1-Year Anniversary Mega-Update (Part 2 of 2)
In part 1 of our Mega-Update we talked about some logistical considerations for fulfillment. Now we’ll cover a little more about design, sourcing, shipping and other things to think about when starting a hardware project.
We decided to pack the parts directly in the shipping box, to not need a separate product box and shipping box (take a look at the picture at very top of the post). If we were to do it again, we’d have a separate box for the product and for shipping after all. There were many backers who requested something extra with their kit, such as an extra board. It wasted time to cut through the packing tape on the box to put in the extra item when the shipping labels were printed, or to have a pile of finished but untaped boxes waiting for packing labels and a list of extra parts.
Minimize loose parts in a box. We improved upon small parts packaging over time, so the final kits have no loose bits floating around. If you’re just starting out, get a variety of boxes and plastic bags and play around with them to see what works best. USPS will send you free flat-rate boxes if you order online.
Isolate sharp corners using bubble wrap, boxes for individual items, or pointing the sharp thing away from delicate items.
Measure packaging time and costs. We anticipated that with time, our packaging workflow would get faster, but it turned out not to be that way. At some point, your assembly line just can’t get any more efficient. No matter which tricks we tried, in the end each of our kits takes over an hour for one person to assemble from start to finish-- that’s excluding QA, troubleshooting help, “it got seems to be lost in the mail” questions, printing shipping labels, unpackaging parts from reels, etc.
Think about your manufacturing process while you design your product. In our case, the manufacturing process is kit assembly, which involves many steps: cutting and coiling wire, cutting apart parts reels, inserting chips into foam, heat-sealing parts bags, wrapping chassis in bubble wrap, etc. The number of steps needed to complete a kit, and the large number of components in each box, poses challenges for efficient packaging.
- If functionality is not compromised, minimize the number of components by using multiples of one size/type. Use ten of one screw instead of two each of five different screws, for example. Don’t use three 910 ohm and two 1.2K resistors if five 1K ohm resistors do the job just as well. Little changes like this really add up.
- Don’t use both standard and metric hardware; you’re just begging to get them mixed up. We often confused #4-40 screws and M3’s. Metric hardware probably preferable, as it's cheaper in bulk from China, plus kit builders outside the US can find replacements for it.
- If possible, plan ahead for a QA process. Quality assurance has been an issue, because there is no easy way to check over every small parts bag for accuracy. Omissions or mistakes are frustrating to the end-user, and consume our time when we have to make a second shipment for missing parts.
Every custom part is a liability. While you should use off-the-shelf components whenever possible, eventually you’ll need to make some custom parts. Your pre-launch plan should pay particular attention to them.
- Ensure your manufacturer has specific experience in the process you're using. You’d think that our stamped metal toroids, for instance, would be an easy to make. The manufacturer thought that too, until he struggled for eight months with centers popping out and the toroids having wrinkles because he did not have specific experience with metal stamping. Now, because the first shop has jacked up their prices, we've decided to go through a lengthy and costly process of re-tooling with a spinning house.
- Low price can mean low quality or reliability. We had to go through three different chassis manufacturers so far because we kept having problems with them: too slow, too expensive, poor quality, “there was a fire in the laser cutter.” Laser cutting ⅛” acrylic should be a fairly standard and low-risk procedure, but we found price quotes to vary immensely. When you’re looking for the lowest price possible, keep in mind there's a good reason why some places are a lot cheaper than others.
- Completely specify your part from the beginning to avoid any ambiguity. The secondary coils suffered alarming issues when the manufacturer switched from signal build wire to heavy build wire of the same gauge, thinking it wouldn't make a difference. Heavy build magnet wire has thicker enamel, so a fewer turns will fit into the length of the secondary, thereby changing the inductance and the tuning point of the coil. Fortunately, we were able to work with him to figure out what happened. (Note: if your secondary is under 228 ohms, the simple fix is to use 5 turns on your primary).
Streamline your supply chain from the beginning. Our kit sources too many parts from too many different manufacturers, which resulted in an inventory nightmare. 90% of delays were because some part was missing, and not due to a manpower shortage. All too often, in a panic, we would rush-ship parts at a high cost, so that we could reach a deadline we’d decide upon.
- Particularly when ordering bulk products from China, the wait time can be many weeks. Something as small as missing spade terminals can bring the assembly line to a screeching halt.
- Sourcing parts from one place at a higher cost (e.g. Digi-Key) rather than sourcing those parts from two dozen different eBay sellers pays off in time and headaches saved.
- Take advantage of value-added services. They are usually worth it. For instance, we could have bought pre-cut, pre-spooled lengths of primary wire, optical wire and GDT wire had we chosen the right suppliers. Digi-Key offers microcontroller programming which we may use in the future, but in the past year we flashed all the chips in-house using a custom board. It’s also possible to buy some parts in bags instead of reels, which saves hours of cutting them apart. Small savings in time add up.
The procedure for ordering parts from a manufacturer when there’s no way to order online took some getting used to. It usually goes something like this:
- Step 1: You send a Request for Quotation (RFQ), which includes drawings, descriptions, material information, details about the manufacturing process, target price (optional), payment terms, etc.
- Step 2: Receive back a quote from the manufacturer.
- Step 3: Send a Purchase Order (PO) which references the quote number. Include any Terms and Conditions here, such as expected delivery date, consequences of significant delays, or whose responsibility shipping costs and potential shipping damage will be; A Google search for “purchase order with terms and conditions” will show you some good samples, but it’s good to have these looked over by a lawyer.
- Step 4: Receive a sample, approve it or request changes.
- Step 5: After the items are made, receive them with a packing slip and an invoice. A packing slip is in the box, which references the PO number. The invoice is sometimes mailed separately, or just emailed. Be sure to check each shipment as you receive it, so that you can catch any damaged or missing items immediately.
- Step 6: Pay the invoice via check or bank transfer. Checks are slow to clear and slow to mail, but bank transfers have a hefty fee.
Resources for sourcing parts:
- Ebay.com: You’ve probably all used it; you can find some small things very cheaply in huge quantities on eBay if you use search terms wisely. Ebay is mostly targeted towards consumers, but you can find some bulk items.
- Alibaba.com: Dirt cheap wholesalers from around the world, mostly from China. If you post an RFQ, be prepared to be inundated with emails from ten dozen “Lucy Chang”s and “Amy Hu”s. The sales reps suspiciously have nearly exclusively women’s names and stock photos of attractive young women... perhaps they're trying to appeal to a demographic of middle-aged men. Alibaba is intended for large-scale wholesale and typically has minimum orders in the hundreds.
- Aliexpress.com: Like eBay, but it’s more intended for B2B sales, as many items are only available in multiples, though not quite the huge scale of Alibaba. It has a friendlier UI than Alibaba as well.
- MFG.com. In the words of a friend of ours, “MFG.com is like the OkCupid of matching you with shady chinese machine shops.” Post an RFQ for a custom manufacturing job, get competing quotes from shops around the world!
- For most custom jobs, leave at least a two month lead time for the process of tooling, manufacturing a sample, approving the sample, adjusting the tooling, and the first round of production.
- Familiarize yourself with International Commerce Terms: http://en.wikipedia.org/wiki/Incoterms; payment/credit schemes such as: NET30 (buy on credit and pay after 30 days), paying for tooling upfront and for the parts as they arrive, 50% up front and 50% upon delivery (as Chinese suppliers often want), etc.
Shipping: “Take my kidney, just don’t make me print shipping labels again!*”
Printing mailing labels, managing special requests, processing address changes, notifying backers of tracking numbers, etc, takes longer than you think. There’s also a learning curve when choosing optimal mail services and filling out international customs forms, so delegate one person to the task.
Decide on a carrier. USPS is 2-4 times cheaper than other carriers, particularly for international shipments, but you pay for it in reliability. USPS hands off mail to the recipient country’s local postal service, after which the package becomes untraceable. If the package is not successfully delivered, it's usually lost forever, but if you’re lucky it eventually returns to you. Good luck if you need support or to collect on a lost or damaged box, as USPS customer service is as good as nonexistent. UPS, DHL and FedEx are much better about service, but cost upwards of $300 per shipping box to some parts of the world.
Get phone numbers from international backers!!! Kickstarter does not collect phone numbers automatically in its shipping information survey, but this is very important for international orders. We had a number of packages returned without the recipient even knowing that deliveries were attempted, because there was no way for the post office to get in touch with them if there was a problem with the address.
Find a bulk mailing software that works for you. We’ve used USPS’s software Stamps.com which got the job done, but there are other services out there that might be better. Stamps.com is proprietary, slow, only allows one user at a time, and occasionally buggy.
Per-unit cost: For a hardware project, your selling price needs to be at several multiples of the cost of components to you plus the price of shipping. When planning, consider the costs of the following:
- Ordering 20% extra stock to account for damage/loss/mishandling cost of packaging materials (boxes, bubble wrap, etc).
- Cost of labor for packaging
- Cost of labor for customer service tasks (replying to inquiries, updating shipping information, etc)
- Cost of labor for shipping
- Cost of shipping to near & far locations
Initial start-up costs:
- Cost of prototyping your product
- Cost of incorporating your company
- Legal fees for consultations about your product & company (e.g. LLC vs C-Corp vs S-Corp?)
- Legal fees for drafting an operating agreement between founders
Monthly Overhead Costs:
- Employee payroll
- Accounting/payroll processing
- Taxes (businesses file quarterly, and you better not mess up your end-of-year W2s!)
Don't forget to value your own time. It’s easy to get swept up in the excitement of a project that takes off and neglect to calculate how many hours of your own time you pour into it. If it consumes your life, you need to make provisions for your own costs of living, whether funded by the project or from other sources, for the project to be able to continue at all.
Last but not least: was it worth it?
Ask us at 4AM, tape-gun in hand, and we might say no. Ask us when we’re well-rested and we’ll say: yes, absolutely! We brought six hundred baby Tesla coils into the world, something we didn’t imagine we could do. Don’t let our shortcomings scare you from trying something out. oneTesla has been an adventure that has taught us much more than we anticipated, and these are not things you can learn in a classroom. If we were to summarize:
- Plan ahead
- Expect the worst
- Don’t give up!
Thanks again for all of your support and patience. Without each and every one of you, oneTesla wouldn’t have happened!
Happy coiling, everyone!
-The oneTesla Team
P.S. Give us a Like at facebook.com/onetesla :)