What does it mean to be a hardware manufacturer today?
One has a fantastic idea, one gets financial backing, applies for a patent and finds a factory to manufacture the do-dah, and the money rolls in! Fantastic!
But, alas, the road to manufacturing is at times not as clear cut as many would think. It can be a windy, difficult and treacherous route, cut into the side of a mountain. The rock pummeled into a path by those who came before. The metal carcasses of the less fortunate convoys, lie in the valley beneath.
OEM
The distinction between design and manufacturing are being blurred every day. We have OEM manufacturers, selling a generic product, which anyone can purchase and put their brand name on. We might have a successful business selling garden rakes, and see there would be a good profit if we could offer a lawn-mower as well. But we have no idea how to design a lawn-mower, so we go to an OEM manufacturer. The OEM puts our name on their generic lawn-mower, paints it our brand colour, and suddenly we are in the lawn-mower business. We are a fully fledged lawn-mower manufacturer, or so it would seem to the customer.
The music equipment business is not dissimilar. We are a successful manufacturer of analogue do-dahs, but our customers also buy, for example, USB audio interfaces. We have zero experience at designing USB devices, Windows driver programming, firmware, digital audio etc. We could hire a bunch of engineers and give them some years to design our audio interface. Or, we go to an OEM manufacturer. We get a generic audio interface with our name on it, with zero investment costs. It’s the exact same device (baring the logo) as countless other companies have purchased from the OEM. A tried and tested design. But generic. There is nothing to differentiate our audio interface from the competition, except that our name is on it.
ODM
In order to gain some advantage over our competition, the next level of out-sourcing is ODM, Original Design Manufacturing. The ODM asks, what do we want? A USB audio interface? How many channels? They take an existing product they already designed for someone else off the shelf, how about this form factor? Do we want a display? How about this one? No, OK, how about this? Great! And so it goes, we hammer out a list of requirements, usually based on technology the ODM has already implemented in other products.
From our companies business point of view, we cannot lose. The ODM is doing all the hard-core engineering work. We don’t need to employ those expensive electronics engineers, mechanical engineers or industrial designers. We just let our expert product manager (usually a business graduate) come up with the specification the market research statistics have shown is going to be a hit, and the ODM will do the rest.
Consequences
There are many consequences with this type of product design. Namely, our company has no need to keep engineers on staff, since we have the ODM to bring the product to the manufacturing stage. We stop hiring engineers, then eventually fire the remaining ones. We have no engineering prowess, no deep knowledge about what is going on under-the-hood. Our product is now at the mercy of the ODM for updates and bug-fixes. We might have a big neon sign on the top of the building which is synonymous with decades of experience, and a treasure trove of innovation and pioneering design. But today there is not be a single person in the building which understands how the product works. On the device it may even say “Designed by OUR COMPANY”, since we were the ones who did the market research and therefore “designed” the thing. <roll eyes>
The second consequence, which is not immediately obvious to the company hiring the ODM, is that any new design elements which we might have actually invented and ask for in our product, will immediately be copied and offered to all new customers who walk in the door of the ODM offices. As much as we might like to think our design is protected by copyright, or in increasingly rare cases, patent law, the reality is, enforcing such protections is difficult. Over international borders, it can be nearly impossible.
The result of all this ODM outsourcing, is a marketplace filled with generic products. Many designed by just a handful of ODM offices. There is little to differentiate the products, save for the brand name. The in-house engineering skills our company had, once highly prized and leveraged to create cutting edge products which no other company or ODM could pull off, have disappeared in a puff of smoke and golden parachutes.
What am I getting at? That engineering, that being a manufacturer of a device, is not something to be out-sourced.
Do not out-source your core competencies!
Rather than being a chore, a pain in dealing with personnel, unions, eye watering investments in plant machinery, logistical headaches and supply chain disasters which arrive just in time to mess everything up, rather than this, manufacturing should be seen as a skill. Manufacturing is an ability. From the operator loading a reel on surface-mount production line, to the person crimping a cable, these are skilled individuals. They did not learn these skills sitting on the sofa from an online course. They learned it the hard way, on the job, on the shop floor.
The core of hardware manufacturing is based on the accumulation of skills in the organization. As if a pyramid structure, at the base the knowledge and skill, the individuals and their abilities supporting the rest of the organization. It takes decades to collect and develop these abilities. The accumulated knowledge is irreplaceable. The workshop personnel and their expertise are the key asset of any manufacturing business. They are tactfully traversing the rocky path, they keep the show moving. The mangled train wrecks in the valley a reminder, there are no short cuts.
In memory of Colin Bilby, R.I.P. An expert machinist who was kind enough to become my mentor and share his vast knowledge, while we worked on the shop floor at Soundcraft.
Thank you Colin!
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Michael McLoone