What is new product introduction?
The New product introduction process ensures a product design can go into mass production at the expected cost, quality, and speed. It mainly involves product design improvements (through reviews, prototyping, risk analyses…) and process engineering (including process layout and tooling, but also testing stations and staff training).
Table of Contents
Please keep reading, or select the section you want to skip to by hitting the links below.
- Part 1 – the need for preparation work between product design and production launch
- Part 2 – Overview of the NPI process, from product idea to production
- Part 3 – How to find a good manufacturing partner
- Part 4 – Design reviews & adjustments: DFM, DTC, DFQ, DFD
- Part 5 – Optimizations for lower cost and better quality
- Part 6 – Small production runs before mass production
- Part 7 – What is the buyer’s role in the NPI process?
- Conclusion and wrap-up
- Appendix – Definitions
Thanks to Kickstarter, Indiegogo, and other crowdfunding platforms, raising funds on the merits of a great idea has gotten much easier. Many projects have been funded quickly, sometimes raising millions of dollars, without giving away control of the company to investors.
Meanwhile, the hard work of getting from a product design to the “production ready” stage hasn’t gotten any easier. New product introduction like this remains a challenge for teams doing it for the first time. For many, the dream stops here, and the nightmare begins.
The Uncomfortable Truth For Hardware Startups
- Around 90% of new products manufactured in China fail on at least one objective (timing, quality, cost).
- Around 80% of new products manufactured in China fail on at least two objectives (timing, quality, cost).
Think about these questions.
How many Kickstarter projects have been delayed by more than a year? How many had to throw in the towel before mass production even began? How many are called a scam by backers who complain about very long delays and poor communication about the project status?
This guide will show you how to avoid your project falling into the majority above.
We will focus on electrical, electronic, and/or mechanical products that aim at sales in the millions of dollars (or more) under strict quality requirements.
The need for preparation work between product design and production launch
Many developers and engineers want to move directly to production once they see one prototype is working well. They feel they are ready, they want to stay within budget, and they want the product on the market as fast as possible. However, they skip some very important steps. They ignore NPI best practices that have been refined over many years in many industries, from automotive to electronics.
1.1 Common pitfalls startups suffer from
Many startup founders come to our Shenzhen office and discuss their plans. Here are some of the most common mistakes they make:
- Their business plan severely underestimates total costs, typically by a multiple of 2 to 4.
- They expect an insanely short time from idea to mass production, not even realizing the need for many steps along the way (e.g. certifications and other tests).
- They start looking for a manufacturer even though they only have the concept of a product in hand. They are not even sure what the main components and the main production processes will be chosen in the end.
- By the time they are ready to go into production, they find out that the unit price has ballooned to the point their project is no longer economically viable.
- They have volume projections that are unrealistic compared to the cash they have on hand.
If one summarizes all these issues, the root cause is the same: the disconnect between product design (R&D) and the production processes necessary to make their project a reality.
1.2 NPI Best practices
In many industries, the process of bridging product design and production processes is called New Product Introduction (NPI).
Large companies have entire departments doing NPI work. Not only do they help make mass production much better and cheaper, but they also set targets & milestones that need to be monitored as part of each project’s management.
What does a good new product introduction process include? It is a set of tools applied to fill the gap between Development and Production. The aim is not only to bring a new product concept to maturity but also to mitigate most of the production risks (cost overruns, quality issues, long delays).
For example, many people think Apple products are designed-in-California and made-in-China, end of story. If it were the case, their product quality would not be high, and their product design would be less differentiated.
Why? Here is how Cook, Apple’s CEO, describes it1:
It’s not designed and sent over, that sounds like there’s no interaction.
The truth is, the process engineering and process development associated with our products require innovation in and of itself. Not only the product but the way that it’s made, because we want to make things in the scale of hundreds of millions, and we want the quality level of zero defects.
That’s always what we strive for, and the way that you get there, particularly when you’re pushing the envelope in the type of materials that you have, and the precision that your specifications are forcing, requires a kind of hand in glove partnership. You don’t do it by throwing it over the chasm. It would never work. I can’t imagine how that would be.
NPI can take many forms, but its purpose is simple: ensuring the product can be made at the expected levels of cost, quality, and speed, while respecting the designers’ intent.
Overview of the NPI process, from product idea to production
The New Product Introduction process is quite standard in a number of industries. For example, in the European and North-American auto industry, every component that goes into a new car has to go through the PPAP process – their version of NPI. In part 1, we saw that Apple also considers it a must.
2.1 A good NPI process often makes the difference between failure and success
R&D teams tend to under-estimate the role of NPI – what we called ‘the hard work of getting from a product design to the ‘production ready’ stage’ earlier in this article. Here is a telling example.
A startup was planning to launch production in a Shenzhen factory. They focused entirely on the product design and trusted the manufacturer to plan and execute all the pre-production preparation.
They started to panic after the estimated date of production launch had been postponed twice. In reality, their dedicated assembly line was not even close to being ready. The fixtures, jigs, and automated testing stations were all missing. No experienced engineer was planning for what operator would do what. Many components had been delivered but were defective.
If mass production had been launched immediately, it would have been a quality disaster and the batch would have been refused.
By delaying the launch by 2 months and doing the necessary engineering work, the first batch could be shipped to customers in good conditions. Had the manufacturer taken those steps earlier, there would have been no delay.
Unfortunately, very few Chinese factories are even aware of the NPI work required for highly customized products. They are used to improvising and adjusting in real time. After all, they can play this dangerous game with their customers’ money, not their own.
2.2 What NPI process makes sense for start-ups?
Let’s assume you are developing a product composed of electronic and/or mechanical parts. Based on our experience, the work can be broken down into 4 activities (what we at Sofeast call the four Ps of NPI for start-ups):
- Product design & development
- Partner selection & onboarding
- Process development & validation
- Production launch
If we add the 5 milestones that matter the most (from ‘product idea’ to ‘production launch’), the typical situation can be illustrated this way:
2.3 Why are many activities taking place in parallel, rather than one after the other?
- As the product design is refined, the processes that will be necessary become clear, and the search for a suitable manufacturing partner can start.
- As the production processes are planned and applied to make prototypes, the product design team gets rapid feedback and keeps iterating
- The manufacturing partner should be tightly involved and provide their own feedback
Once these interactions and iterations have given birth to an approved prototype, there is still much work to test and validate the processes, typically through a pilot run (see part 6).
How to find a good manufacturing partner
Finding the right manufacturer for your project, and keeping them motivated all throughout the development work, is a science as well as an art. If it is done poorly the first time, you will have to go back to square 1 in a few months.
Most importers have learned a simple rule in China: Poorly selected factory = 99% certain failure
3.1 Expect to be disappointed and plan accordingly
Several times a week, foreign companies complain to us problems they have with their Chinese manufacturer. It is usually cost, quality, timing, or communication issues.
They all tell us they were quite enthusiastic when they started to communicate with their new supplier, and then it went downhill.
A key reason for this is a poor selection process. It is not simple. Alibaba won’t be of any help here.
Think of the hiring process. Mistakes are frequent, and a 100% success rate is unheard of. For this reason, qualifying a backup supplier (to be developed in parallel) is good practice. You can devote less effort to it, and develop it more slowly so that it is ready to take on the second or third production batch.
- For further reading on cultivating a backup.
3.2 The manufacturing partner selection process
Setting up an RFQ (Request for Quotation) and auditing the factory are the first steps. In addition, the supplier needs to fully understand the buyer’s expectations.
You should share your vision when it comes to time to market, engineering capability, flexibility (e.g. making a first small batch), IP rights protection, quality control, commitment to see the project through, warranty and spare parts, and so forth. When they hear all this, many suppliers might turn you down. Better to know this now!
As part of the selection process, the buyer typically needs to know this information about the supplier:
- Cost of assembly work, and total cost (including the components and additional handling costs)
- Warranty offered by the supplier (it might simply be a monetary compensation for defective parts)
- Can they possibly become competitive on our market with our product or similar, in a few years?
- Engineering (R&D) and testing capabilities
- Quality control standard, as well as experience with product certifications
- Commitment to schedule and to final cost
- Their network of suppliers, and how much you will be allowed to know (transparency?)
- Their ERP, what ERP modules they have implemented, and whether customers can access to their inventory data (this is seldom possible)
- Payment terms (e.g. 20% down before production, 40% before shipment, 40% net 30 days)
- For further reading: typical criteria that an auditor checks at an EMS’ factory are listed in this article.
What manufacturer profile makes sense for your business?
Hardware startups and R&D companies often dream of working with Foxconn (one of the contract manufacturers working for Apple and many other computers brands). This is often the wrong approach for several reasons:
- Foxconn group operates many sites, and as a whole is offers extremely variable quality levels. They do a great job for Apple because Apple makes sure all the NPI work is done very well.
- There are many alternatives that can be a better fit depending on your product type, the complexity of assembly, and the expected volume. For example, if you issue a small order that can be placed on a line and finished in a few hours, most Chinese manufacturers are not interested. Most of them are organized for high-volume, low-mix production runs. They don’t make a profit on small runs.
You are better off working with a manufacturer that has a few lines optimized for low-volume, high-mix products and has implemented some Lean principles.
You also need to work with a company that has R&D capabilities that complement your own in-house skills. If your product needs a very specific type of plating (to get the exact visual result you need), and if you are not an expert in that process, make sure the contract manufacturer can help you here.
One last word on the collection of all this information… 99% of Chinese suppliers always say “yes, we can do it” at this stage. You will need to scratch below the surface and double-check many of their claims.
Does it sometimes make sense to select 2 partners for manufacturing? In some cases, it does.
Let’s take an example:
You develop an innovative belt that integrates a power bank. You can engage a manufacturer with deep experience in power banks, and another one specializing in high-quality belts. Over time, the power bank company might learn what they need to become your only supplier. The main benefit here is risk reduction. This approach does take much more energy, but in some cases, it is a good choice.
3.3 Contract and negotiation
As the buyer, you do need a contract that is enforceable in China. Do not skip this step, and work with a lawyer experienced in China business. Here is why:
- A good contract sets the rules of the game. You will probably need to remind your supplier multiple times of what they have signed. If nothing is written, everything is allowed…
- Litigating in China against a local company is not something you want to do. And, in 98% of cases, you won’t need to. In any case, the contract will give you much leverage. You can push a supplier hard by having a lawyer send them a demand letter, for example. Serious suppliers don’t want lawsuits and don’t want
3.4 Managing your contract manufacturer
After you selected a contract manufacturer (CM), they will need information from your side. Make sure to sign the proper contracts before sending anything sensitive (your standard NDA is probably useless here).
- For further reading: lawyer Steve Dickinson describes a very common mistake that leads to loss of IP rights and explains that startups are more often hurt by an inability to deliver products than IP infrigements on the China Law Blog.
Standard documents that are provided by the buyer to the CM include:
- Product & packaging specifications (make sure they are very detailed)
- Bill of material, and component vendor selection if that has already been done
- Standards to which the finished products will have to comply
- Acceptance criteria, including tolerances
Do you HAVE to provide all this information? No. It is common to expect the CM to work on defining some of these documents. However, you need to be aware of the risks of letting the CM do that work. Designing the product to make it ‘work’ and ‘look’ as expected is NOT enough:
- Very few CMs do a proper Design For Manufacturing (see part 4 about DFM). We often review the DFM done by CMs and they often overlook serious potential issues.
- Even fewer CMs do the optimization of production processes (see part 5) or a pilot run (see part 6).
- Chinese suppliers are consistently over-optimistic. Once they find issues, they work their way around them. In the end, the buyer is the one that pays for all these shortcomings. You have been warned!
Chinese manufacturers are consistently over-optimistic. It is the buyer’s job to look for potential issues and to ensure they are addressed.
3.5 Keeping the CM motivated
The business model of Chinese manufacturers is often to finance all the development work (including the tooling) and to make that money back many times over once production is running. In a sense, they place a gamble on every project they accept to work on. This has 3 implications:
- If they don’t believe very strongly in your project, they won’t start working with you.
- If their motivation is not very strong, and if development takes longer than expected, there is a high chance they drop it after 1 or 2 months. That’s where startups often struggle a lot.
- If the CM is financing all the development work, you are at risk of being totally dependent on them. They expect to have the exclusivity of the manufacturing rights of your products, at a minimum. Here again, you need to think through all the legal implications before starting to work with anybody.
Design reviews & adjustments: DFM, DTC, DFQ, & DFD
If you decide on your product design and you “throw up over the wall” to a contract manufacturer, you will probably suffer long delays, cost overruns, and poor quality. For best results, the design needs to be reviewed and adjusted, and it will have an impact on every aspect of your project.
4.1 Why the design stage is extremely important
If issues are found at the concept stage (when a design can easily be adjusted), the cost of that adjustment is much, much lower than the situation where that same issue is found later on. The bill goes up very fast when some products need to be reworked or scrapped because of quality issues. The time to fix issues also expands dramatically as you make progress. Several studies have shown this type of relationship in the NPI process of many different products (it is often called the ‘1-10-100 rule’).
Typically, catching a temperature problem at the prototype phase would cost next to nothing (the adjustment would be part of the normal iteration cycle), but noticing it once mass production is under way would lead to a lot of scrapped material, high cost overruns, and long delays. In other words, think very hard about design before moving onto the next stages of the NPI process.
4.2 Four types of design reviews
Let’s focus on 4 common types of design reviews:
Your ‘product design’ will help sell in the marketplace. The ‘production process design’ is also vital if you want to hit your quality, cost, and delivery targets. Both are extremely important and are closely linked. Optimizing one often necessitates changes in the other.
DFM, DFC, DFQ, and DFD are deep topics. Let’s proceed with an overview of what is usually verified in each of them.
4.3 What is DFM (Design For Manufacturing)?
The R&D team needs to ask these questions:
Can this product be assembled? We have seen buyers who haven’t found a way to assemble their new product and who expect their supplier to find a way.
Sometimes it works, and sometimes it doesn’t. Confirm this assumption as early as possible.
Is it easy to assemble? If your team has spent hours to assemble an early prototype, don’t assume the manufacturer will find a better way. Many projects meet this issue. If you are far away from an easy assembly process, it is usually better to keep working on your design before showing it to any manufacturer. Several companies used our facilities and help from our engineers to find a better approach, and it saved them much time.
Can the parts to be assembled together be made with standard processes? If you need a bleeding edge piece of equipment to make certain parts, making them in China or any other low-cost country might be impossible… or extremely expensive.
Was the design of the parts optimized for their production process? For example, injected parts should have draft angles to ensure they can be ejected from their mold easily and without scratches.
Can the parts be manufactured with a high yield (i.e. a high percentage of pieces with acceptable quality, with no need for rework)? Some companies decide to go into production even though some parts still suffer from a very high defect rate (sometimes up to 70%). This might be fine for a small pre-production batch, but no production run will be sustainable in these conditions. You should not go into production if 5% or more have to be reworked – otherwise, your supplier will force you to accept a higher price and a longer lead time.
In these reviews and discussions, the more you involve your contract manufacturer, as well as the manufacturers of some of the parts, the better.
(Further reading on DFM: Your Chinese Manufacturer Can Help Improve Your Product Design!)
4.4 What can go wrong with poor DFM?
Here are 3 very common pitfalls that can be avoided thanks to good DFM.
Buying tooling that is several times more expensive than needed. This is a serious issue, especially if you don’t plan to make large batches of your first product design. Buyers are often surprised when 2 suppliers give vastly different quotes for tooling, but each supplier usually has its own proposal… one of which makes more sense for your business.
Finding more than 50% of defective pieces in the first production batch. Let’s take the example of precision mechanical components with a tolerance of +/- 0.005mm. Inspectors might reject the batch because of measurements outside the tolerance, even though those measurement points are not critical-to-quality and are perfectly acceptable.
Forgetting to confirm the packaging. This is quite common. Packaging is seen as an accessory that can be confirmed later. Unfortunately, designing and fine-tuning the packaging might take time and might delay the whole project.
Finally, a word of warning.
Some buyers seek perfection for the first version they will release on the market. They keep doing iterations, with no end in sight.
Most Chinese suppliers expect to have made, shipped, and collected money on a project within 6-12 months after they started working on it. We have seen cases where the manufacturer becomes resistant and then drops the entire project.
Discuss their expectations at the start, and do what you can (typically, some of the design and prototyping work can be done by a different service provider) if your product is particularly complex.
4.5 What is DTC (Design To Cost)?
What is the cost structure of your product? It can be broken down as follows, to get a ‘big picture’ idea:
- Parts (components, materials, accessories)
- Assembly work
- Manufacturer’s margin
The whole DTC approach consists of starting with a realistic cost estimate, confirming the product’s features and their associated costs, and tracking cost changes over time. If a change pushes the total cost outside of your budget, you need to think of a reaction plan.
Cost of parts – a few quotation requests can provide an estimate early in the project. Fewer parts mean lower costs, so the product design can be optimised with that objective. Similarly, buying parts that are in the same shape, same color, and same material, will lead to lower costs. Here is 2 examples:
- For injected parts, combining 2 parts in 1 mold can cut the total mold cost by 30% or more.
- Moving from 4 different shapes of Velcro stickers to 2 different shapes allowed us to cut both the unit cost and the tooling cost.
Cost of assembly work – includes the time for workers to do the assembly, quality control, packing, and shipping.
For example, in Shenzhen, the minimum salary (the basic amount without tax) is about 2100 RMB a month, but the total cost of an operator is actually 4,000 to 7,000 RMB per month once all taxes, electricity, dormitory, meals, and other expenses are included.
A frequent mistake here is to think of assembly as an easy step. Here are two recent examples:
– In one case, the customer evaluated it would take 8 min, but it actually took over 30 min due to unstable testing software and to repeated rework along the process.
– In another case, the buyer had a prototype made for more than 10,000 USD and assumed the production price would be below 100 USD per piece. They paid for all the tooling and yet did not validate that assumption with the manufacturer. In the end, the whole project had to be abandoned because production costs were too high.
Manufacturer’s margin – this is the difference between the selling price to the customer and the total cost (including overhead). In consumer electronics made in China, the margin is seldom below 15%, and it can rise to 50%.
A high margin might be acceptable if you need the factory to stop and retool a line to make a very small production run. But you should try to avoid it in other cases.
There are different ways to negotiate a lower margin:
- By requesting transparency into the sub-suppliers and their pricing. If this is not negotiated from the very beginning and written in a contract, it will not happen.
- By avoiding ‘hidden charges’ such as the amortization of tooling (it is better if you pay it yourself upfront).
- By requesting a detailed breakdown cost sheet. Note that this might be very hard to negotiate.
Cost of logistics – this can be reduced in many ways: lower volume packaging, slip sheets instead of pallets, re-engineering of the parts & products flow, consolidation into a full container, and so on. Logistics often represents 30% of the total cost, so it is worth an in-depth analysis! Here are two examples of cost reduction:
- A 40cm cube was assembled in Guangdong. All parts were made in Guangdong, except for the aluminium box (in Zhejiang). Switching to a Guangdong aluminium factory raised that part’s price but cut overall costs.
- Packing caps together, rather than in individual boxes, saves a lot of packaging volume. Shipping them in bulk, and then repackaging them in the destination country, can be a good strategy.
4.6 What is DFQ (Design For Quality)?
You need to come up with quality standards, and then ensure production will meet those standards (DFQ). To increase your confidence, you can get a few samples and test them to standards higher than those you promise to your customers.
For example, Nokia did drop tests from 2 meters high, even though their target for production was only 1.2 meter. Their phones gained a reputation for robustness.
A design review, together with an analysis of pre-production testing results, can help avoid many quality issues down the road.
Here are some common mistakes:
Tolerances are too tight – don’t forget that prototypes are often made with more consistency than mass production (they were made by engineers, and bad pieces were sorted out), so don’t extrapolate all your findings. This can lead to an 80% rejection rate in the first batch.
A typical example is wooden products. Their dimensions change depending on the ambient humidity and temperature. The same applies to precision metal parts – their dimensions are slightly different at the Dongguan factory than once they reach a Los Angeles warehouse.
Tolerances are too loose or are missing – some people reason, ‘why add tolerances if we find that all the prototypes are good?’ As noted above, prototypes are often much better than mass production for several reasons.
Don’t assume the manufacturer will sort out bad products on the production line, the way they sorted out bad prototypes!
No validation from final users – prototypes are typically tested by the engineers and their friends, not by typical end users. That can lead to bad surprises when products hit the market. The company might get poor feedback such as “not easy to use”, “breaks easily”, and so on.
No stress testing – R&D engineers often have few samples to test, and they “play safe” to avoid breaking anything. However, a good reliability study can often lead to interesting results on a set of 10 prototypes.
For example, if the wheels of a skateboard have meant to survive for 100 km, pre-production samples can be tested on up to 200 km on different types of roads.
Not confirming process capability – the fact that you found 10 products in a row within specification doesn’t mean your first batch of 2,000 pcs will be 100% good. That’s one of the reasons why a pilot run is so useful (see part 6 below). Unfortunately, nearly all Chinese suppliers hate the idea of pilot runs and suggest skipping that step.
No compliance testing – your product will probably need to compliant with the importing country’s regulations if it is sold in the US, Canada, the EU, Australia, Japan, and/or others. If they are not, they might be blocked by Customs, or (worse) you might face severe product liability.
Good manufacturers will also refuse to make unsafe products – I remember the case of a Lithium polymer battery with a loose design that could cause overheating and even a burning battery. The buyer insisted but, in the end, it was not made.
4.7 What is DFD (Design For Distribution)?
a) DFD for the completed product
The goal of DFD is to optimize the tradeoff between low-volume packaging (and lower costs all along the supply chain) and adequate protection of the product.
The design of your product, and of its packaging, will have a direct impact on several considerations:
- The protection of the product during transportation;
- The volume of packaging needed for that protection, which might increase logistical costs;
- The impact of manual handling of material.
If you are planning to make your new product in high quantity, it is crucial to have a packaging engineer review the product & packaging design in light of the constraints of the distribution pipelines (what are the risks of damaging products?).
Packaged product testing standards from ASTM or ISTA can be a good starting point, but their adequacy needs to be verified. They might not correspond to the real issues in the field.
b) DFD for components
The way components are packaged when shipped from the suppliers (or upstream processes, in an integrated manufacturing facility) to the place of assembly can also be optimized:
- An enormous amount of protection (and extra costs) might be necessary, while a small change to the component design might allow them (for example) to be stacked up.
- Inadequate protection might cause quality issues (dents, scratches…).
Kevin Howard, an experienced packaging engineer working at Packnomics, made the suggestion to ask yourself: ‘how would components and packaging be designed if the assembly station was robotic?’.
(Further reading on DFD: Design for Distribution: What Hardware Startups Need To Know)
Optimizations for lower cost and better quality
I want to touch on two ‘best practices’ that are seldom applied but that improve both cost and quality. The larger your expected volumes, the more you should follow this advice.
5.1 Change management and traceability
This is a part of the new product introduction process that is often overlooked.
Buyers often realize it after a few orders, when they see the devastating effects of unauthorized changes and/or of a lack of traceability.
Chinese suppliers sometimes make changes to a part (e.g. its material, its production process, and/or its supplier) or to the assembly process. They truly believe they are authorized to do it. They don’t let the buyer know about it, they don’t record the details of the change, and they don’t do a formal risk analysis.
As I wrote before, the buyer often pays the price of the manufacturer’s mistakes. So, you can’t expect your supplier to take all reasonable precautions. You need to clarify your expectations and ensure your supplier complies.
In practice, what does it mean?
The buyer should have the supplier sign a contract that makes it clear that undisclosed and unauthorized changes are forbidden. Regular reminders, as well as penalties, are necessary.
As we wrote in section 3.2, you should ask about the level of transparency you can expect. By default, you will have zero visibility into the part suppliers. If you don’t know who makes the part, you can’t complain that the part is now made in another factory…
What does it take to implement a good change management process?
Let’s face it, it can be relatively heavy if the manufacturer doesn’t already have a good system for it.
New parts and processes need to be approved (sometimes with a new pilot run). Records need to be made and kept. However, it is well worth the effort.
Let’s take the example of a supplier who suddenly uses a lower voltage capacitor. The result is failures coming up shortly after the product starts being in use. The customer notices it.
The question is, what portion of production has this issue? If traceability records were kept, it is possible to identify when the switch happened, which pieces have the new capacitor, and where (and to whom) they have been shipped out. Damages can be contained fairly quickly. Without any such records, the entire production of the last few weeks/months needs to be recalled. This can put a small company out of business.
As I wrote above, changes can happen anywhere. I remember a production manager decided to glue 2 parts together instead of screwing them. It saved them time and money. However, operators got tired, became less precise, spilled glue on the sides, and it led to a major quality issue. Not to mention concerns about the durability of the glue, which had been sourced on the local market and had no MSDS sheet (i.e. no specifications).
5.2 Confirming process capability
How to get a batch of products within specifications? By ensuring the processes are capable of producing nearly 100% of your products within specifications. (Note: this won’t bring much value if production volumes are under 1,000 pieces.) Let’s take a critical aspect of your product. It needs to be within specification, otherwise the product is defective.
For example, let’s take the diameter of the cap of a pen:
- If it is too tight, it can’t be put on the pen
- If it is too loose, it will fall off
It means there is an upper and a lower tolerance. If 100 caps are measured, their distribution might look like this:
You cannot assume that production will go smoothly, but this can be checked.
If process capability is too low, changes need to be made before large volumes are released on the lines. Note that the shape of the distribution is sometimes different. It might show 2 or more peaks. It can lead the engineers to identify different causes of variation – for example, a metal tube is cut in a CNC machine and then adjusted manually. A small batch of between 20 and 200 pieces are made and then checked. A process capability index (Cp, or Cpk) can be calculated.
Based on these findings, it is possible to estimate the defect rate in production.
Very, very few Chinese factories do this type of study on their own. It is virtually always done at the request of their customers.
Why? Because the supplier wants to move ahead as fast as possible. (Remember, the customer is the one that pays most of the price when quality is bad, costs are much higher than anticipated, and there are long delays.) They want to skip all intermediary steps and move straight to large production runs. Which brings us to the next part – the pilot run.
Small production runs before mass production
Based on our years of experience in China, we have come to some simple rules when it comes to new (highly customized) products:
Skipping the pilot run = many problems in mass production Pilot run + proper adjustments = much smoother production
A new product introduction is not complete without at least one small pilot run. This the phase where the product design and the production processes are tested and validated:
- If there are issues, fix them and do a new small run.
- If all goes well, processes are mature, and the factory can proceed to the next step.
Typically, NPI engineers are responsible for the following deliverables:
- Working instructions are ready and workers are trained. The working instructions should be visual, should show how to set up and use tools (if any), and should show how to check quality.
- Tools can be properly used, and they work as expected.
- Parts all come from production processes (not prepared by hand ‘just for this small run’) and their failure rate (breaking during assembly, etc.) will be low.
- Critical processes are capable of producing within specifications (see section 5.2).
- The quality system is in place, from incoming outgoing QC, including records, feedback loops, and corrective actions. This includes testing stations.
- The line is relatively balanced, with operators ‘loaded’ with the same amount of work.
- There are no personal safety risks for operators.
As rule of thumb, these are signs that the processes are not ready for mass production:
- The pre-production run was made by a few workers (or engineers) on a table, and was not made in the same conditions as mass production.
- The quantity of the pre-production run was very low (under 50-100 pieces). Lower quantities are sometimes acceptable, but risks of issues appearing in mass production will be higher.
- Bench assembly rather than an assembly line (products are not moving from one workstation to the next).
- More than 10% of the pieces are defective.
- For more information, read Don’t Skip Your Pilot Run.
What is the buyer’s role in the NPI process?
As a buyer, how involved should you be in the NPI process?
As we saw, it can be quite time consuming and requires an array of competencies. The best contract manufacturers can handle it fully on their own (the buyer is not expected to take the lead) and the majority of Chinese factories are unable to do it well.
Depending on the situation, and the level of risk you can tolerate, let’s distinguish between 3 different approaches. (Remember, the risks range from long delays to poor quality, and many customers are actually ‘kicked out’ by their supplier when all the difficulties become apparent).
Approach 1: the buyer is very hands-off (no interference)
If you work with a factory that has already been making very similar product, or if the quantities are very low, this may make sense. You only request the minimum – a perfect sample before production, some photos during production, and a final random inspection before shipment.
Approach 2: the buyer controls what is being done
If you place a large order and financial risks are higher, it makes sense to spend more resources on controlling what happens in the factory. We are assuming the factory has engineering competencies in line with the task they face.
The buyer needs to understand the process the supplier is planning to use, to review it, and, if needed, to ask for improvement. You don’t want to find in the middle of production that a part was not inspected prior to assembly and it doesn’t fit (and the entire line has to stop)… or, worse, that most of the products are unacceptable.
An independent quality inspection is strongly recommended for every batch, and probably at several points along the production of every batch. Many importers found out that Chinese manufacturers voluntarily relax their standards in the 2nd, 3rd, or 4th batch, which is known as “quality fade”.
- For further reading on the phenomenon of “quality fade”, read this article: http://knowledge.wharton.upenn.edu/article/quality-fade-chinas-great-business-challenge
Approach 3: the buyer takes the lead on the NPI process
This is what experienced R&D teams do.
Over time, their build an NPI process that makes sense for their needs, and that balances risks reduction with what it costs them.
Large companies such as Apple, HP, Dell, and many others take the lead on the NPI process. They set that process and control it all the way through. It allows them to enjoy lower risks, greater transparency into the situation, and a better alignment between the product design & pricing (for successful sales) and what production is capable of (for low cost, high quality, and few delays).
Most small companies that don’t have extensive experience manufacturing new products see the NPI process as an expensive proposition. They often reject it altogether, and they come back to it later after they have suffered through ‘production hell’.
Our main purpose for this guide is to help hardware startups understand the concept of NPI (New Product Introduction).
NPI can represent over 50% of the R&D cost for a new product.
Surprisingly, small companies always think they can skip it. They focus instead on product design and on marketing, and they count on the manufacturer to “do what they are good at”, which is not always a wise choice. The result, in many cases, is an unsuccessful project and heavy losses.
Investing in improving the design, production & testing processes at the outset maximizes the chances of getting good products on time. Inconsistent quality, non-compliance to safety standards, and long delays can kill your brand.
Now, let’s say you have already worked on your design and your sales projections. You have a budget and you can’t stretch it. What can you do?
You can roll the dice and hope all comes out well in the end. Sometimes it does.
Or you can make a second budget that includes a smaller first order or a simpler product. Look for an engineering company that can help you and is familiar with China manufacturing. Select a suitable contract manufacturer.
Doing the NPI process well requires a vast array of skills. Use your supplier’s internal competencies as much as possible, as this can save you substantial money. If they don’t have the resources to take on some of the work involved, or if you need someone to drive the process and review the milestones, work with experienced engineers.
You are not alone.
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- 5 Steps for Producing a Customized Product in China
- NPI Process [Glossary entry]
- New Product Introduction [Solution]
- Prototype development [Solution]
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