©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
From Idea to ProductYou have an idea. Now what?
Joseph DonoghueMurray Learmonth
Leardon SolutionsSan Diego, California
www.leardon.com
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Taking an idea from early concepts into the customer’s hands
An orchestration of the competing requirements of cost, schedule, budget, and product features
A process of constraining the ability to change
Product development is simply a process followed by a team
What is Product Development?
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
The Process of Product Development
Product Development Phases
Definition FeasibilityPrototype
Design
Production
Prototype
Production
Ramp
Stable
ProductionDiscontinuanceDefinitionDefinition FeasibilityFeasibility
Prototype
Design
Prototype
Design
Production
Prototype
Production
Prototype
Production
Ramp
Production
Ramp
Stable
Production
Stable
ProductionDiscontinuanceDiscontinuance
Product Development Checkpoints
Production ProtoCheckpoint
(PPC)
Production ProtoCheckpoint
(PPC)
Product Release Checkpoint
(PRC)
Product Release Checkpoint
(PRC)
Definition Ready Checkpoint
(DRC)
Definition Ready Checkpoint
(DRC)
Product FeasibilityCheckpoint
(PFC)
Product FeasibilityCheckpoint
(PFC)
Product DesignCheckpoint
(PDC)
Product DesignCheckpoint
(PDC)
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
For each Product Development Phase…. Activities to Perform
Practical Considerations
Pitfalls to Avoid
Format of this Presentation
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Definition Phase: Activities to Perform
FeasibilityPrototype
DesignDefinition
Production
Prototype
Production
Ramp
Stable
ProductionDiscontinuanceFeasibilityFeasibility
Prototype
Design
Prototype
DesignDefinitionDefinition
Production
Prototype
Production
Prototype
Production
Ramp
Production
Ramp
Stable
Production
Stable
ProductionDiscontinuanceDiscontinuance
Intellectual Property Product Data Sheet (IS and IS NOT) Program Budget Preliminary Program Schedule Product Cost Program Priorities (Cost, Scope, Schedule)
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Things to know about Patents Patents give you the right to exclude or prevent others
from infringing (“negative” right) Infringement litigation is very expensive Time-to-market, first-mover advantage, and brand
development are sometimes more important than IP protection.
Approximately 3% of all patents in the U.S. make money for their owners (Source – U.S. Patent and Trademark Office)
Definition Phase: Practical Considerations
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Schedule Rules of Thumb1. Determine total time required for engineering: Ask an engineer how
long it would take them to design. Multiply by a factor of 2 for an schedule “pad”.
2. Determine time required for unique tooling: Rules of thumb for tooling: 8 weeks for a large unique part; 6 weeks for a small unique part.
3. Determine time required for prototyping: Prototyping time is the time it takes to procure parts, build products, and ship. Expect this to take at least 3 weeks for a simple product and 6 weeks for a complex product.
4. Determine time required for qualification: Simple testing should take 2-3 weeks but some country-specific compliance testing can take up to 3 months.
5. Determine number of prototype phases: You can determine the number of phases by asking the engineer how many revisions of design they will need to complete design.
Total Schedule Time = No. of Prototype Phases x (Design Time + Prototyping Time +
Qualification Time) + Tooling Time
Definition Phase: Practical Considerations
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Creating a Development Budget1. Calculate the engineering budget: 2 x (No. of Engineers) x (Schedule
Time in Months) x ($8,000/month)
2. Calculate the tooling costs: Talk to somebody familiar with manufacturing. Rules of thumb for unique parts: Small Fab Tool: $8,000; Large Fab Tool $15,000. No tooling costs for off-the-shelf parts and components.
3. Calculate the prototype costs: 10 x (No. of Prototype Units) x (Direct Material Cost of Product). 10 is used since prototype units are ten times more expensive than production units
4. Calculate the prototype qualification costs: Determine how many tests required to verify the design works properly. Multiply this by $5,000 if you can’t do the testing yourself.
Engineering Cost
+ Tooling Cost
+ Prototype Costs
+ Qualification Costs
Total Development Costs
Definition Phase: Practical Considerations
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Do not spend all your budget on obtaining IP Patents can cost as much as $15,000 each Many inventors/entrepreneurs spend all their money on
IP and then don’t have any money for a proof-of-concept device
IP without a proof-of-concept device isn’t very attractive to investors
Be aware of creeping features throughout your project
You must understand the customer “pain” you are resolving
Document your product IS and IS NOT and don’t deviate unless you can correlate incremental revenue to new features
Don’t just add new features to a product because it seems like customers will like it. You will never satisfy all of your customer needs.
Definition Phase: Pitfalls to Avoid
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Feasibility Phase: Activities to Perform
Prototype
Design
Production
Prototype
Production
Ramp
Stable
ProductionDiscontinuanceDefinition Feasibility Prototype
Design
Prototype
Design
Production
Prototype
Production
Prototype
Production
Ramp
Production
Ramp
Stable
Production
Stable
ProductionDiscontinuanceDiscontinuanceDefinitionDefinition FeasibilityFeasibility
Design and Build a Proof-of-Concept Prototype Test and Verify Functionality of the Prototype Determine Product Cost Refine Program Schedule Refine Program Budget
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Proof-of-Concept Device The proof-of-concept device sometimes bears little
resemblance to the final product. The objective of the device is to prove functionality
Feasibility Phase: Practical Considerations
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Proof-of-Concept Device Example Printer Paper Pick System
Feasibility Phase: Practical Considerations
Proof-of-Concept Device Production Device
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Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Proof-of-Concept Device Example High-Speed Envelope Feeder
Feasibility Phase: Practical Considerations
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Ways to Estimate a Product Direct Material Costs
1. Work with a vendor who is an expert with the part type Get a quotation for the part cost over different volumes Use the vendor as a resource on how to decrease the cost Be sure to understand all costs including tooling and setup
charges
Feasibility Phase: Practical Considerations
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Ways to Estimate a Product Direct Material Costs
2. Use the following guidelines to estimate mechanical part costs
Feasibility Phase: Practical Considerations
~ 10,000 >100,000
Small Part
$0.50 $0.35
Large Part $1.50 $1.00
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Ways to Estimate a Product Direct Material Costs
3. Use the following guidelines to estimate electrical part costs
Electrical Printed Circuit Board Assembly Price per square inch
Use Digi-Key on-line catalog to estimate electrical component prices
Feasibility Phase: Practical Considerations
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Don’t move into the next phase until you have proven functionality of all the product features
Never accept the statement “We’ll take care of that down the road.” from an engineer.
Design change is easier early in the development process Changes late in the development process take twice as long
and cost five times more than early in the process
Feasibility Phase: Pitfalls to Avoid
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Prototype Design Phase: Activities to Perform
Production
Prototype
Production
Ramp
Stable
ProductionDiscontinuanceDefinition
Prototype
DesignFeasibility
Production
Prototype
Production
Prototype
Production
Ramp
Production
Ramp
Stable
Production
Stable
ProductionDiscontinuanceDiscontinuanceDefinitionDefinition
Prototype
Design
Prototype
DesignFeasibilityFeasibility
Product Design with all Integrated Features Fabrication of a Design Prototype with Rapid
Prototyping Verification of the Product Feature Performance
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Primer on Rapid Prototyping Stereolithography (SLA):
A laser is used to cure liquid material and generate a part Parts are great for verifying form and fit but not usually function Takes about 3 days from release
Prototype Design Phase: Practical Considerations
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Primer on Rapid Prototyping Machining
It is possible to machine most plastics and metals Turnaround times are around 1-3 weeks Produces parts that can be used to test form, fit, and function
Prototype Design Phase: Practical Considerations
Machined Parts Before Glueing
Final Prototype Assembly
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Primer on Rapid Prototyping Silicone Molding
Take a machined plastic part and create a silicone mold for producing 15 parts
Costs more than a tooled part but lead-time is much faster
Prototype Design Phase: Practical Considerations
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Primer on Rapid Prototyping Quick-turn Printed Circuit Boards (PCB):
Normal PCBs take around 3-4 weeks to produce. This process take 3 days but costs around 10 times more than an
normally produced PCB.
Prototype Design Phase: Practical Considerations
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Comments on worldwide engineering costs An on-shore experienced U.S. engineer can earn $150,000 per
year An off-shore experienced Taiwan engineer can earn $50,000
per year Off-shoring engineering is an extremely difficult task but can
be done Keep all “core” work on-shore (Core is work that strategically
differentiates you from your competitors) Move “non-core” work off-shore (Non-core is work that is
considered a commodity)
Example Core: Industrial design (look and feel) of the product Non-core: Structure, design details, and 2D drawings for the
product
Prototype Design Phase: Practical Considerations
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Be sure to properly qualify your product Non-operating temperature storage Moisture absorption Condensation Operational vibration Packaged random vibration End user handling Temperature and humidity operating performance Transportation shock Altitude performance testing Bare and package drop Thermal shock Regulatory tests (ESD, safety, Radiated and Conducted Immunity)
Prototype Design Phase: Pitfalls to Avoid
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Avoid engineering cost run-ups Never work on an “open checkbook” contract with hourly
engineering rates Some design services firms will charge up to $150/hr for an
expert
Regroup and evaluate budget, product cost, schedule, and product features
Prototype Design Phase: Pitfalls to Avoid
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Production Prototype Phase: Activities to Perform
Production
Ramp
Stable
ProductionDiscontinuanceDefinition Feasibility
Prototype
Design
Production
Prototype
Production
Ramp
Production
Ramp
Stable
Production
Stable
ProductionDiscontinuanceDiscontinuanceDefinitionDefinition FeasibilityFeasibility
Prototype
Design
Prototype
Design
Production
Prototype
Production
Prototype
Design Product for Production using Standard Manufacturing Processes (e.g. plastic molding)
Choose Final Vendor Base Produce and Qualify Production Prototypes
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Do not assume that you must manufacture in the lowest cost country
Production Prototype Phase: Practical Consideration
Hourly Compensation Costs in Manufacturing
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
Germ
any
United K
ingdom
United S
tate
s
Japa
n
Singap
ore
Hungar
y
Taiwan
Mex
icoChina
Bureau of Labor Statistics. International Comparisons of Hourly Compensation Costs in Manufacturing, 2007. www.bls.gov
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Production Prototype Phase: Practical Consideration
How to find a competent vendor1. Open the yellow pages: There are many competent vendors
in your own backyard. L.A. County has the largest manufacturing base in the
U.S. Orange County ranks 8th in the U.S. Riverside-San Bernardino Counties ranks 16th in the U.S. San Diego County ranks 19th in the U.S. L.A. 5 county + San Diego County is 3rd largest
manufacturing “state” in the U.S. behind California and Texas.1
2. Professors in the Engineering and Business Schools are well connected to industry professionals
3. Visit websites such as alibaba.com and globalsources.com for off-shore vendors (especially China sources)
1. Manufacturing in Southern California, L.A. County Economic Development Corporation, March 2007.
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Production Prototype Phase: Practical Consideration
How to evaluate a vendor1. Ask for at least 5 references for customers with similar
products
2. Contact each of the references and ask about level of service and quality of product
3. The turn-around time for a quotation should be less than 2 weeks
4. Ask the vendor about the normal minimum order quantities (MOQ) of their existing customers
5. Visit the vendor’s factory
6. Evaluate the vendor’s flexibility when scheduling the factory visit
7. Ask to meet the actual people you will be working with when your product is in production
8. Ask for them to documentation that describes their quality processes
9. Ask them for a list of quality data that will be supplied with each shipment
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Production Prototype Phase: Practical Consideration
Outsourcing and Offshoring Outsourcing: subcontracting a process to a third-party
company Offshoring: relocation of a business process from one country
to another
Things to consider when offshoring Offshored supply chains become quickly difficult to manage Don’t underestimate the difficulty in offshoring a product or
design Entrepreneurs typically don’t have the leverage or economics
of scale to approach off-shore manufacturers and get world-class pricing
A thorough understanding of the culture and how to effectively communicate with them are keys for successful offshoring
Non-disclosure agreements and patents mean little in Asia Relationships are key to the successful of the offshoring
project
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Production Prototype Phase: Pitfalls to Avoid
How to Avoid Vendor Disasters Maintain an extremely close relationship with your vendor A vendor relationship is about teamwork: expect co-
accountability for the success of your product and don’t “point fingers”
Expect an “open door” policy at your vendor’s facility Some vendors will tell you that they can do anything you ask
them to do. Check references. Resolve all product issues prior to starting production Have a written Change Request process in place with the
vendor Be sure to have the product cost quotations as a function of
volume in writing
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Production Ramp Phase: Activities to Perform
Stable
ProductionDiscontinuanceDefinition Feasibility
Prototype
Design
Production
PrototypeProduction
Ramp
Stable
Production
Stable
ProductionDiscontinuanceDiscontinuanceDefinitionDefinition FeasibilityFeasibility
Prototype
Design
Prototype
Design
Production
Prototype
Production
PrototypeProduction
Ramp
Production
Ramp
Start Production of the Product under Revision Control
Audit Functionality and Manufacturing Process for Quality
Review Product Cost Fill Distribution Pipeline
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Shipping and Logistics Be sure to include import duties and shipping costs in cost of
goods sold calculations when procuring your product from offshore vendors
Expected import duties can be found at the United States International Trade Commission website www.usitc.gov/tata/hts/index.htm
Shipping costs depend on method of shipment: Air shipment: Takes around 3 days but is expensive. Fedex and
DHL both have excellent worldwide services. Good for small volumes and prototype shipments.
Ocean shipment: Estimate around 5 weeks to get from Asia to the United States. A 40’ ocean container shipment costs is about $5,000
Production Ramp Phase: Practical Considerations
$1,500
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Returns and Repairs Your supply chain must accommodate returns and repairs This is sometimes referred to as a Reverse Supply Chain or
Reverse Logistics Only repair returned products if it makes financial sense.
Sometimes it is best to just send the customer a new product. Set up a process with your vendor to recycle returned
products
Production Ramp Phase: Practical Considerations
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Inventory = Cash Don’t produce too much inventory unless you understand your
demand Don’t let vendors talk you into producing a large number of
products by giving you a small discount
Production Ramp Phase: Pitfalls to Avoid
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Stable Production Phase: Activities to Perform
DiscontinuanceDefinition FeasibilityPrototype
Design
Production
PrototypeProduction
Ramp
Stable
ProductionDiscontinuanceDiscontinuanceDefinitionDefinition FeasibilityFeasibility
Prototype
Design
Prototype
Design
Production
Prototype
Production
PrototypeProduction
Ramp
Production
Ramp
Stable
Production
Stable
Production
Fulfill Product Demand Listen to the Customer and Feed Back into
Production
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Even if things seem to be going flawlessly…
DON’T GET COMPLACENT!!!
Continue to perform quality checks, resolve all issues, and listen to the customer.
Stable Production Phase: Pitfalls to Avoid
©2007 Leardon Solutions
Design. Manufacture. Deliver.TM © 2010 Leardon Solutions
Murray [email protected]
© 2009 Leardon Solutions
Contact us if you need advice…..