Getting Ready for Manufacturing...Getting Ready for Manufacturing Creative Decisions and Design....

@dragoninnovate /dragoninnovationwww.dragoninnovation.com

Getting Ready for ManufacturingCreative Decisions and Design

SCOTT N. MILLER

DRAGON INNOVATION CEOBOLT CO-FOUNDER

Georgia Tech September 25, 2019

1. Review Manufacturing Process2. Understand Power of a well structured Bill of Materials (BOM) 3. Deep Dive on the Manufacturing Triangle

• Cost• Schedule• Quality

4. Unlock Manufacturing Insights

Learning Objectives

The Journey to Dragon

● Provide transparency and education on how the process works● Reduce costs and increase efficiency via a manufacturing platform● Simplify communications and bridge gaps● Create high value connections throughout the ecosystem

Dragon’s Approach

DFM Videos on blog Factory RFQ App Factory Selector

Some of our Customers

“Dragon helped us take our crowdfunding success and translate it into shipping more than 100,000 Pebbles in just over a year.”

ERIC MIGICOVSKY FOUNDER of PEBBLE

“Dragon’s depth of institutional knowledge about manufacturing accelerated our planning efforts.”

STEVE CHAMBERSCEO of JIBO

“We've been working with Dragon from the moment we had a prototype and wanted to begin the manufacturing process”

JONATHAN FRANKELFOUNDER & CEO of NUCLEUS

AND MANY MORE

Why is Manufacturing Hard?

Manufacturing is Continually Evolving

● New TechnologiesNew Locations

● New Tariffs● New Competitors

In manufacturing there are many “Unknown Unknows”

● COGS, tooling and manufacturing costs● Lead times● Permanence of Quality● Iteration cycles● DFMA● Factory Selection and Management● Team Scalability● Schedule & Project Management● Specialized skills (ME / EE / SW/ Q / SC / Logs)● Retail Channel

Bi-Directional Information Flow

Design Product Send Data to CM Build Tooling

Mold Parts Assemble Product Inspect & Ship

Communication is a Big Deal

1 10 100 1K 10K 100K 1M 10M

Tools/BOM

Quality Plan

Schedule

Hand CNCRubber Mold

3D ProtoLabCNC

Arduino/PI Pre-Certified Module

Local Shop

Optimized for speed & Ease of development

Primitive or Absent

Blind Spots

Domestic CM PRC-CM Owned Factory

Optimized for cost & stability

Mature

New HW starts here Apple starts here

Existing RelationshipNeed to find & Vet & Match

Tool(1) Tool(N)

ASICChip w/ Cert

EnterpriseExcel

How the Process Works from 1 to 1MIf you’re not Apple

1 10 100 1k 10k 100k 1M 10M

Tools/BOM

Quality Plan

Schedule

Hand CNCRubber Mold

3D ProtoLab CNC

Local Shop

Primitive or Absent

Blind Spots

Mature

Tool(1) Tool(N)

ASICChip w/ Cert

EnterpriseExcel

Scaling is Complicated and Dangerous

1 10 100 1k 10k 100k 1M 10M

Tools/BOM

Quality Plan

Schedule

Hand CNCRubber Mold

3D ProtoLab CNC

Local Shop

Primitive or Absent

Blind Spots

Mature

Tool(1) Tool(N)

ASICChip w/ Cert

EnterpriseExcel

Simplify and De-risk Manufacturing

The Manufacturing Triangle

Manufacturing Triangle

The Thing you Designed

The Thing People are Going to Buy

What’s a BOM

● Complete, detailed precise list of ingredients required to build finished product

● Organized hierarchically into sub-assemblies● Includes fabricated & purchased parts, electrical components, manual &

packaging

What to Include?

1. Generala. Part Nameb. Internal Part Numberc. Vendord. Vendor Part Numbere. Usage (Quantity per Unit)f. MOQg. Lead-Timeh. Pricei. Extended Price

2. Mechanical Partsa. Fabrication Method (and

relevant specifics)b. Materialc. Part Geometric Volumed. Bounding Box Dimensions

3. Purchased Partsa. Specs

4. Electrical Partsa. Toleranceb. Packagec. Ref Desd. Sourcing Requirement

(Consigned, Assigned, AVL, Open)

e. Compliance (RoHS)5. Manual and Packaging

a. Giftboxb. Trayc. Manuald. Polybagse. Master Cartonf. Tapeg. Shipping Label

Why a BOM is Important

FACTORY SELECTION

PRODUCTONPLAN

SCHEDULE

CASH FLOW

VENDORSELECTION

VERSIONCONTROL

OVERAGES

SUPPLYROBUSTNESS

SYSTEM OFRECORD / IP

Hierarchical Structure for Manufacturing

Flat BOM for Supply Chain

Costs (Fixed & COGS)

Company gross profit

Distribution Costs

Materials

Markup/Profit

Packaging

Warranty

Customs/Shipping

Model Price Break Down

Retail markup, factoring, 3PL logistics, etc.

Apple ~50%Laptops ~25%

5% of sales

$0.3 to $2.00

1.5-3% of Material

9% - 25% of Materials/Labor

$0.50-$5

Accessories $0.50-$5

10% of total

Engineering

Pilot runs/samples

Tooling

Testing/testing equipment

Production line fixtures and test fixture

Certifications

Non-Recurring Engineering (NRE)

TOOLS TO ANALYZE & ITERATE WITH FUZZY DATACOGS Estimates, Cash Flow Planning, Supply Chain Robustness Analysis, etc.

Scenario 1: Baseline

Initial Tooling

Long-LeadComponents at MA

ProfitableRevenue

Working Capital Required

100% at MAR

COMPONENT TERMS

XF (Net 0)

CM TERMS

Net 30 from Delivery

CUSTOMER TERMS

Sea (5 Weeks)

SHIPPING

WORKING CAPITAL: $250k

Scenario 2: Improve Component Payment Terms

0% at MAR

COMPONENT TERMS

XF (Net 0)

CM TERMS

CUSTOMER TERMS

Sea (5 Weeks)

SHIPPING

Scenario 3: Improve Factory Payment Terms

0% at MAR

COMPONENT TERMS

Net 30 Days

CM TERMS

CUSTOMER TERMS

Sea (5 Weeks)

SHIPPING

Scenario 4: Improve Customer Payment Terms

0% at MAR

COMPONENT TERMS

Net 30 Days

CM TERMS

On Delivery

CUSTOMER TERMS

Sea (5 Weeks)

SHIPPING

Scenario 5: Air Ship

0% at MAR

COMPONENT TERMS

Net 30 Days

CM TERMS

On Delivery

CUSTOMER TERMS

Air (2 Weeks)

SHIPPING

Cash Flow Comparison

SCENARIO 1: BASELINE

SCENARIO 5: AIR SHIP

WORKING CAPITAL DIFFERENCE: $154k

Schedule

Product Development from PoV of Entrepreneur

Ideation

Design

Engineering

Design Validation

t of m

Cost estimate & cash flow DFM review RFQ and factory selection MSA Quality planning Custom part sourcing

DFM and tooling Part sourcing Test equipment/plan Durability and life

testing Production forecast Material planning Packaging

development

Shipment audits Cost reductions Renegotiating MSA Quality

improvements Warranty analysis Factory audits

t of m

Planning

Pre-Production

On going production

Three Phases of Manufacturing Activities

Manufacturing Phases

EP1/EVT - Engineering Pilot / Engineering Validation Test:• Build and test several units that function as expected• Learn about new requirements from users

EP2 -> FEP / DVT - Design Validation Test:• Fix items from prior phase• More testing• Achieve final aesthetic

PP / PVT - Production Validation Test:• Build and test a lot of units that that function as expected• Final ID• Move from engineering to production floor

t arri

Typical Manufacturing Schedule

46 weeks

Long MSA negotiations

Late design release

Custom designed components

Certification, MA, Late design changes, Life testing, Packaging

Material shortages

Quality

Types of Quality

Use/abuse

• Dropped• Vibrated• Tension / Torque• Pressed• Actuated• Heated• Frozen• Rubbed• Handled• Spilled coffee• Used in new & unique

Production

• Miss-assembled• Failed parts• Programmed wrong• Packaged wrong• Wrong color• Old parts• Testing equipment failures• Obsolete parts

• Shipping• EMF• Safety• ITAR• Rohs• California Prop 65• CE• UL• Recall risk

Quality

• Definitions:• Quality = Customer Satisfaction = Performance –

Expectations• “Fitness for Use”

• Incoming Quality Control: Use good ingredients.• Build and test along the way. Use sub-components.• Statistical Process Control (SPC) / Yield. Find out now,

not later.• Sample Testing: Temp/Humidity; Transportation; Drop;

T/T; Small Parts; Heavy Metals; Compliance; Functional; Life. How do tests match reality? ISTA-3A.

• Final Inspection / Acceptable Quality Levels (AQL)• Walk the line. Get your hands dirty.• It is much easier (and less expensive) to make changes

before Production Start.• What happens if something fails?• Will make or break a product … and a Company!• Quality is rarely considered in the engineering phase by

startups due to schedule, cost and technical pressures.• Watch out for the Unknown Unknowns.• Strong indicator of long term success, etc.• Can you answer the question “How do you know the

product is good”?

The Birth of Roomba(and iRobot)

EARLY TIMELINE

• “IS Robotics”• $5M Revenue from 13 Business Units• No idea what we wanted to be when we grew up.

• IS Robotics -> Modem? -> Robot to get Beer | Clean floor• SC Johnson “Clean” Project ($$$)• Paul & Joe -> Sheet metal Dust Puppy• Hasbro JV in parallel• Launched first version in 2002 (2 years late)

ENGINEERING

• Small & close team in Somerville.• State of the art - bare metal + Masked ROM.• Set $50 COGS -> $200 Retail.

• Stuck to it.• Battery $13, so had $37 for 5 motors.• Zero sum game.

• ID’d key tech challenges as mobility and efficient cleaning.

TEAR DOWN

• Mobility (Wheels, Virtual Walls, and coverage algorithms / navigation)

• Cleaning (Brushes, Bins, etc)• Power (Battery, Charging, Docking)• UX (How to specify room size)• Safety (Wheel drop, cliff sensor, etc)

Roomba Sub-Systems

• Cleaning / Cheerios• Side Brush• Lift mechanism / battery (progression)• Brush cleaning / hair• Vacuum / redirector / hidden compartment• Safety: Wheel drops, CG.• Mobility: Wheels on diameter.• Navigation / systematic neglect. Odometry• Battery

Teardown

• Wheel encoder dust• Blue light special• R1B Fly paper

Disasters

How We Enabled Luck

• Didn’t know how hard it would be (neither did our VCs).• Early and people loved it (5x returns).• Based in China and embedded in the CM. • GNT / Fri mold change.• Always Nimble.• Worked ridiculously hard. Belief in team and product.

@DragonInnovate /DragonInnovationDragonInnovation.com

Scott@DragonInnovation.com

Getting Ready for Manufacturing...Getting Ready for Manufacturing Creative Decisions and Design....

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