8 ms·

What Every Hardware Startup Should Know About the Electronic Component Landscape

134 points by sam 13y ago

mercuryrising 13y ago
I wish there was more of this type of information about injection molding, that seems like more of a dark art than electronic assembly. What do you guys think of having the component manufacturer source the parts? I've seen some that purchase parts directly from Digikey, but I'm not sure if they pool together orders for discounts, or if they just handle the purchasing so you don't have to. It seems like they could get a better deal than I could (I always assumed that a manufacturer would try to source locally in China and get stuff for dirt cheap, but they buy from Digikey too - seems kind of strange). Does anyone know any good US based contract manufacturers? All the ones I've seen are ridiculously expensive ($17 for a 4" x 1" board with ~60 components, as opposed to ~$6 at Myro (thanks theunixbeard for catching that error)). I'd love to get something made here in the US, but I can't eat another $10 for my lights - especially for a service like assembly (where the quality seems like it won't matter that much - the light will work or it won't work). I've been toying with the idea of a stretch goal on Kickstarter to assemble some delta bots to do the electronic assembly (it'd be about $1200 for a single bot, whereas contract manufacturing is about $2000, but I'd have something to show for that money with a pick and place machine). Having a machine where you could throw a stenciled PCB on in any orientation, then pick and place the parts onto, and cook it on the spot (moving the camera up and watching for reflow) would be pretty awesome. It's sticky being in the 'middle' - big enough where you need to use services rather than hand assembly, but small enough where you don't really have any purchasing power. The road to production has a big no man's land in the middle. Ch00f has a great write up on the process of going through with contract manufacturing, and some of the hurdles he saw with the process - http://ch00ftech.com/2013/04/16/making-55-of-something-without-lifting-a-soldering-iron/ http://ch00ftech.com/2013/04/16/making-55-of-something-witho...
- sam 13y ago
  >What do you guys think of having the component manufacturer source the parts? I'm assuming you're asking about having the contract manufacturer source the parts, right? This is typically called "turnkey" contract manufacturing as opposed to "consignment" where you source the parts yourself. It really depends on the kind of product you're building and your ability to negotiate with component distributors an manufacturers. If it's your first time around and you're optimizing for speed, turnkey is probably the way to go. If you need specialty parts and you know how to source them more effectively than your CM, then consignment may make more sense.
  - DanBC 13y ago
    When I was involved in sub-contract engineering (more than 10 years ago) our firm had a weird setup. If we sourced the parts we'd charge a 10% fee. The customer avoided that fee if they provided the parts. It's weird because when we buy off our BOMs from our regular suppliers we'd get well packed components that were easy to goods-in inspect and put to kit. If we needed 250 surface mount resistors we knew we either had a reel, or we would buy a reel because we'd probably use them. But when the customers supplied stuff it'd come in horrible little bits and bobs. You'd get a strip of exactly 250 SM resistors. (Which is horrible for the P&P machine we were using, and resistors get dropped by the machine a lot). To us it should have been the other way round - "Supply the kit yourself? We charge you 10% (of something) because we still have to goods in inspect it and kit it and etc". Most manufacturers are happy to do a mix. So, if your product uses one weird IC and you happen to have stock of it, but nothing else, feel free to tell them that you're supplying that part.
- theunixbeard 13y ago
  What does "Mylo" refer to? A specific assembling company? I tries googling to no avail...
  - deleted 13y ago
    [deleted]
  - mercuryrising 13y ago
    Good catch - that should have been Myro. https://www.myropcb.com/ https://www.myropcb.com/
- analog31 13y ago
  >>> It's sticky being in the 'middle' - big enough where you need to use services rather than hand assembly, but small enough where you don't really have any purchasing power. The road to production has a big no man's land in the middle. Second quote of the week in one week. ;-) I make a couple of small electronic gadgets for my side business. My day job is also involved in electronic manufacturing, and I've had a good overview of what it involves. Amusing anecdote: I was restocking a critical part, and noticed that one of the _alternate_ part numbers was on end-of-life status. I panicked and bought out my supplier's entire inventory of my preferred part number. That turned out to be the world's remaining supply, and the part is now obsolete. I suppose at the end of the day, the lesson is that no matter how good you think your suppliers are about keeping you apprised of component lifetime issues, once in a while, you're going to get screwed. For being in the "middle," it's not just purchasing power, but that there are a lot of shady vendors out there. Any start-up that is headed towards that wilderness had better have an experienced buyer along. In fact, if you're still working at a day job, any experience you can get in the trenches of supply chain management will probably benefit you. It's also worth considering what your design chain looks like, because it is intertwined with your supply chain. For instance, if you're shopping your firmware work out, and your microchip goes obsolete, you'll need to have a plan for responding quickly. I've observed that sourcing issues can eat a measurable fraction of your engineering department's time and attention. At this point, I've stuffed and soldered 1000+ boards.
  - robomartin 13y ago
    > sourcing issues can eat a measurable fraction of your engineering department's time and attention. Or worst. I personally experienced a sourcing issue kill eight months of engineering design work and hundreds of thousands of dollars. It was a simple case of being a small fish in a big pond and the suppliers not giving a shit about providing advance EOL notices. No recourse. You have to redesign your product and hope to survive.
diminoten 13y ago
I wish the Lockitron folks had read this before they started... I think they're, what, 7? months behind schedule due to hardware issues. I get emails about it, and they're super nice, but 7 months is a long time.
- voltagex_ 13y ago
  Lots of the Kickstarter-backed projects have this problem. I'm not sure how you solve it except with experience.
  - freehunter 13y ago
    I'm kicking around the idea of forming a hardware startup after a successful proof of concept using off-the-shelf electronics that I assembled by hand. What's really holding me back is that I have no idea where to start with a custom design or talking to manufacturers. The only option I can think of is hiring someone with experience in making customer hardware products at scale, but that's pretty expensive to bootstrap.
    - voltagex_ 13y ago
      I'm only coming from the perspective of a buyer and interested tinkerer. * It's better to over-deliver than over-promise. Yes, your marketing materials were really shiny but the product didn't really live up to expectations * After-sales support is so bloody important - don't disappear after you've shipped (MiiPC & Cubieboard I'm looking at you) * Don't lie to me if you say your product is going to be open source or worse, "hacker friendly" (although this was a problem even before Kickstarter and Indiegogo) * Tailor your communications to your market - the wonderful people over at Ninjablocks/Little Bird Eleectronics had some issues with writing copy that was aimed at general consumers where a lot of their market wanted real technical details Of course, you'll have different issues to deal with if you're going the VC/startup route rather than the crowdfunding route.
    - sam 13y ago
      You might consider checking out these companies. They help folks at your stage with all the nitty gritty details of manufacturing a physical product: http://www.dragoninnovation.com/ http://www.dragoninnovation.com/ http://highway1.io/ http://highway1.io/ http://makesimp.ly/ http://makesimp.ly/
robomartin 13y ago
What every hardware startup needs to know about hardware startups is that if you need to read a blog post to know about these issues you better get someone onboard who has hardware experience. Most of the comments so far seem to focus on KS projects. Of course, there are issues well outside of KS campaigns. Software is easy. You have full control of just about everything you need to assemble your product. Hardware is a different beast. There are issues in the design and manufacturing of physical products that border on being surreal --until you understand the reasons behind some of them. The first time a distributor told me "delivery for those parts is 22 weeks" I could not comprehend how they could stay in business. As I gained experience I realized they did that precisely because they are trying to stay in business (among other factors). Also, while true to a great extent, going with authorized distributors isn't necessarily a guarantee of getting good parts. I have a couple of wire racks with enough defective components to buy two brand-new entry-level BMW's to back that up. Sometimes authorized distributors can get, shall we say, creative. Under special circumstances they'll work with brokers to bring in parts to fill orders that might be in allocation. They'll have you agree to NCNR terms and then, if there are issues with the parts you are on your own. If you don't know what "allocation" and "NCNR" mean and you are in a hardware startup...GOTO paragraph 1. One of the interesting side-effects of our current plug-together "engineering" environment is that kids are coming out of school with very little real hardware experience. Snapping together a bunch of Arduino compatible hardware isn't equivalent to designing and making said hardware. I read lots of complaints on HN about software engineering applicants not being able to code. I've seen the same kind of thing with EE's not being able to design their way out of a paper bag. Pretty sad state of affairs.
- madvoid 13y ago
  Can you expand more on why the distributor has a 22 week delivery to stay in business? (Your third paragraph)
  - cdawzrd 13y ago
    Their parts presumably take about 22 weeks to manufacture and get to the end customer. They probably cannot afford to build the parts ahead of time and stock them, so they only kick off the factory once they receive the order. In the case of small orders, manufacturers may wait to start a production run until enough orders have come in to make it worth it, which can mean long lead times for someone who only wants 100 of something
beambot 13y ago
Bunnie Huang (Xbox hacker, Chumby designer, etc etc) also has a good blog series about such things. Here's the first one in the series about making a real BOM (it's more than just the parts!): http://www.bunniestudios.com/blog/?page_id=2812 http://www.bunniestudios.com/blog/?page_id=2812
- robomartin 13y ago
  Right. And this real BOM is what I would call the absolute minimum requirement. Once you start thinking about revision, tracking, defect management, end-of-life management, costing, EDA integration, versioning and other real-world factors and needs of a hardware manufacturing operation a BOM becomes a crucial and far more complex document. There are a bunch of specialized software solutions dedicated to dealing with BOMs. Excel isn't a BOM management system.
  - DanBC 13y ago
    Go careful though - some of those systems are kludged to fit on the end of accounting packages. Something that can do payroll, which has been extended to handle ordering, which has been extended to handle BOMs, is really suboptimal. I have experience of Sage line 50 / line 100. They were awful for the bits most of the company needed to do.
iamabraham 13y ago
This is an excellent basic article but ignores some significant advantages available. For starters, "brokers" don't really exist in the way described. Many franchise and most independent distributors broker parts from each other. Arrow and Future in particular. Secondly, brokered parts can be an excellent source of cost savings; many will buy a 5k reel to sell 1k pieces and are left with extra inventory that can be had for pennies on the dollar. There is risk admittedly , but finding a reputable independent distributor like America 2 or Signature Electronics can be a benefit to purchasers. Aside from cost savings, these companies can offer forecast information to help you avoid some of the problems listed. As for finding a good contract manufacturer, there are services like EMSforce that can take a project and present multiple bids to you in a way that offers competitive pricing without sacrificing service.
neommc 13y ago
here, Sr. Hardware Engineer from big consumer electonics corp. this blog is tooo basic. for startup, they should co-work with design house instead of homemading hardware. the big cost is the equipments, not the components. from prototype to engineering sample, u dont need to think about components or BOM. make it work, make it meet your req of spec, fix all the bug, p/r it, mp it. Keep it in mind of BOM, but not from beginning, but from the engineering sample.
flyinglizard 13y ago
Part ordering is time consuming and annoying, and the pricing in low volumes (typical for development work or upstart products) is really awful (high, and large disparities between suppliers). We created http://sandsquid.com http://sandsquid.com for making it easier to purchase components online (especially at the early stage of the product life cycle) while still maintaining reasonable pricing and an ability to easily scale up the orders as needed. Sandsquid was born out of our own need, manufacturing USB test jigs for a customer of our consulting business (we then made it as a bunch of scripts, but then decided it's too good to keep for ourselves). We just couldn't come to terms with the amount of effort it takes to order parts for a moderately complicated PCB.
hkmurakami 13y ago
I remember moving a few of our older products to NRND status at my old gig. It basically meant that we're EOLing the products and it's your last chance to buy in bulk before they'll become unavailable. We let this be known very clearly to our main customers, but I doubt small time buyers who buy from our Distis really got the message :( Definitely a good thing for hobbyists/Kickstarterers to keep in mind!

134 points by sam 13y ago

I wish there was more of this type of information about injection molding, that seems like more of a dark art than electronic assembly. What do you guys think of having the component manufacturer source the parts? I've seen some that purchase parts directly from Digikey, but I'm not sure if they pool together orders for discounts, or if they just handle the purchasing so you don't have to. It seems like they could get a better deal than I could (I always assumed that a manufacturer would try to source locally in China and get stuff for dirt cheap, but they buy from Digikey too - seems kind of strange). Does anyone know any good US based contract manufacturers? All the ones I've seen are ridiculously expensive ($17 for a 4" x 1" board with ~60 components, as opposed to ~$6 at Myro (thanks theunixbeard for catching that error)). I'd love to get something made here in the US, but I can't eat another $10 for my lights - especially for a service like assembly (where the quality seems like it won't matter that much - the light will work or it won't work). I've been toying with the idea of a stretch goal on Kickstarter to assemble some delta bots to do the electronic assembly (it'd be about $1200 for a single bot, whereas contract manufacturing is about $2000, but I'd have something to show for that money with a pick and place machine). Having a machine where you could throw a stenciled PCB on in any orientation, then pick and place the parts onto, and cook it on the spot (moving the camera up and watching for reflow) would be pretty awesome. It's sticky being in the 'middle' - big enough where you need to use services rather than hand assembly, but small enough where you don't really have any purchasing power. The road to production has a big no man's land in the middle. Ch00f has a great write up on the process of going through with contract manufacturing, and some of the hurdles he saw with the process - http://ch00ftech.com/2013/04/16/making-55-of-something-without-lifting-a-soldering-iron/ http://ch00ftech.com/2013/04/16/making-55-of-something-witho...

sam 13y ago
>What do you guys think of having the component manufacturer source the parts? I'm assuming you're asking about having the contract manufacturer source the parts, right? This is typically called "turnkey" contract manufacturing as opposed to "consignment" where you source the parts yourself. It really depends on the kind of product you're building and your ability to negotiate with component distributors an manufacturers. If it's your first time around and you're optimizing for speed, turnkey is probably the way to go. If you need specialty parts and you know how to source them more effectively than your CM, then consignment may make more sense.
- DanBC 13y ago
  When I was involved in sub-contract engineering (more than 10 years ago) our firm had a weird setup. If we sourced the parts we'd charge a 10% fee. The customer avoided that fee if they provided the parts. It's weird because when we buy off our BOMs from our regular suppliers we'd get well packed components that were easy to goods-in inspect and put to kit. If we needed 250 surface mount resistors we knew we either had a reel, or we would buy a reel because we'd probably use them. But when the customers supplied stuff it'd come in horrible little bits and bobs. You'd get a strip of exactly 250 SM resistors. (Which is horrible for the P&P machine we were using, and resistors get dropped by the machine a lot). To us it should have been the other way round - "Supply the kit yourself? We charge you 10% (of something) because we still have to goods in inspect it and kit it and etc". Most manufacturers are happy to do a mix. So, if your product uses one weird IC and you happen to have stock of it, but nothing else, feel free to tell them that you're supplying that part.
theunixbeard 13y ago
What does "Mylo" refer to? A specific assembling company? I tries googling to no avail...
- deleted 13y ago
  [deleted]
- mercuryrising 13y ago
  Good catch - that should have been Myro. https://www.myropcb.com/ https://www.myropcb.com/
analog31 13y ago
>>> It's sticky being in the 'middle' - big enough where you need to use services rather than hand assembly, but small enough where you don't really have any purchasing power. The road to production has a big no man's land in the middle. Second quote of the week in one week. ;-) I make a couple of small electronic gadgets for my side business. My day job is also involved in electronic manufacturing, and I've had a good overview of what it involves. Amusing anecdote: I was restocking a critical part, and noticed that one of the _alternate_ part numbers was on end-of-life status. I panicked and bought out my supplier's entire inventory of my preferred part number. That turned out to be the world's remaining supply, and the part is now obsolete. I suppose at the end of the day, the lesson is that no matter how good you think your suppliers are about keeping you apprised of component lifetime issues, once in a while, you're going to get screwed. For being in the "middle," it's not just purchasing power, but that there are a lot of shady vendors out there. Any start-up that is headed towards that wilderness had better have an experienced buyer along. In fact, if you're still working at a day job, any experience you can get in the trenches of supply chain management will probably benefit you. It's also worth considering what your design chain looks like, because it is intertwined with your supply chain. For instance, if you're shopping your firmware work out, and your microchip goes obsolete, you'll need to have a plan for responding quickly. I've observed that sourcing issues can eat a measurable fraction of your engineering department's time and attention. At this point, I've stuffed and soldered 1000+ boards.
- robomartin 13y ago
  > sourcing issues can eat a measurable fraction of your engineering department's time and attention. Or worst. I personally experienced a sourcing issue kill eight months of engineering design work and hundreds of thousands of dollars. It was a simple case of being a small fish in a big pond and the suppliers not giving a shit about providing advance EOL notices. No recourse. You have to redesign your product and hope to survive.

diminoten 13y ago

I wish the Lockitron folks had read this before they started... I think they're, what, 7? months behind schedule due to hardware issues. I get emails about it, and they're super nice, but 7 months is a long time.

voltagex_ 13y ago
Lots of the Kickstarter-backed projects have this problem. I'm not sure how you solve it except with experience.
- freehunter 13y ago
  I'm kicking around the idea of forming a hardware startup after a successful proof of concept using off-the-shelf electronics that I assembled by hand. What's really holding me back is that I have no idea where to start with a custom design or talking to manufacturers. The only option I can think of is hiring someone with experience in making customer hardware products at scale, but that's pretty expensive to bootstrap.
  - voltagex_ 13y ago
    I'm only coming from the perspective of a buyer and interested tinkerer. * It's better to over-deliver than over-promise. Yes, your marketing materials were really shiny but the product didn't really live up to expectations * After-sales support is so bloody important - don't disappear after you've shipped (MiiPC & Cubieboard I'm looking at you) * Don't lie to me if you say your product is going to be open source or worse, "hacker friendly" (although this was a problem even before Kickstarter and Indiegogo) * Tailor your communications to your market - the wonderful people over at Ninjablocks/Little Bird Eleectronics had some issues with writing copy that was aimed at general consumers where a lot of their market wanted real technical details Of course, you'll have different issues to deal with if you're going the VC/startup route rather than the crowdfunding route.
  - sam 13y ago
    You might consider checking out these companies. They help folks at your stage with all the nitty gritty details of manufacturing a physical product: http://www.dragoninnovation.com/ http://www.dragoninnovation.com/ http://highway1.io/ http://highway1.io/ http://makesimp.ly/ http://makesimp.ly/

robomartin 13y ago

What every hardware startup needs to know about hardware startups is that if you need to read a blog post to know about these issues you better get someone onboard who has hardware experience. Most of the comments so far seem to focus on KS projects. Of course, there are issues well outside of KS campaigns. Software is easy. You have full control of just about everything you need to assemble your product. Hardware is a different beast. There are issues in the design and manufacturing of physical products that border on being surreal --until you understand the reasons behind some of them. The first time a distributor told me "delivery for those parts is 22 weeks" I could not comprehend how they could stay in business. As I gained experience I realized they did that precisely because they are trying to stay in business (among other factors). Also, while true to a great extent, going with authorized distributors isn't necessarily a guarantee of getting good parts. I have a couple of wire racks with enough defective components to buy two brand-new entry-level BMW's to back that up. Sometimes authorized distributors can get, shall we say, creative. Under special circumstances they'll work with brokers to bring in parts to fill orders that might be in allocation. They'll have you agree to NCNR terms and then, if there are issues with the parts you are on your own. If you don't know what "allocation" and "NCNR" mean and you are in a hardware startup...GOTO paragraph 1. One of the interesting side-effects of our current plug-together "engineering" environment is that kids are coming out of school with very little real hardware experience. Snapping together a bunch of Arduino compatible hardware isn't equivalent to designing and making said hardware. I read lots of complaints on HN about software engineering applicants not being able to code. I've seen the same kind of thing with EE's not being able to design their way out of a paper bag. Pretty sad state of affairs.

madvoid 13y ago
Can you expand more on why the distributor has a 22 week delivery to stay in business? (Your third paragraph)
- cdawzrd 13y ago
  Their parts presumably take about 22 weeks to manufacture and get to the end customer. They probably cannot afford to build the parts ahead of time and stock them, so they only kick off the factory once they receive the order. In the case of small orders, manufacturers may wait to start a production run until enough orders have come in to make it worth it, which can mean long lead times for someone who only wants 100 of something

beambot 13y ago

Bunnie Huang (Xbox hacker, Chumby designer, etc etc) also has a good blog series about such things. Here's the first one in the series about making a real BOM (it's more than just the parts!): http://www.bunniestudios.com/blog/?page_id=2812 http://www.bunniestudios.com/blog/?page_id=2812

robomartin 13y ago
Right. And this real BOM is what I would call the absolute minimum requirement. Once you start thinking about revision, tracking, defect management, end-of-life management, costing, EDA integration, versioning and other real-world factors and needs of a hardware manufacturing operation a BOM becomes a crucial and far more complex document. There are a bunch of specialized software solutions dedicated to dealing with BOMs. Excel isn't a BOM management system.
- DanBC 13y ago
  Go careful though - some of those systems are kludged to fit on the end of accounting packages. Something that can do payroll, which has been extended to handle ordering, which has been extended to handle BOMs, is really suboptimal. I have experience of Sage line 50 / line 100. They were awful for the bits most of the company needed to do.

iamabraham 13y ago

This is an excellent basic article but ignores some significant advantages available. For starters, "brokers" don't really exist in the way described. Many franchise and most independent distributors broker parts from each other. Arrow and Future in particular. Secondly, brokered parts can be an excellent source of cost savings; many will buy a 5k reel to sell 1k pieces and are left with extra inventory that can be had for pennies on the dollar. There is risk admittedly , but finding a reputable independent distributor like America 2 or Signature Electronics can be a benefit to purchasers. Aside from cost savings, these companies can offer forecast information to help you avoid some of the problems listed. As for finding a good contract manufacturer, there are services like EMSforce that can take a project and present multiple bids to you in a way that offers competitive pricing without sacrificing service.

neommc 13y ago

here, Sr. Hardware Engineer from big consumer electonics corp. this blog is tooo basic. for startup, they should co-work with design house instead of homemading hardware. the big cost is the equipments, not the components. from prototype to engineering sample, u dont need to think about components or BOM. make it work, make it meet your req of spec, fix all the bug, p/r it, mp it. Keep it in mind of BOM, but not from beginning, but from the engineering sample.

flyinglizard 13y ago

Part ordering is time consuming and annoying, and the pricing in low volumes (typical for development work or upstart products) is really awful (high, and large disparities between suppliers). We created http://sandsquid.com http://sandsquid.com for making it easier to purchase components online (especially at the early stage of the product life cycle) while still maintaining reasonable pricing and an ability to easily scale up the orders as needed. Sandsquid was born out of our own need, manufacturing USB test jigs for a customer of our consulting business (we then made it as a bunch of scripts, but then decided it's too good to keep for ourselves). We just couldn't come to terms with the amount of effort it takes to order parts for a moderately complicated PCB.

hkmurakami 13y ago

I remember moving a few of our older products to NRND status at my old gig. It basically meant that we're EOLing the products and it's your last chance to buy in bulk before they'll become unavailable. We let this be known very clearly to our main customers, but I doubt small time buyers who buy from our Distis really got the message :( Definitely a good thing for hobbyists/Kickstarterers to keep in mind!