This is a tool we use to fine tune projects toward the most commercially successful outcome.  It works by highlighting the 3 competing priorities in every project.  These are:

• Performance – how good does the product have to be
• Cost – how much will it cost to make
• Time – how quickly will it be available

The easiest way to understand this is to look at some examples.  Firstly, here is a visual perspective.

Project Priorities Perspective

So you can see that each competing priority is at one of the corners of a triangle.  If either Time, Cost or Performance is critical, then you can trade off the other two and get what you want.  Simple.

Life is usually a bit less simple.  The impulse is to say, “I want maximum performance at the minimum price and I want it now”.  You can only get this if someone else has already designed it and built it and you are buying it as a mass produced commodity product.  Mobile phones and portable media players are examples of this.  But then they are already doing it and you are a consumer, not a profit maker.

For a niche product opportunity, the point is that no-one else has done it;  or if they have, no-one knows about it.  The difference here is arbitrary since the outcome is the same.  The old saying goes, “Build a better mousetrap and the world will beat a path to your door”.  But time and marketing has shown this to be untrue.  If no-one knows, then no-one is beating a path regardless of how good your product is.

So the project will either have to buy technology to save time or increase performance, spend time to save cost or increase performance, or reduce performance to save time or cost.

An alternative view is obtained using a mind map.  Here is one possible way of representing this.

Project Priorities Perspective - Mind Map

Over the next three posts I will explore how these trade offs work for each of these scenarios and how the Project Priorities Perspective helps to identify these trade offs.

Ray Keefe has been developing high quality and market leading electronics products in Australia for nearly 30 years.  For more information go to his LinkedIn profile. This post is Copyright © Successful Endeavours Pty Ltd.

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There are many companies successfully doing good business in China.  Most of them are large, have deep pockets and have core staff in China making sure it stays good.  Names like Sony, Siemens, IBM (Lenovo)…

Smaller companies can run into trouble.  This is a case study of a project we were able to rescue.  I won’t give out technical or commercially sensitive details (we will never do that – in fact we offer an NDA, Non-Disclosure Agreement,  to all our clients) but I will look at the overall project and the issues that arose.

For ease of reference, I will refer to the client as Mr Electronics.  Mr Electronics had spent a year getting a product developed in China with the ultimate aim of manufacturing it there.  Conventional wisdom was on Mr Electronics’ side.  Most people believe that it is cheaper to make things in China than here.  And the engineering effort was being done for free by the manufacturer.  What is not to like about this arrangement?  It has both the perceived benefits of making electronics products in China:

1. low manufacturing cost
2. low engineering cost

So where is the catch?

Well, you might have noticed that Mr Electronics had spent a year to date on the project.  What I didn’t tell you is that it was simple product; conceptually simple and physically simple.  It was battery operated and only did one thing.  Every time the project was reviewed with the manufacturer and the question was asked if everything was now clear, the answer was “Yes“.  Yet every prototype presented clearly showed the answer should have been “Clueless“.  They were not speaking the same language! It wasn’t just English versus Chinese, but it was a completely different culture of how to communicate.  Since “Yes” is the best answer, it is the only answer you get, regardless of the real situation.  Mr Electronics is not alone in having run into this issue.

A year is a long time to not have your product available for sale!

In frustration, Mr Electronics approached us to review the project and advise on how to proceed.  The production in this case was going to remain in China (you can’t win them all) since the manufacturer had developed the enclosure and that part looked to be acceptable.  So we concentrated on the electronics and software.  Within 17 days we had obtained the following outomes:

1. analysed the specification and recommended changes that doubled the battery life while improving performance
2. designed the electronics, PCB layout and software
3. produced a fully working prototype unit for evaluation
4. generated all the production documentation to make, program and test the PCB (circuit board)

Although I’m proud of the result we got here, my point is that they might have never gone to market if they had stayed on the original path.

So did Mr Electronics have a happy outcome?  Not completely!

Mr Electronics isn’t very much out of pocket since the actual cost was low, even for 10,000 units.  He is however out nearly 2 years of his life, hasn’t captured the market opportunity he originally aimed at and isn’t enjoying the profit stream he deserved since his product was a good idea and should have been a commercial winner.

Some key take home points for me were:

1. get the right people involved and you can reduce your time and cost to market
2. get the right people involved and you can get a better outcome than you can achieve on your own
3. China might be cheap but that doesn’t guarantee you will get a commercially successful outcome
4. “Yes” only mean “Yes” when you are both speaking the same language

OK, this post looked at what can go wrong.  And unfortunately Mr Electronics’ experience is not unique.  But from here on I plan to stick to how to make things go right.

Next I will show you our Project Priorities Perspective and how it can help to bring focus and clarity to maximise the commercial outcome.

Ray Keefe has been developing high quality and market leading electronics products in Australia for nearly 30 years.  For more information go to his LinkedIn profile. This post is Copyright © Successful Endeavours Pty Ltd.

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In order to make electronic products in Australia at a good profit, it is necessary to understand the factors that contribute to the total cost of a manufactured product.  Here are the top 5:

1. The cost of the engineering and tooling effort – sometimes referred to a NREs (Non Recoverable Expenditure)
2. The cost of the parts that must be purchased in order to make and assemble the product
3. The cost of the labour and energy required to make the product
4. The cost of production rework for product that doesn’t work first time on the production line
5. The cost of warranty returns and loss of reputation and loss of customer confidence when the product doesn’t work correctly

So when we look at the real cost of a product, the production labour can turn out to be a small component.  The key to low cost electronics manufacture is to design the product to be efficiently, flawlessly made and to continue to work correctly for well past the warranty period.

This sounds really simple and basic to me.  What do you think?   Is this really readily achievable if you set out to do it?  We believe so and routinely do it.

So now you have it, the secret to our success and the strategy we have used to ensure electronics products manufactured in Australia by our clients are indeed competitive and profitable when compared to Asian imports.

This isn’t the end of the story of course.  The simplest things seem often to be the hardest to get right. So next we will look at a few specific case studies.

Some of these will be very surprising.

Ray Keefe has been developing high quality and market leading electronics products in Australia for nearly 30 years.  For more information go to his LinkedIn profile. This post is Copyright © Successful Endeavours Pty Ltd.

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So what stops us from competing?

Many people I speak to believe we cannot Manufacture Electronics Products in Australia and make a profit.  Belief is a powerful thing.  Enabling beliefs enable, and limiting beliefs limit.  We have been privileged to take part in some projects that break through this limiting belief barrier.  So I wanted to share with you not only why it is possible, but why it can be the norm.

Firstly, it is about mindset.  Dr Marc Dussault refers to this as the Exponential mindset and the resulting thinking as  ”Antimimeticisomorphism“.  I’ll let him explain it since he does it much better than I do.  Please visit his sites.  I’ve learnt a lot of very important lessons from Marc.

So thinking differently will get different results.  Albert Einstein famously said “We can’t solve problems by using the same kind of thinking we used when we created them.”  So one type of thinking got us into this mess, and a different type of thinking is the way out of it.

Electronics Manufacturing in Australia – Some things to think about

We have some distinct advantages when it comes to manufacture.  Here is a short list:

1. We have the most cost effective technical workforce in the OECD – ie. our engineers, technicians, scientists and developers are underpaid at present compared to the rest of the world.
2. We are in a moderate cost of living economy (look at the Germany, UK, USA or Japan)
3. We have a ‘make it work’ approach that can get the job done
4. We seemed naturally predisposed to try things a different way to the norm – this is a very good thing
5. Niche and technically advanced products are ideal choices for our local manufacturers
6. We are well placed to export to Asia!

So the next question is “How do we take advantage of this to become more competitive“?

My next post will reveal the top 5 contributors to maximising profits and the real total cost of ownership of a manufactured product.

See you then.

Ray Keefe has been developing high quality and market leading electronics products in Australia for nearly 30 years.  For more information go to his LinkedIn profile. This post is Copyright © Successful Endeavours Pty Ltd.

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