Disaster! Why is my production going wrong? Chapter 2

28-Nov-2018

Following up on the previous chapter, we will show you what more to look out for in order to guarantee a smooth production process.

Time is Money 

What are the dynamics of the delays discussed in the previous chapter? It is important to reiterate that Low Cost Manufacturers typically deal with multi-million-unit orders and your project barely registers on their production schedule. The factory floor will calculate a very long lead time as they need to fit you in between “juggernaut” orders. They cannot anticipate a good time slot as it all depends on the smooth flow of their big business.

Even worse, the moment another large client comes along, the production team will bump your order even more as they need the income, considering the shockingly thin margins. You get pushed down the line of priority and the LCM announces delays. Or worse, they let you know at the last minute even though production managers have seen it coming for several weeks.

To prevent conflict and with the best intentions, the LCM may decide to subcontract your project to keep in line with schedule. Unauthorized and undisclosed subcontracting almost always results in lost time. Many of the second-tier suppliers lack the know-how and engineering resources to complete your work.

You’re only as good as your quality

Many of our clients are surprised that LCMs tend to have a very small R&D team in relation to their operations. Experience is handed down and expertise rests on a handful of people. This is dangerous as most factories have a high employee turnover rate. The razor thin margins make it difficult to keep skilled labor and that results in quality fade and production delays. Expect your first delivery to be your best one.

LCMs also have limited funds to invest in equipment, technologies and processes. Suppliers may delay or even refuse projects late in the development phase once they fully understand the implications of your quality standards. The supplier’s standard production process may also not be able to consistently reach the required quality in which case they have to scrap a large proportion of defect products.

Chances are that the production manager decides that your order is too small to justify the effort of setting up production. Without your knowledge, he subcontracts your order somewhere else – very often a small workshop with mediocre quality, on-time delivery, safety and staff morale. While you are led to believe that production takes place at the LCM, work is actually done at a cheap factory with immature systems and very little staff support. You lose all control over inspection, quality standards, and protection on your expensive intellectual property.

Lack of Motivation 

Some Low-Cost Manufacturers are too focused on short-term performance at the expense of their employees. Senior management forces projects down the production ranks and while you are promised the world by an executive, your order ends up with a production team that doesn’t believe in the business potential.

They will agree with everything the executives propose, but during development, they are not motivated and do not provide sufficient resources. Telltale signs are a myriad of excuses for delays, design limitations and technical road blocks; they are “working on it” but stop answering your emails and phone calls, delaying your project till infinity (or until you cannot bear the costs anymore).

Enough about the inconvenient truth! We face the challenges with positive solutions

At CRE8, our strength is that we offer our R&D team and project management together with the manufacturing expertise of our partners. This gives our customers a true ODM experience without having to approach the Taiwan Mammoth manufactures (which also have problems with low volume orders but that will have to be addressed in another article).

Also, when it is time to scale up your project and increase orders, it is more efficient to transfer your hard work to a bigger ODM, as the mid-tier manufacturers use the same processes and documentation standards and already have established relationships with large scale manufacturers.

Yes, their prices may seem higher than the LCMs, but 20 plus years of experience has taught CRE8 DESIGN that the hidden costs, delays and project management problems explained in this article may end up to be much more expensive than anticipated. The bottom line is that, the LCM will provide a tantalizing unit price at the beginning of your project only to end up being more expensive at shipping time. Not to mention all the stress, international travel and macro-management you are guaranteed to go through during development and production (I can’t put a monetary value on that but its high … Very high!) That is why a knowledgeable project management team which foresees the pitfalls and has the best feasible solutions will add tremendous value to your production!

If you wish to know more about how we can weigh in to help facilitate your production process, we are happy to answer your inquiries! Contact us!

Read Chapter 1

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