Going It Alone Part 3: Inside the Factory Walls
Part III of the Going It Alone series will answer the question: What is a factory and how can I tell one from another? I will answer the question from a consumer electronics perspective and I will assume an audience that has little or no prior knowledge of manufacturing. The purpose of this article will be to try to introduce the burgeoning entrepreneur to the basic components of electronics manufacturing in China.
I will do this in the context of manufacturing the simple electronic product shown below – a digital kitchen timer that we call the Klip!. This is an item that we sell at The Container Store chain and at gourmet stores across the United States. I chose this product because, while relatively simple, it still encompasses all of the major facets (noted in the white boxes) of manufacturing a mass-produced electronic item of greater complexity. I’ll start with a little background, then I’ll give a very basic overview of each manufacturing sub-process and I’ll conclude with a summary that will serve to make your first visit to a third-party manufacturing facility more effective and productive. Armed with the knowledge from this post you should be able to walk into an Asian plant for the first time and have the basic working knowledge that you need to converse intelligently about the creation of your item.
Although the scope of my company’s products is fairly narrow, my personal background in manufacturing is more broad. I have visited upwards of 50 plants both here in the United States and in China which include facilities as diverse as the GE Locomotive factory in Erie, PA to the Dunlop Tire plant in Buffalo, NY to the massive VTech Electronics factory in Asia. I am knowledgeable of lean manufacturing techniques, Poka-Yoke and Kaizan events just to name a few. I mention these subjects only to give you a taste of how deep the topic of manufacturing can get. As someone who is planning to contract with a third-party rather than build a factory of your own, these subjects are more academic in nature than you need to know about for now.
Origins of a Factory
One of things that I like about working with the factories in China is that big or small, I am typically interfacing directly with the owner and director of the facility. I like these people because they are, like I am, entrepreneurs. I respect these people because as difficult as it is to start and run a company in a country that encourages and embraces capitalistic activities – try doing it in a country like China. Many a long car-ride I have spent trading war stories with these factory owners – one entrepreneur to another. I know that many of you who read my first two posts draw your line between America and China, but I draw it between the entrepreneurs and the corporations. We live in a global economy. These individuals work as hard as anyone I’ve ever met, put people to work and make a life for their employees and their families. To me, that is as honorable a pursuit in China as it is in this country. More on this topic at a later date – for purposes of this article I plan to focus on the mechanics and leave further discussion of the culture for another post.
Take a moment to put modern-day electronics in perspective. If you’re under 20 years old, you may feel like inexpensive electronic gadgetry has always been as ubiquitous as it is today. However, I’m 34 and I still remember the mechanical alarm clock that my parents had which displayed digital-like numerals on a series of “leaves” which “flipped” by gravity, as a mechanical gear-train churned away to keep the time. This product predated the advent of the inexpensive, mass-produced integrated circuit (IC) and related display technologies (7-segment LEDs).
Of the factories that American Innovative works with, the oldest ones are a mere 25-30 years old and the youngest one is no older than American Innovative itself – about 7.
Admittedly, the young factory is not as sophisticated as the older factories but, much like the older factories, it began primarily as an assembly house. Over time this factory has (and will continue) to acquire machines and technology that will allow them to bring more and more functions in-house, that are currently performed outside. Perhaps other functions will never be brought in-house. While we tend to view in-house injection molding (see below) as a sign of a more mature facility, we work with at least one very high-quality facility that continues to outsource this, presumably by design.
Assembly is what most of you probably think of as the heart of the factory, and it is. All related components have either been acquired from outside sources or manufactured elsewhere in the facility and they come together in long rows of moving conveyor belts and – yes – young, predominantly female, wage-workers which perform a solitary function on the line (more on who these people are in a future post).
The lines are setup such that each worker performs a very specific task, which is carefully planned and designed in advance. The details of that tasks are outlined on a sheet of paper which hangs alongside the station. More recently I’ve seen a more sophisticated setup in which flat screen monitors replace the papers that you observe in the photo here.
A single assembly line step might be to use an electric, torque-limiting screwdriver to secure a PCB (Printed Circuit Board) to a plastic, injection molded base. Another worker might then solder two wire leads to a speaker and a third might be an in-line QC (Quality Control) person which uses a harness to connect power to the partially-built product and test the speaker.
SMT PCB Manufacture
So where does said PCB come from? Printed Circuit Boards are obviously the lifeblood of any electronic product and, not surprisingly, the technology used to create them has come a long, long way. There are two common types of PCB – through-hole and SMT. If you’ve ever assembled a circuit board from a kit using a soldering iron then you’re familiar with through-hole technology. Wire leads from individual components are hand-fed into the PCB (etched previously). The leads are then soldered and snipped. Some components are still done in exactly this manner today but more recently newer, less manual-intensive, technology has replaced this process. SMT stands for Surface-Mount Technology.
Look closely at the photo above. This is the PCB that is the core of American Innovative’s Klip! kitchen timer. The board above is an example of an SMT PCB. On the far right you see a shiny metal cylinder which contains the quartz crystal responsible for running the clock. This is the lone through-hole component on this board. Next to that you can see two white wire leads which run to the speaker. There are a couple of wire jumpers and the battery contacts on the left but other than that the remaining components are surface-mount technology. The small, rectangular boxes are various resistors, transistors or diodes which comprise the circuit.
These special SMT components are placed on the PCB using a machine which literally grabs the components one at a time and places them on the board using a guided positioning system or in some older machines I’ve seen (like the one picture at right) by moving the PCB itself around, with the feed mechanism stationary. As an aside, I’ve even been to a factory that makes these machines – there happens to be one in upstate New York. If you ever wanted to know what the machine is that makes the machines that make the machines? Well … it’s us.
There are countless videos on YouTube that will allow you to see an SMT machine in action. Here’s one that I located randomly. Next the boards are run through a machine called a wave solderer that essentially solders every lead all at once, thereby replacing the extensive manual labor that used to go into the creation of a similar board made using through-hole technology. The SMT boards are smaller and more reliable.
Looking at the photo of the PCB again, you’ll notice that I haven’t mentioned anything about what that ubiquitous little black blob is. That is a blob of epoxy. Beneath the epoxy is the board’s MCU (Micro Controller Unit). The MCU is “stitched” to the board in a process that looks not unlike sewing with a sewing machine. A worker aligns the IC bonding machine with the receiving area of the PCB using a high-power digital magnifier and then the rest of the process is completely automated. Finally a blob of epoxy covers the delicate MCU pins to prevent damage and deterioration.
“One Word: Plastics”. Injection molding is the process by which hot, liquefied plastic is injected into steel (or sometimes other materials) cavities called moulds, under high-pressure. There is a real art to injection molding that includes proper design of the parts themselves, the moulds that form the parts and the various parameters that can be tweaked during the injection process itself. For now, suffice to say that all of the plastic components of your product are made – one at a time – using this process. In the photo at the very top of this post, this would include the white housing components, black belt clip and battery door, translucent LCD cover, rubber buttons and even that tiny, little white spec which is the “Set” button from the rear of the unit. One or two workers typically operate the station. A first worker runs the injection molder, removing each newly molded part by hand. A second worker removes flash – excess unwanted plastic – from the finished part using a knife. The final parts are carefully stacked in bins for transport to the assembly area mentioned above or, if injection is an outside process, for shipment to the main factory.
Tool & Die Making
Closely related to injection molding is the tool shop. Again, not every factory has injection molding in-house and even those that do may outsource the creation of the steel tooling to an outside specialty house. Creation of the steel tooling is one of the longest stages of the product design process – typically taking 6-8 weeks from beginning to end. Steel blanks are machined using CNC (Computer Numerical Control) Machines or by another process called ECM (Electrochemical Machining). In another post perhaps I’ll talk a little about the design of plastic parts which, in addition to serving their intended purpose in your product, need to be designed in such a way that they can be easily injected. Smart design of your plastics will allow you to avoid features that are difficult to mold, resulting in mechanical apertures called “actions” which make your tools more complex and more expensive. A basic understanding of plastic part design is important for this reason. As someone new to this world, you may have a state-side company design a basic CAD database and they may not do it well. The Asian factories you ask to quote your part will typically not question your design and you may get back extremely expensive quotes (thereby deflating your entrepreneurial spirit) for a part which, if designed, slightly differently may have resulted in tooling charges a fraction of the cost. Even slight knowledge – “talking points” type of knowledge – of every aspect of the design of your specific type of item will go a very long way. This is akin to the consumer who gets ripped off by the local garage because they don’t understand that cars no longer have carburetors, distributors or batteries that need refilling. A basic knowledge of your car may save you a lot of money at the repair shop.
Painting & Deco
Painting of plastic parts that are not molded in color is typically done using masking and spray booths. One of the nice touches that we added to the Klip! timer is a rubberized paint on the rear housing, belt clip and battery door. This rubberized paint makes the product nicer to hold and gives it a higher-quality appeal. It is worth noting, that this rubberized paint is not without a cost. I believe the upcharge is something like 10-12 cents, which by the 4x rule, is approximately forty cents at retail, but we felt it was important. Determining your target retail price point and understanding whether or not you can make your item for a cost that will allow for that retail price is extremely critical and should predate any discussion with designers or factories. Alas, this subject is again a topic for another day.
“Deco” refers to lettering or other graphics which are applied to the product using processes known as pad-printing or silk-screening, to name two. I won’t get into the details of these processes but typically the results from silk-screening are better but the shape and size of your part may limit your ability to use this process in some cases. Pad printing is a more flexible alternative in that case.
Quality Control (QC)
Quality Control is such an important topic that I can not possibly address it in a paragraph or two. Suffice to say that QC is not a single “station” – it is a thought process, a way of factory life and something that takes place (or should take place) throughout the plant. There’s inbound QC, in-line QC, outbound QC and third-party QC. For today, your take away should be that if you visit a potential manufacturing partner you are going to want to grill them on what their QC process is and any good factory will want to show-off their attention to this aspect of the manufacturing process.
What To Look For
The day of your visit has arrived! Above, I’ve outlined the major processes that go into the manufacture of your garden-variety consumer electronic product. So what does all this mean to you? How are you going to apply this knowledge when you walk into that Asian facility for the first time. The key is to think about the steps that I’ve outlined below. Think of assembly as the hub of the factory. How many assembly lines are there? More importantly, what percentage of them are actually in use during your visit. If there are a lot of idle lines that may be a red flag. Find out why. Ask the representative who is giving you the tour how many workers the factory has. They will give you a range. The reason for this has to do with the seasonality of the business and should not be cause for alarm. Dig deeper – ask how many of the total workers are on the line, in QC, in the engineering department, or in other disciplines. A mid-sized factory (say 400-700 total workers) is probably a good size for a first project – not too big and not too small. That said, there are large factories that are willing to invest in small, new companies and there are new, smaller factories that are destined for greatness.
As the tour continues, make a note of which of the sub-disciplines mentioned above are present and which are not. Ask questions about this. If there is no injection moulding present, ask why. Ask who they work with (they may not tell you). Ask if they plan to bring it in-house in the near future.
Ask for numbers. One easy way to compare factories (even without visiting) is to ask things like:
- How many injection molding machines do you have?
- How many SMT machines do you have?
- Is IC bonding in-house and, if so, how many of those machines are on-hand?
- How many assembly lines are there?
- How many shifts do you run?
- What percentage of the year are the lines occupied?
Believe it or not, the marketing managers are used to being asked these things and will typically have the answers to these questions at their fingertips.
If examples of the factory’s items are not in the conference room where your visit will begin, be sure that you tour their showroom. Look at the items and the name brands (if they are visible – they often will be). Observe the complexity and quality of the items that are on display.
Try to meet one or more of the product engineers, if the engineering offices are adjacent to the factory. See how well the engineers speak English, if at all. Try to get a sense of who you will be working with from day to day. One single face-to-face meeting goes such a long way in a relationship that will take place over e-mail for months to come.
Finally, make sure you look around. How clean is the factory? How well organized is the layout? How happy do the line workers look? Observe how the director and the mid-level managers interact with the engineers and even the line workers. These sniff-tests will all serve to give you a sense of what the factory culture is like and whether or not this factory is a good fit for you and your project.
The factory will take you out to lunch and pay for it. Try everything except for the chicken feet. They may kid you but the factory reps know that Americans won’t eat the chicken feet and they’re ok with that – you will not offend anyone. I heard on the radio just this week that chicken feet go for 40 cents a pound in China and 2 cents a pound in the United States. Can you say arbitrage opportunity? Now you know what to pack in the available corner of your suitcase, before you depart. Good luck! You’ll do great.