20141111 tinker tuesday prototype to product
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Transcript of 20141111 tinker tuesday prototype to product
Prototyping
Mark Wong
Production
www.omgbazinga.com
The path of
to
WHAT WE DO
WHAT WE DO
you’ve finished yourfirst
Congratulations,
The push into prototyping. Or Not?
What’s NEW? What are the new product’s attributes and characteristics?
What’s Novel? What is new in the product that others on the market doesn’t offer?
What’s it For? What is the purpose or function of the new product? Your new offering must meet an unmet need
Does the technology exist? Do we need any new technology to produce the product? Are there any issues with the product concerning government regulations, safety, and environmental issues, patent infringements, or other possible hang-ups?
What’s gonna pay for it? Make sure you already have customers lined up, people who say “I want it!” How much will be the manufacturing cost, and how much will people willing to pay for the product?
Prototyping is a holistic context of bringing a new product to market, rather
than as a standalone process. A prototype developer should be able to
offer engineering expertise in all aspects of the process.
http://www.phillipsmedisize.com/sites/default/files/whitepaper/Prototyping%20White%20Paper.pdf
Technology Development Readiness levels (TDRL)
1 • Basic principles defined, technology conception and/or application formulated
2• Experimental technological design, technological evaluation and POC design
3
• Breadboard validation in a laboratory, technological development, completion of POC
4• POC prototype technology demonstration in the relevant environment
5• System/subsystem model development, pre-manufacturing considerations, system
integration
6
• Alpha and Beta trials by end-users, development iteration improvements, IP filing and protection
7
• System robust testing, commercial design incorporation. Manufacturing, packaging and labeling
8
• Actual system Launch, proven through successful operations, ready for full-scale deployment
9• Sales. Distribution standards, dealership, wholesaler, manufacturer maturity
10• Mature Technology with commercial sales
Research
Applied R&D,
Demonstration
Pre-market
Manufacture
Commercial
Deployment
Post-market
Surveillance
The Path to Product – TRL1 to 4
http://www.gidcompany.com/blog/product-prototype-development-2/product-prototype-development-tips-to-get-started-with-
your-new-product-prototype-development/
http://www.phillipsmedisize.com/sites/default/files/whitepaper/Prototyping%20White%20Paper.pdf
Breadboard prototype (TRL2)
Mock-ups and sketches (TRL1)
Physical Proof-of-Concept (POCs) (TRL 2-4)Digital to physical functional replicas that meet specifications. Iterative stage.
POC to POV, robustness testing, (TRL4-5)Transforming the Physical into the Functional.BOM finalization.
Alpha, Beta testers in actual environment (TRL 6) Pre-manufacturing considerations, preparation for market entry
Types of Prototypes
Breadboard prototype• Basically a working model of
your idea
• Basic function
• Demonstrate functionality
and communicate your idea
to potential model makers or
manufacturers
Presentation prototype
(Proof-of-Concept) POC• representation of the product as it
will be manufactured.
• Used for promotional purposes
• Must should be able to demonstrate
what the product can do, but it is
not necessarily an exact copy of the
final product.
• sale price, materials, manufacturing
costs, marketing, safety factors,
• Sales and distributed, and the profit
margin. If you plan to license your
invention to a manufacturer, you
can often do so with a model."
Pre-RTM prototype• This type of prototype is for
all practical purposes the
final version of the product.
• However, keep the physical
appearance aside for a
while and test the
functionality, because if it
functions well, then you just
have to polish the
aesthetics.
• Alpha/Beta testing in this
phase
You must first
The lesson is
WORKS
SIMPLE
PROVEthat your technology
before going into manufacturing
consistently
Iterate. Iterate. Iterate.
Product Lifecycles Affect Revenue Sensitivity to TTM
http://info.arteris.com/blog/bid/64100/Calculating-Late-TTM-Revenue-Loss-Part-2-Industry-Product-Lifecycles
BuildBuy $
Considerations• increasing functionality
• Increasing complexity
of new technologies
• More product features,
certification
• increased
performance pressures
• Time to market pressure
• Can you build it
quickly?
• Does the technology
change rapidly?
• Motor vs Processor
• Can a ready-made
module do the job
specification?
http://player.vimeo.com/video/110359218
$
BUILDBUY Integrated power and functionality Quick plug-and-play Tested operation Parts that quickly go EOL/NRND Faster time to market (TTM)
Custom specifications Smaller surface area Flexibility of component parts and
suppliers Optimized design (power / signal)
Larger surface area, may not be power optimized
Redundant component sections Expensive (more manufacturer
intermediates)
Requires iterative testing Selection Integration manufacture and test Longer time to market (TTM)
• TRL 2-4• No expertise• Test various options quickly• Iterative prototypes for POC
• TRL 3+• Experienced and capable design team• Your company can retain the technology
resources for the duration of numerous iterations during the product life cycle
Accelerating Product time-to-market
http://www.kodak.com/global/mul/business/solutions/files/accelerating_product_time.pdf
Product
Part 1 Component 2 Component 3
Component 4 Component 5
Reduce the number of custom components
Part 1 Component 2 Component 3
Component 4 Component 5
you’ve reachedCongratulations,
TRL3/4
New considerations, New headaches
Bill-of-Materials (BOM)How many parts are in your product? Open market or custom fit? Your factory partner isunlikely to share the cost breakdown, so you’ll need to tap into every network you have tocompile this due diligence and decide if that (insert potentially-unnecessary-but-cool-part-you-cannot-live-without here) is really worth it. Packaging, screws, manuals, everything.
Key component riskIf your invention or prototype relies on one specific unique technology, is it a single unique-selling-point? Can it be copied or replicated easily? If not, why? If yes, why? Can you use analternative? Is there a cheaper alternative? E.g. Arduino vs a cheaper microprocessor
Stand-alone modules VS custom designUsing existing standards, development kits may not translate well into a final product.
NRND / EolNot Recommended for New Designs. End-of-Life. Do not use these parts in any part of yourBOM.
New considerations, New headaches
Proof of ValuePrototype vs cost to manufacture. Pull out your cash-flow statement. The cash-flowstatement? A great prototype will tell you if you can make the product; the cash-flowstatement will tell you if you should. Before production, you must understand the numbers ofhow your prototype translates into a manufactured item.
SuppliersSpecific component? Note the lead-time? Costing. Ask a trusted network for referrals. Visitthem, and ask for samples, if the component is obscure, maybe you should use an alternative.
Potential to scaleCrowdfunding projects have a wealth of case studies for learning what it takes to scale. Whatwill delay the prototype? Missing deadlines due to unforeseen complexities in manufacturingcosts associated with scaling from prototype to production. Do trial manufacturing runs.
Customs, export restrictionsBatteries, FCC, CE, radio-communications will hamper international couriers / freight
What you must do – TRL3+
Define your specifications
Write down all your product specifications and requirements. This is the first step in
Quality control.
Make robust prototypes that can scale
Perform proper prototyping. Make Proof-of-Concept and Design Prototypes. Make
in small quantities, making 10 to 100 of them will highlight potential problems in
manufacturing. Implement design for manufacturing principles into the Design
Prototype.
Take ownership
Do not outsource a design iteration. Take ownership of your design and sign off on
all design changes, only you know what’s best and you must know everything in
your prototype.
Prototype Verification (POC to MVP)
Ensure that the design is proven and consistent in performance prior to production
kick-off. Identify your Minimum Value Product (MVP), your POC is now your pre-
MVP.
If you are creating a product from your prototype ideas..
http://prafulla.net/wp-content/sharenreadfiles/2013/07/480546/how-start-a-startup-infographic.png
Tools are important, but not everything
Do not buy cheap tools
you’ve reachedCongratulations,
TRL5+The Path to a
Let’s talk about
Is only the beginning
product…
economicsIf you are taking your product design into production tooling…
Short break…
http://i.imgur.com/fCRiSkG.jpg
Develop supplier relationships
http://i.imgur.com/fCRiSkG.jpg
Intangibles can only be seen in personManufacturing fingerprints - Nobody pays for new goods that look used. This unexpectedquality problem cost us time, money, and relationship tension with the factory.
Appearance and PackagingIt’s practically its own product. Reprints, poor packaging that cannot survive shipping,mishandled appearances will affect sales. If you need to ship goods almost any distance, youneed to protect them with inside boxes. This cost is low, but if your factory partner isn’t on top ofit, you will receive damaged goods that you own and cannot sell.
http://i.imgur.com/fCRiSkG.jpg
http://i.imgur.com/fCRiSkG.jpg
Selling price of my products?
Value$ Pricing, market share, brand awareness
Pricing
Cost-plus, Competition-driven, mROI, Cost-in-UseValue-in-Use. Must be value-based-pricing
Minimum Order Quantity (MOQ)Economic Production Quantity (EPQ)MOQ
PO (Purchase Order) + Volume BOM + Setup time +
Tooling + labour + profit margin + Freight + tax + transaction costs
Value of my products?
Price: $1.00
~300’ length
~$0.003/inch.
Cost to hang a poster: $0.01
Price: $5.00
12 strips
$0.416 / strip
Cost to hang a poster: $1.66
166 Times the cost!Consumers will always compare with existing products
http://www.slideshare.net/Brioneja/value-in-use-analysis-for-new-product-introductions-2176479
http://i.imgur.com/fCRiSkG.jpg
Pre-pre-kickstarter sales.Good idea to sell initial batch prototypes to your beta customers. This will gauge
actual market need / desire and will also generate an initial source of funds for your
first production batch deposit.
MOQ / EPQ
Quantity
Total Cost
Holding cost
Ordering costs
Annual Cost
Optimal order
Minimum total cost
http://flylib.com/books/en/3.287.1.217/1/http://home.ubalt.edu/ntsbarsh/business-stat/stat-data/forecast.htm
Optimal Selling price (single product type)
Time
Sales
Cost Price
Total
Volume
Category
Maximum publicity Costs
($)
Competitor
Entrant
Selling Price
Break-even region
Product maturity or novelty decline
Assuming products can be shipped to retailers
Perceived vs Actual Value – Identifying MVP
Price
Benefit
Manage your customer’s expectationsPerceived value affects purchase decisions
Perceived
ValueBrands. Image. Accessories..
Product
Features
Neutral Customer
expectations
Customer’s
expectations greater than
product benefit
Product benefit greater than
customer expectations
Feature 1 Feature 2 Feature 3 Feature 4…
MVP MVP+
Absolute price/unit is irrelevant. We must compare cost in use and value in use.
Multiple run Average cost curves
Cost/Unit
Output - Units / month
long run average total cost curve (LRAC)
Minimum efficient scale (MES) or MAC (minimum average cost)
1/3 MES
1/2 MES
Diseconomies of scale, rising LRACEconomies of scale, falling LRAC
http://tutor2u.net/economics/revision-notes/a2-micro-economies-diseconomies-of-scale.htmlhttp://marketingscience.info/assets/documents/205/10743.pdf
Selling price of my products?
BOM @ MES_EPQ
BOM @ MOQ
4-10x BOM
Bill of Materials @
Minimum Efficient
Scale at Economic
Production Quantity
Now you know how much it
costs per unit of your
prototype/product-to-be
Bill of Materials @
Minimum Efficient
Scale at Economic
Production Quantity
Your MOQ is usually your
biggest startup cost!
Suppliers have low profit
margins and must produce
large quantities to break-even.
Return-of-Investment
(ROI)
• SHIPPING FULFILLMENT
• Taxes
• international delivery
• transaction cuts
• TTM (Time to market)
• Iteration
A good estimate will be 4-10
times the selling price of your
BOM.
Ask your customers if that is a
fair selling price.
Reorder point – production and consumption
http://home.ubalt.edu/ntsbarsh/business-stat/stat-data/forecast.htmhttp://flylib.com/books/en/3.287.1.224/1/
Time
InventoryImperfect Quality / Defective goods
Safety stock
Re-order point
Delivery
Lead time
(Avg demand x Lead time ) +
Safety Stock = Reorder point
Managing Defects
http://leardon.com/how-to-successful-product-change-3-tips-for-product-change-management
Product defect severity can be broken down into four categories:
LowVery limited customer impact. Low severity defects should only be fixed in the early
prototyping phases and should be ignored in all later stages of the lifecycle.
MediumModerate customer impact. Medium severity defects should drive changes the
early stages of the product development lifecycle but should not be resolved
during production.
SeriousHigh customer impact. Serious defects should be fixed as soon as feasible and
rolled into prototype testing or production.
CriticalSafety or regulatory issue. Critical defects should always drive an immediate
change and the production line should be shut down if the product is in
production.
http://i.imgur.com/fCRiSkG.jpg
http://i.imgur.com/fCRiSkG.jpg
Shipping, customs and taxAt some point, you’ll need to get your goods from the factory to somewhere else. Whether youuse a plane, train, truck, or ship, Before that, unless your factory partner is within driving
distance, you will be doing a lot of business with FedEx to get samples back and forth. It doesn’tsound like much, but will add up.
http://i.imgur.com/fCRiSkG.jpg
http://leardon.com/product-development-considerations-for-2012
Summary
If you are creating a prototype from your product idea (TRL 2-4)
• Write down all your product specifications and requirements prior to creating a
prototype .
• Perform proper prototyping. Make Proof-of-Concept and Design Prototypes.
• Select the best supplier who can take you from the beginning to end of the
product development lifecycle.
• Take ownership of your design and sign off on all design changes.
• Implement design for manufacturing principles into the Design Prototype.
If you are taking your product design into production tooling (TRL 5-6)
• Know the price at all order quantities.
• Decide on the best place to manufacture your product with the best suppliers.
• Properly qualify the product using Production Prototypes.
If you are starting to produce inventory of your product (TRL 8-10)
• Sign off on all manufacturing and design changes.
• Buy only the quantity of products that is necessary for immediate sales.
• Don’t Pay until quality is confirmed.
The Pebble Case study
2009 2012 2013
• Production tooling • Large component order• Global Bluetooth
certification• Late deliveries• Failed Quality Control
$10.26M on KickstarterFebruary 2012
CustomersReceived their products
inPulse
$375,000
Y-combinator
The GoPro Case study
2002 2012 20142011 2013
2008 - Digital HERO 5
2007-’08 2010
Founded
Competitor
Entrants
How can we help you?
• Consultation advice
• Prototyping services
• Dev boards to custom
electronics
• Custom projects
• Custom enclosures
• TRL 3 to 6
• IdeaBins
How do we keep costs low?
Hi Volume, Low Mix
Hi Mix, Low Volume
Seriouslyl o n g j o u r n e y
Before you will see
a return of your
investment
But the rewards and returns
Worth itare well
If not nowThen when?
@fusion2x
@fusion2x