Contract manufacturer contracts

We set up our own P+P line, because the CMs haven't been good on quality or delivery for small-run stuff. The business is very competitive so most CMs hire low-cost labor and shoot for high-volume stuff. There must be some smaller outfits that you could work with personally, but I couldn't name one.

Maybe you could hire the ME and such to do the detailed design, and manage them directly. They'd have to do what you say, and your customer wouldn't have to put them on the payroll. Programming is more difficult, and might be endless, so maybe they should try to in-house the code.

With me it's 50/50. Sometimes contract houses where things were initially rocky have come around and they started delivering much better product design. What is paramount is that they are willing to do design reviews and listen. If they don't, run.

If the product is complicated there is no choice other than having your own people. However, they do not have to be employees. Some of the most successful designs I've ever been part of were done with a crew where way over half of the engineers were contractors and consultants. What's key is loyalty. They have to stay in the relationship for years, ideally for decades.

What I'd discourage from is using college and university students too much because they don't have a lot of time, often can't work regularly and tend to vanish quickly. Also, no contracting engineers who are just between jobs and disappear the millisecond they receive a lucrative job offer. Nomads who move from company to company can also be a problem because they become almost unavailable once a new contract starts. Should ideally be true consultants.

I'm a little unclear on what you mean by "hire'. Do you mean find contract engineering as in consultants? Or do you mean hire as in put on the payroll? I can't see the latter unless you think there will be continuing updates or other products to be designed. I think consultants can be a good way to go if you can get commitments on the hours to complete tasks. There the problem becomes managing risk. I suppose you would need to work with people you know and can rely on. Do you have experience with other contract designers? Don't you know people you can work with?

I *am* the contract engineer of these arrangements and work hard to make the customer happy. Partly that's because I want them to be happy enough to be a repeat customer and partly it is personal pride. It is more than once I have done more work than contracted for to make the project happen the way it needs to rather than adhering to the original agreement. In the end it pays off. Maybe I've been lucky and not had clients that take advantage of it.

On the other side, I work with contract manufacturing to get boards built and have not found many problems. I have an outfit in PA that is close enough to drive to when needed and they try hard to make it work for me. Other outfits seem to do the work with a very arms length attitude. The work was ok, but they just don't provide anything extra to help me get working units I can deliver.

What I generally provide is a measurement concept, detailed feasibility calculation, circuit designs, and (often) a working prototype with data acq, control, and software. Customers can show that to money people and their own management, to demonstrate that the product can work.

I don't have a lot of mechanical design and fabrication capability, so my protos are usually built on small optical breadboards. (I have a hypersonic lidar sitting on my bench right now, on a 12 x 24 inch Thor Labs breadboard. I'm on the hook to ship it by the end of the year--wish me luck.)

The step from there to a product requires a bunch of optical and mechanical design, procurement, manufacturing, and test. Some outfits have in-house resources for that, some hire consultants, and some want to hand the proto to an outside firm for the whole productizing process, plus pilot production. That's what I'm trying to avoid if possible.

Cheers

Phil Hobbs

Trying to understand properly. You are designing a product that has mechanics and optics, but you are just designing the electronics along with a full system approach. I suppose you use some sort of off the shelf optics and mechanics for your proto?

This is very unclear. You list three things in one sentence and then say "this" is what you are trying to avoid. "This" is the latter, the outside firm working from your proto?

No real experience, the one time we went looking for a CE we found the price high, and wondered how you tell a good one from one not so good. (Besides plunking down your cash.)

You had one bad experience. It sounds like it might be worth your while to see if you could find a good CE place that you could work with. Then when your customer asks you'll have a recommendation.

George H.

My customers have used 2 CM companies with their attached CE departments. One of them has really impressive big-name references, whether the other one has mostly lesser-known SME customers. It seems that the best estimate for work quality was from a prototyping house guy who had worked with both of them, and knew the responsible project managers by name. My recommendation is to ask for references people in similar position to you.

I've also used small spezialized CE companies, but here the problem is coordinating the work. If the customer has a competent person to run the show, this could work ok.

Joerg commented about the combination of in-house people with contractors/consultants. I've also had excellent results with similar team when the people fit well together and may have already worked earlier for other projects. Relatively high level knowledge of all parts is an important aspect for long term business. You don't have to know all the details in-house, but you must know what kind of details there are and who to call.

And the difference between R&D and productization. In R&D you go where no one has gone before (your job) and in productization you do what you've already done many many times (CE/CM job). Get a CE/CM who has worked with at least as complex product as yours. You don't want to be teaching them and the end customer does not want to pay for extra iterations.

Hi, Mikko,

Nice to hear from you!

I'm leaning very much that way. My client wants to crowdfund the productizing part, which I've never done before, so it should be interesting. ISTM that the feeling of security you get from a 'firm' quote from the CE outfit is mostly an illusion anyway--what are you going to do when they start the overruns?

Cheers

Phil Hobbs

I guess I have only been on the management side of this relationship once. I was building a board set for a telecom application and the schedule was too short to do it all myself. In the end I found it very hard to both manage the project and get my own work done. I also found that working with someone is not much like having them work for you. Personalities can be very different in different roles.

I remember being on a CE team once where the guy in charge was a real putz. He was jerking the customer around quite a bit, mostly schedule delays because one of his friends was not getting the work done. Finally the customer sent a team from France to review our progress and one guy appeared not to speak English. When all our presentations were done they had everyone but our head leave the room. Turns out the guy who didn't appear to speak English was the boss and spoke English just fine. He had ripped our lead a new one and went on to set in place a number of controls to make sure we stayed on schedule from there on. Lesson learned, when working remote, make sure you have adequate monitoring.

I have done firm quotes before. How can you have overruns on a firm quote? When I have overruns I have to eat them. If the customer has overruns (spec changes) I sometimes eat those too, but at my discretion.

If the CE outfit overruns, it can either eat it or else just quit. They know that a startup is unlikely to be in a position to sue them.

Cheers

Phil Hobbs

Yup. Got the tee shirt on that one.

Cheers

Phil Hobbs

I remember going to Germany with the owner of AZ Microtek to discuss a design job for Bosch. The German's were pulling the switch to German from time-to-time then going back to English.

Then the owner of AZ Microtek spoke up, in German, he was born in

It was hilarious, the paled faces >:-} ...Jim Thompson

Being in a position where quitting would be the preferred way to go is very extreme. They would get nothing for the work they had completed. If they misjudge a design so much that it is better to just give up, they won't be in business long anyway.

I've never come across a CE outfit that didn't insist on progress payments. Have you?

Cheers

Phil Hobbs

Progress payments are typically based on deliverables. You get what you pay for.

Sure. But schematics and code aren't very transferable, especially when (as is common) they're hacked-up versions of a previous project. The next outfit could hack up its own in less time than it would take to fix up the first one's mess.

Cheers

Phil Hobbs

I had that happen with Dutch. It's a fairly rare language because of the small population so a group of engineers felt safe. All around me, speaking Dutch. Who in California could possibly understand that? Eventually I raised my head as if I hadn't noticed them before and said "Goede middag dames en heren". They almost froze ...

Or the couple in front of me at Tar-jay. In thick Bavarian accent they were making fun of some of the habits of other shoppers. So I greeted them from behind in the thickest Bavarian I could imitate. Their faces ... priceless.

In another situation I was meeting a group of potential Chinese customers for the first time. There was an older gentleman and three younger. One of the younger ones was doing the talking after introducing each of them. At one point, in order to show respect, I turned to the senior gentleman as I spoke and the rest took on a surprised if not horrified look. Sensing this was a mistake I returned to facing the one who was doing most of the talking. Much later it occurred to me that the senior gentleman didn't speak English and they were concerned I would find out. I suspect this was an aspect of saving face that is not so likely to happen with a western culture.