Should I manufacture my own boards or outsource them?

Hi Mike,

many questions and there is no simple answer. How did you manufacture your add-on-boards ? Do you think you can handle the processes that go along with assembling SMT- and THT-Boards ? Before you start determine what you gonna do: - How many boards - what technology - in what time do you need them - what�s the skill now That might give you an idea what is needed before the first board is going to stock. One thing I can tell, for 150K you won�t be able to do it. As I said before on this forum it takes time to raise a business like that and drawbacks might be the pavement your road. But that shouldn�t discourage you, well investigated with the right people and the right support it�s always worth the efforts when there is a chance of ROI.

M2C

Wolfgang

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Mike,

I can only reiterate what Wolfgang has covered.

How have you manufactured these previously ? Were they small hand built batches and now you are ramping up production ?

Does the $150K include materials or is it free issue ? If a manufacturer supplies components as well, he will charge you a handling cost. OK, you won't have the cash flow problem, but you will have the logistics of controlling "failures". Does this include test / verification ?

It would be nice (on paper) to let someone else manufacture so that you can receive good sub assemblies, but there is a lot of interfacing required when dealing with a subby.

Generally, any build/technical problems in-house, can be fixed within a few hours, sometimes minutes, and DCR's etc; follow behind. When dealing with a subby, you have to interface with their system. To be honest, this will show up any flaws within your system. Some companies may even charge for non-value added activities such as design changes.

If the product is going to be a "runner", try and build it in house, but as Wolfgang says, you won't get much for that budget. Especially when you bolt on extras like feeders.

Can you not design the add on board into your main product. All you will need then is some configuration management (different build standards) to control your requirements.

It may be cheaper, amortized over the product life cycle, to build it in as standard. Do the sums.

In answer to question 4, whether you sub it or not, the market you are in will probably raise this scenario again. So learn anyway.

A good book I have is "SMT Soldering Handbook" by Rudolf Strauss and the ISBN number is 0-7506-3589-4.

Good luck in what you decide and keep the net posted with what you conclude. There are many good people with a lot of experience on this forum such as Wolfgang et al. You will learn by keeping in touch.

I know I have.

Regards,

Chris May.

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Deon Response:

Hello Mike,

Although the trend now days is to outsource, in some cases building it yourself is a worthwhile process. From what you say your product seems pretty simple and mature, so it might be very cost effective for you to bring it in house. I do believe and have put together a low volume production line for about 120K. This is a semi-new pick and place a new convection oven and a tabletop printer. A small used batch washer would do the trick as far as cleaning is concerned. You can build the product day and night as long as you have process control measures and trained personnel in place.

The advantages of course are: Monitor your own quality Minimal inventory costs Minimize WIP to your needs Amongst other monetary and non-monetary advantages.

The disadvantages are: Capital investment Increased workforce Increased overhead Headaches once in a while

As far as your questions are concerned: 1-Has anyone else done this? Positive or negative results?

We are an OEM that manufactures high end low volume, high mix, and low complexity product. We were thinking about outsourcing at one time but with the product that we build it was just going to be way too costly. Therefore we kept it in house and are benefiting tremendously in doing so.

2-Is it worth it and what is the recommended equipment? I would recommend a cost analysis using the figure of what you are paying to have product built currently. This will determine the cost advantages.

As far as recommended equipment this really depends on your volume but assuming low-mid volume: 1- A good semi-new pick and place. 2- Tabletop semi automatic printer. 3- A small convection oven 4- Small batch washer.

4- How difficult is it to do? Well that all depends on how much are willing to pay for a good workforce and adequate training.

Other than that: Good Luck. Hope this helps.

Regards, Deon Nungaray SMT Mfg. Process Engineer General Monitors E-Mail: deonn@generalmonitors.com 949-581-4464x2801 Fax:949-581-1528

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Mike, I understand your dilemma very well. You see, I was a manufacturing engineer for 11 years doing make or buy decisions before getting into the sales field. But for this commentary I will wear my engineer hat.

Your situation is not uncommon. Many of my current customers face the same problem and some go the outsource way and some build it internally.

As Wolfgang has mentioned, your budgetted $$ to do your line is quite low. At best, you might get lucky and get some good equipment that has not been bruised up very badly for a relatively low dollar. The old saying 'You get what you pay for' is quite often true. The best way to start an internal line is to find a young energetic tech or engineer that has the attributes for starting a line up. Hopefully, he has done it before and knows of some of the pitfalls. Many times they have personal prejudices toward equipment and that can be good and bad. There is some excellent equipment out there but it must be purchased from a credible source. There is also some not so good out there as well. That is why they should have some experience in equipment selection.

Whether you should do it or not depends on many factors. The biggest is probably your giving up of your control of the process. That is both a good and a bad thing. When you relinquish the control of the build you also give up many of the headaches in building the boards. The constant interface to the supplier and the resultant hiccups in the product flow are probably the main reason some come back to building it themselves. You didn't really state how many of the boards per batch and how often the batches are run or how many revs the boards and batches will see.

There are many extenuating circumstances that might 'require' you to build inside. How far away is your supplier? Do you have more than one? How is your relationship with them? Do they understand that you are considering putting in your own line? Sometimes, if they know that you are considering it then they will work very well with you to get your products built and keep your costs competitive. They don't want to lose a customer either.

If you do decide to build them internally send me an e-mail and let me know if I can help. I can recommend several books for you to review.

Good luck, JON

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Hi Mike:

If you are only spending around $150K per year in assembly I would have to say totally understanding your business that you should continue to outsource this operation. The cost of the equipment will be almost double that and it will be limiting in it's ablities. I know where your coming from with this question - it is an interesting field and can't be that difficult to master, well it is interesting and it is difficult to master. by using the expertise of your current vendor or maybe finding a higher level of expertise with a new contractor should provide you with more "Value" than going through the growing pains of assembling your own PCB's. After all, Value equals profits correct?

Regards, Chris Rogers

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I don't know what type of boards you are doing but if they are through hole or surface mount. You can get a whole line of used equiptment for pennys these days. I am sure that I could send you a quote for a complete line. The price of used equiptment is extremely low you should act soon before the market changes. I have been in the industry for 24 yrs now and I have seen almost everything. You can e-mail me with a number if you would like to talk first hand on this matter. Good Luck John!!

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On the outside looking in the cost of manufacturing your board assemblies may look high. I will tell you that it is probably a good price. There are allot of hidden costs in manufacturing and yes equipment right now is cheap but try buying parts cheep. You would be shocked at part prices. I would recommend getting a number of quotes from some CMs then visit the ones that you think are reasonable. If you really want to tie your money up in equipment hire a good engineer first.

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In my opinion its based on the final price advantage you get. And also just because it is cheap to manufacture do not jump to start. See how long your product will sell and what is the product life cycle.

There are many mfrs who can offer you reliable quality and economical prices. If you send the autocad drawing/gerber and tell the material thick and other specs,, i can tell you how cheap this can be manufactured.

bye

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Hi,

Lots of good answers and I am sure questions in the above.

I have too many questions to really know whether your idea is a good one, as it could be, or one that will cause you more problems.

Based on the size of the PWB that you will buy and the fact that all you are dealing with is one board size, you might be able to buy some really cheap equipment, build fixturing and assemble the PWBs yourself as you need them for either inventory or orders. Who knows maybe all you need is one trained soldering person that also keeps your pwb and component inventory.

Another alternative is to go to a smaller shop that is consistent with your volume needs. That choice depends on all the cost, quality, reliability, availability, etc factors.

The best I can tell you is to hire a consultant that knows the business and have him work with you to establish all the obvious and hidden costs plus risks. You will still make the decision yet it will be more informed.

Good Luck, YiE, MA/NY DDave

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Hi Mike,I thing the most important question is what's the series of your production? Is necessary to buy a huge line or you need middle or even low class machine? The costs are very different. If we're talking about 1-2 million cmps/month you can get everything new under 150k(you can call me).Otherwise it's 2-3 times more expensive and the equipment is semi-new. About your question 4 - it's easy to do.All you need is good support and one engineer with experience.

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Consider solid solder deposit before you buy a lot of equipment. http://www.sipad.com

mk

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Cool! A 3 year plus thread!

Well, to answer your question, don't build it yourself. Manufacturing is completely different from engineering. I could spend the next 3 yeras explaining why you shouldn't, but it appears this has already happened. And by the way, the cost of equipment is about only 1/3 of the cost to actually start building your product.

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