Building 2000 units of a product, part 1: sourcing COTS parts – Elaine Chen

MIT Sloan Senior Lecturer Elaine Chen

From Dragon Innovation Blog

There are many phases of engineering development before you get to a looks-like, works-like prototype. At this phase, the product looks like and works like a final product. Hopefully it has been designed with the final manufacturing techniques in mind.  Like many modern day hardware companies, you probably went the extra mile in validating your market before scaling up your operation. You have probably run a successful crowdfunding campaign. You now have a 1000-2000 unit preorder that you now need to fulfill.  How do you go from the prototyping techniques you have been using to date to sourcing and building a small lot of this scale?

At 1000-2000 units, this is considered a low volume production run. This is a very tricky quantity to build, especially for consumer electronics products with a low cost-of-goods-sold (COGS). In fact, Ben Einstein of Bolt VC famously calls this quantity the “uncanny valley of manufacturing” in his awesome talk about prototyping (see Slide 41).

What’s involved in a 2000-unit build?

Let’s first look at what is really involved in getting 2000 units built, starting with the components.

First, you must source all your components. There are two kinds of components you need to buy.

  • “COTS parts”: These are parts you can buy off the shelf. M2 hex screws are COTS parts. Standard metal gears are COTS parts. Standard switching power supplies can be COTS parts. 6′ USB-A to micro-USB cables can be COTS parts.
    • Some parts are commodity items – fasteners, for instance, are low cost, and there are many places you can buy them from.
    • Some parts are critical components that can make or break the performance of your product. For instance, a Coretex M3 microprocessor is a critical component. A specific Bluetooth low energy chip is a critical component. A specific motor designed into your drive chain is a critical component.
  • “Custom parts”: These are parts that are unique to your design. You will need to find a supplier to create them specially for your product.  There are two main categories of custom parts:
    • Electrical / electronic parts: these include custom printed circuit board assemblies (PCBA), cable harnesses (i.e. custom cables with connectors on either side made to your specifications) and the like.
    • Mechanical parts: these can include plastic parts and metal parts, which can adopt a variety of sizes and shapes and have a variety of performance requirements.

 

Read the full post at Dragon Innovation Blog click here or for Part 2 of her series.

Elaine Chen is a startup veteran, product strategy and innovation consultant, and author who has brought numerous hardware and software products to market.

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