So many steps are involved in the manufacture of a new product in China, it is easy to lose sight of the whole project. After working with hundreds of importers, we have noticed that very few companies have a strong plan. Nearly all skip important steps.
Our senior engineer Paul and I have prepared this video. It is an overview of the 5 steps you need to follow, and all the main sub-steps.
(It is on Youtube… Blocked behind the great firewall.)
Important note: most of these steps are NOT applicable if you buy standard (off-the-shelf) products.
TRANSCRIPT OF THE VIDEO
Welcome to this video where we will be discussing the steps involved with the procurement process for a highly customized product.
The process is broken down into 5 phases which cover initial concept idea through to product launch and beyond.
- Phase 1 – Partner Selection
- Phase 2 – Non Recurring Engineering & Sampling
- Phase 3 – Pre Production
- Phase 4 – Production
- Phase 6 – Continuous Improvement
This is the complete FLOW CHART, which is too difficult to see in detail, so in order help better understand each of the steps we have separated out the elements in each of the Phases.
So let’s look at the Partner Selection Phase
Initially you would need to define your product specification sheet. The purpose of this document is to provide information to a manufacturer on what is being produced and the specific requirements associated with each aspect of the design.
The next step is to send out the Request For Quotation pack. It is often the case and also good practice to send out details of a similar product in order to get rough quotations first, this allows you to compare quotes from different suppliers without disclosing the full information to too many companies.
Once you have a number of quotations in, you can compare these and select the suppliers you wish to send the full technical detailed RFQ pack to. This pack should include all your technical drawings, specific details of parts, estimated quantities per year and any information that will help potential supply partners to provide the fullest quotations they can.
Once you get your quotations back from the suppliers you approached, it is time to create a short list of potential suppliers that you feel are the best match to your requirements.
After you have created a short list, you need to carry out your Due Diligence on those suppliers to determine the best you can their legitimacy.
This SHOULD be followed up with a factory or supplier audit which will provide a detailed report and findings. If you are happy with the results you can feel comfortable that you have found a suitable manufacturing partner
The next Phase is the Non-Recurring Engineering & Sampling phase. This is where any tooling for example will be commissioned.
The first step is to have a Business Project Review meeting with your supplier to go through the project plan in detail with respect to their involvement. Be sure to outline your expectations and the deliverables during this meeting.
The next step is start working on an agreement or contract for all your No recurring Engineering items
In parallel you need to start the prototype or sample process, this is where the supplier will work on producing samples to your specifications in order for you to review them and make changes where required.
Once you are happy with the results from this step you should approve and sign off the samples as acceptable.
Your New Product Introduction plan should be updated at this stage in the process to reflect any implemented changes that impact the plan
An OEM/ODM agreement should be created that covers every detail of the product supply, this will be your manufacturing contract once you are ready to hit the green light.
Once these steps have been completed it is now time for you to place the order (and pay the initial amount) for your NRE items
Once you place the orders for tooling, films or code, the information provided would have been officially released through your Document Control procedure.
Any change or deviation to print that requires officially released data to be updated must be done so through your Engineering Change Request procedure, this way, every change is documented and is traceable in the future.
Once NRE items have been completed to the stage where products can be produced from them, you need to check the parts, these parts would be the ‘first off’ from the tools and in general would require some slight modifications before parts being produced are acceptable.
Once the supplier is happy with the way the tooling is operating for example, they would submit final samples for review and verification and official sign off by you.
The next step in the phase is the actual product and NRE item sign off. This would include you checking every aspect of the parts being produced as well as signing off the functionality and working state of the NRE item.
This would be a milestone in your NPI plan, Production Ready.
It also concludes the NRE and Sampling Phase
Interested in this topic? You will also like Sofeast’s New Product Launch Roadmap [XLS + Video]
Phase 3 is the Pre-Production Phase
It is important to have a follow up meeting with your supplier at this stage of your New Product Introduction plan. You need to go through the agreement and cover all the critical elements and deliverables and set expectations for production.
The next step is to place the order for the initial production quantity.
This also means you will need to pay the initial amount against the purchase order.
A key aspect of getting product manufactured correctly in mass production is repeatability and part of that is to have a good set of work instructions. This is something the supplier will work on, however, you should be involved in this process particularly when it comes to the more technical aspects or some of the critical to quality features of your product.
At this stage you should be reviewing and updating your New Product Introduction plan in particular the product launch schedule.
Every manufacturing process should have a process control plan and this is something you need to generate in conjunction with your supply partner.
In some cases there may be the need to implement software at the supplier’s factory or the need to implement a process that involves using new software. Now is the time to do this.
Every product needs a test plan that clearly identifies what needs to be tested and how it should be tested, along with the frequency of tests. Your test plan should also state what actions need to be taken if test results fall outside the limits you have indicated.
The last step in the pre-production phase is to conduct a pilot run. This should be conducted with the intended mass production set up including all the correct tooling, test equipment, procedures and processes as well as the actual operators that will be assigned to build your product.
A trial run may involve a number of runs with iterative improvements between each run, which ultimately results in the process being signed off as Production Ready
This would be another milestone in your project plan.
The Production Phase consists of the process of manufacturing your products, ensuring they are acceptable to be shipped and then shipping products to your final destination.
It is paramount that you follow up with your supplier throughout the entire production process and obtaining regular progress reports.
Product inspection is another critical step within the process. You can either opt for the during production inspection or wait until everything has been completed and carry out a final random inspection, either way, you need to have your goods inspected before they leave the factory and certainly before you pay the balance of the purchase order.
Carrying out an inspection while goods are still at the factory allows you to work with your supplier on any required corrective actions.
Once everything has been signed off and you are happy that your order is ready to be shipped, it is time to arrange all the logistics of shipping your goods to the destination you need them sent to.
Before goods are sent (depending upon your payment agreement) you would generally need to pay the balance of the purchase order – This would be a payment milestone in your plan.
For ongoing production your product test results would be analysed against the test plan your already have in place. This allows you to monitor performance and other key information and KPIs.
The final phase of the process is Continuous Improvement.
This phase is all about working with your supplier and improving every aspect of the business, from production through to process and procedures as well as building the overall relationship and the partnership.
One aspect of this phase is working with your supplier on Key Performance Indicators or KPIs.
KPIs are assorted variables that organizations use to assess, analyse and track manufacturing processes. These performance measurements are commonly used to evaluate success in relation to goals and objectives.
Supplier Development is another key step during this phase.
Supplier development is the process of working with your supplier on a one-to-one basis to improve their performance for the benefit of your organisation.
Supplier development should lead to improvements in the total added value from the supplier in terms of product or service offering, business processes and performance, improvements in lead times and delivery for instance.
Now that concludes the walkthrough of the entire procurement process for a highly customized product.
We hope you found this of interest and if you have any comments, please leave them below and we will be sure to come back to you.
Want to learn more about the new product introduction process for hardware startups?
Sofeast’s guide covers everything hardware startups need to know for making a new product in China and successfully bringing it to market.
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