In This Episode...

Andy Bartlett, an experienced British product designer who has 25 years of experience in product design, development, and working with manufacturers in China, returns to the podcast to join Sofeast's CEO Renaud for a lively discussion about the kinds of issues and common pitfalls that can come up when developing, approving, and maintaining tooling for your plastic injection molded products.

You'll learn why supplier selection is key, how to protect your IP, tooling budgets, managing the process, and much more besides, as Renaud and Andy both have many years of experience in dealing with mold fabricators and the manufacture and design of plastic injection molded goods.

 

Show Notes

00:00 - Introducing the episode & our guest, Andy - tooling with a focus on plastic injection molding. How to go into tooling once prototype plastic parts have been made and are ready to go into production? What kind of defects may we see? Covered from the angle of the 7 most common mistakes to avoid.

02:31 - Mistake 1. Going straight into the fabrication of the tooling from a 3D CAD drawing without doing DFM, DFQ, & DFC reviews - Andy suggests using the interference check with CAD software and looking for issues in the tooling design like knife edges and radius adding, understanding where the cooling channels are, etc. 

07:32 - When is the real golden sample ready? - actually, it's after tooling has been fabricated and used, as this is when you see flow lines, gates, etc. 

09:12 - Mistake 2. Not giving enough time to iterate tooling and verify tooling - the first parts that come off will probably prompt you to need to make changes to tooling, so factor that time and budget in. 

13:08 - Mistake 3. Getting tooling made in China without making sure to use an enforceable contract - less experienced importers may feel that signing an NDA or an agreement from their own country is enough, but then find that they don't 'own' the tooling and can't be pulled out. 

17:58 - Mistake 4. Purchasing tooling from a supplier on Alibaba, etc, without confirming who designs and produces the tooling - risks include your small project being outsourced to a tooling shop you have no knowledge of which means a lack of control over your project, your IP, etc. 

21:41 - Horror stories where toys have been copied and sold on the market before your original product has even come out - if your tooling design and fabrication is outsourced, perhaps the outsourcer might also decide to produce your tooling again and sell it to someone else to produce your product themselves if they like it! 

23:34- Assessing toolmaker quality - A tip is to look at the floor of the tool shop of your tooling fabricator. If it's clean and well-managed, you have a good chance that they're able to produce quality tooling. 

25:13 - Mistake 5. Not maintaining the tooling carefully - if tooling needs to last for a number of years, it's important to store and maintain it carefully in order to avoid rust and damage. 

25:52 - Mistake 6. Not getting a guarantee for tooling -  Andy reminds us to make sure that tooling is provided with a manufacturer's guarantee that it will be usable for the right period of time appropriate to the quality of steel used in its construction and projected volumes. 

28:27 - Why from a designer's perspective it's better to have a cohesive alignment between the manufacturer and toolmaker - this reduces overall risks of things going wrong and also the effort needed to solve problems.

30:16 - Mistake 7. Not keeping tabs on the health of your supplier's business - if their business fails your tooling could be in danger!

33:42 - Wrapping up

 

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In This Episode...

Sofeast's CEO Renaud and Adrian from the team explore an important part of the new product launch process: pilot runs.

What is a pilot run, why is it so important when bringing new products to market, and what are the benefits we can expect when performing them before going into full production? These and more questions like this answered in this episode!

 

Show Notes

00:00 - Introducing the episode

00:51 - Why the pilot run is such an important activity when launching new products

03:11 - Why a pilot run helps you to validate whether the workshop is going to be able to mass-produce the products - initial prototypes made by an engineer on a bench, no matter how good, aren't ready for mass production without a lot of risks. These prototypes aren't made with the same processes as will be used in mass production, so going ahead without the pilot run is skipping a step.

06:25 - When to perform a pilot run, and how many runs to perform before going into production - you may perform more runs until all of the 'bugs' have been ironed out. Renaud also explains how in some industries, such as consumer electronics, they perform specific pilot runs for engineering, design, and production validation (EVT, DVT, and PVT), each focused on testing different elements of product design and production process.
Some comments on keeping suppliers accountable and being able to control costs better thanks to more visibility over what comes off the line with issues at an early stage.

10:32 - What we can learn from pilot runs used in the automotive industry? - if an auto part can't be made at the right speed and quantity it's a big problem, so numerous production trials are used to assure that the process is capable of fulfilling the correct rate. This principle applies to other products, too.

12:12 - Is a pilot run still appropriate when manufacturing smaller quantities? 

13:33 - How about if you are producing an existing product, but with a new manufacturer?

14:22 - Why DON'T Chinese manufacturers like performing pilot runs? - yes, these reasons cause this:

  • They can be overoptimistic and underestimate the pilot run's importance
  • Staff are often paid per piece which doesn't fit well with the stop/start pilot runs

16:11 - The key benefits of performing pilot runs:

  • It forces the manufacturer to plan the process and production linearly and so avoid delays
  • It trains the staff on small quantities at first and drives the supplier to write good work instructions
  • It allows you to see what does and doesn't work and make changes before too much money is at stake
  • Testing areas and equipment readiness can be assessed
  • The run rate can be tested to assure that no bottlenecks are slowing down the process unduly
  • Stress testing forces process and quality engineers to find issues and work on them before mass production

Basically, "learn from the mistakes before they become too costly."

18:32 - Wrapping up

 

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In This Episode...

Adrian asks Renaud the questions: "Is Investing In Process Automation In The Factory Worth It?" and "What are the best practices to follow to smoothly transition into more automation?"

In China especially, there's a trend to replace staff with equipment, and part of this automation drive comes from the government itself who is steering the manufacturing sector towards higher-tech products.

As staff costs rise, the temptation to use equipment and robots due to the seemingly lower cumulative cost over time is understandable, but is process automation truly worth it, and If we do want to implement automation into the factory, what are the best practices to follow to make it a smooth transition? That's what we get into here...

 

Show Notes

00:00 - Introducing the episode

02:35 - Summarising process automation in the factory - essentially it's the use of equipment and software to replace human labor. This sounds great and can be, but this episode aims to dispel a lot of the fantasy surrounding automation.

05:07 - Is rushing into automation common amongst Chinese manufacturers? - yes, the government and owners are focused on going higher-tech more quickly, but they're walking a tightrope between increasing equipment use and putting too many staff out of work. The usual attitude is that to go up in the value chain processes need to be automated, which is somewhat true, but it's the implementation of automation where things can go wrong if it's rushed into and the pros and cons aren't fully investigated and considered.

07:54 - The benefits & drawbacks of automation in the factory - going through a list, starting with the benefits:

Benefits

  • (08:07) Lower costs of equipment in comparison to employing numerous operators over time (labor cost/social insurance/etc)
  • (10:27) Equipment reduces defects over operators (human error) and removes the need for an operator that focuses on rework
  • (11:30) Reducing management overheads and maybe even dispensing with requiring an HR manager to manage multiple staff

Drawbacks

  • (12:09) The cost of interest on capital expenditure - quite high in China, around 8-10%
  • (12:35) The costs of specialized staff required to run and maintain the equipment
  • (14:02) Cost of getting the machinery to work properly (setup/time/needing operators to work during this)
  • (15:44) Maintenance - a large driver of costs (parts, downtime, training skilled staff, etc) and really important for highly automated factories (listen to more about preventive maintenance here)
  • (20:36) Automation can reduce a factory's flexibility - manual labor allows a factory to be flexible and provide high mix/low volume work, but automation reduces this flexibility and leans more toward low mix/high volume work. Your higher MOQs may remove the ability to take smaller orders which can return more profit.
  • (22:08) Lead times could be reduced by equipment, but often it's not the case - in theory, automation means more parts can be made more quickly, but often Chinese manufacturers make a lot of inventory and don't take advantage of it and it doesn't improve lead times.

22:57 - Many manufacturers don't take many of the disadvantages into account - this can mean that the cost of equipment VS operators over, say, 10 years works out at more! Pivoting is easier with a human workforce. 

24:31 - What are automation best practices followed by the 'best manufacturers?' - Toyota's approach is to automate or remove DDD (dull, dangerous, and dirty) operations without focusing on ROI, as staff safety is more important. 

25:59 - The wrong way to implement automation - rushing into heavy automation will cause trouble mainly due to your staff struggling to be skilled and familiar enough to handle the maintenance effectively. This can cause downtime, scrap, and reduced equipment lifetimes so is a serious problem.

Before implementing full automation, you should try... 

26:32 - Re-engineering human operations - Before implementing automation, the best companies have process engineers check the operations humans are doing and assess how to make those more efficient. So that's re-engineering human operations to reduce 'waste' and increase the seconds per minute that they are physically working on transforming each piece, for example, through improving the layout of and logistics around the production line and providing enhanced training to the operators and their group leader. This can reduce staff numbers and improve efficiency and quality.

28:54 - Semi-automating some of the operations - now you have improved the efficiency of operators you can look into implementing some automation to assist operators to become even more productive, for example, a machine that delivers a part into place for them to transform and then ejects it, reducing their time spent not transforming parts. Again, this should reduce staff numbers and improve efficiency and quality.

31:46 - Some of the problems factories face when rushing into highly technical automation too soon - if a machine goes down it can hold up the whole production until the machine is cleared, for example. But the worst case is that a machine gets broken and can't be used until replacement parts can be obtained.

33:35 - If your supplier informs you that they're implementing automation, how to handle that? - make sure that they're conducting a pilot run that is isolated from the rest of production and they are not recklessly rushing into it. This is a good thing, though, as it shows that they're investing in the company and looking to the future.

34:35 - Renaud's blueprint to implementing automation efficiently - assess whether tools even necessary or is reducing waste in manual operations, for example, a worthy goal? Re-engineer processes with lean manufacturing tools. 
The trend is that over time automation will be increasingly required by most manufacturers helpful, so starting with semi-automation to make the operator's routines more efficient starts to train them and the maintenance staff to work with automation and equipment (maybe with one pilot line to start with) now makes sense.
As you go along, more and more processes can be automated step-by-step, and this will be accompanied by a reduction in staff required in turn.

37:24 - Automation is NOT just robots - Michel Baudin wrote in this blog post that PLCs (programmable logic controllers) outsell industrial robots by millions to one each year. These units control the equipment and processes and the reality of most manufacturing operations is that robot arms, for example, are not actually what is used to automate processes at all.

39:40 - Wrapping up

 

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In This Episode...

Renaud interviews Simon Caballero, a Hanoi-based purchasing manager and expert on manufacturing in Vietnam, to discuss the manufacturing industry in Vietnam, common risks and issues you will face when manufacturing garments there, and the relationship between developing new products and manufacturing in Vietnam and China. 

Simon has a background in logistics and over a decade of experience in sourcing all kinds of products in Asia, with particular expertise in China and Vietnam (a growing manufacturing hub and popular alternative to China). In recent years he has been focused on the garment industry (specifically workwear), hence he's the authority to speak with for this episode's topic.

 

Show Notes

00:00 - Introducing the episode

00:54 - Brief self-introduction by Simon about himself and his experience - Simon explains how he started in Logistics in Spain, but since 2009 his journey has taken him to Thailand, China, and now, Vietnam.

04:53 - What is workwear (a particular focus of Simon's), and how has this clothing trend changed? - workwear includes protective clothing, technical garments, uniforms, and more. This kind of clothing has evolved to be more fashionable and specific to certain tasks and professions.

05:58 - Most factories in Vietnam can be categorized into one of three types (Simon believes this is common in garments and most other product types, too). What are they? - understanding the type of factories available is an important factor when choosing a Vietnamese garment manufacturing partner, so here they are:

  1. (07:05) Foreign-owned companies - these are growing fast and are mainly Korean, Chinese, Taiwanese, and Japanese invested businesses. They are more professional than local companies and have a stronger focus on QC and implementing modern production facilities and processes. But they are also more expensive, so they are a better choice for more complex and higher-quality products.
  2. (08:58) Locally-owned factories - usually only invest in the basics, such as production line/equipment, and lack an understanding of QC and technical processes. Can often specialize in one process or another, such as sewing, but they may not be able to handle multiple processes and sourcing - you can buy FOB from them, but you will need to support them in finding materials and accessories, for example. You need to manage your expectations well when working with them, but this is a low-cost option that can work well for less technical products.
  3. (15:49) State-owned companies - these are large well-financed companies that offer a vertically integrated service (so for garments this is materials, dying, weaving, etc). They are focused on medium/large buyers, so are not suitable for smaller buyers.

17:13 - The impact of Tet/Chinese New Year on obtaining materials and containers in the period just after the holiday in 2021 - raw materials and logistics have suffered from rapid price increases of 5-10% in 2021 after CNY/Tet. Simon discusses the reasons behind the increases, such as increased demand and speculators who had bought up materials when prices were low.
The lack of containers has also led to some delays in shipping from Vietnam, as well as logistics costs ballooning, too.

25:00 - The military coup in Myanmar has also affected garment production - unlike Vietnam, Myanmar was affected by COVID quite badly (with around 10 times as many deaths) and now the military coup there has also disrupted manufacturing. Simon got around this by quickly switching production from Myanmar to China.

26:01 - Are garments manufactured all around Vietnam as they are in China, or centralized in one area? - Vietnam has some industries that occur all around the country such as forestry product and chemical or mineral processing, but the country can be split into zones, each of which specializes in certain product types or materials:

  • (27:02) The Far North (along the border with China & Laos) - more for natural resources and electricity, mechanical and agricultural industries, forestry, mining and minerals (specifically coal), less for assembly of electronics and garments, etc.
  • (27:39) The North (around Hanoi & Haiphong) - industrialized provinces, especially for electronics and garments manufacturing, but also provides many of the natural resource industries found in the far North.
  • (28:20) Central provinces (around Danang and along the coast) - specialize in textiles, footwear, and electronics assembly, also seafood, and agricultural processing.
  • (28:51) The South (around Ho Chi Minh city) - specialize in high-quality textiles as that industry originated there in Vietnam, so they're the most experienced. Tends to be a higher cost than the North. Big brands are all manufacturing in the South in high quantities. More convenient for logistics, too. Also, electronics, software, and pharmaceuticals are found here.

30:41 - The differences between North & South Vietnam - like two different countries in some ways. The South is more open, developed, and more driven to do business, whereas the North is more traditional and led by the government as it is based there. Similarities in China are comparing the PRD cities in Guangdong with most other areas of China, where the latter have been exposed and doing business with foreigners for a long time and so are more open, experienced, and innovative. Also, Taiwan is more advanced again and can provide innovation that the Mainland doesn't have.

34:04 - How about developing new products in Vietnam? - Vietnam doesn't offer the diversity of products that China does, so for new product development in Vietnam, you need to consider that most materials, electronic components, injection molds, pharmaceutical chemicals, etc are imported from China. Importing to Vietnam increases costs and makes supply chains more vulnerable. It is feasible to develop new products in Vietnam, but it's likely there will be a strong reliance on China.

37:10 - QC in Vietnam - importers need to consider QC. Due to the small population in Vietnam in comparison with China, it can be harder to find qualified QC inspectors, and this shortage leads to higher travel costs and longer lead times for inspectors. There are also concerns over inspector integrity. The lack of QC inspectors can affect your new product development.

38:32 - Wrapping up

 

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Remember, Sofeast provides most of our solutions in Vietnam, too, such as product inspections and factory audits, so if you are importing from Vietnam and need assistance, we can help. Visit our website at Sofeast.com

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In This Episode...

Design For Quality is a process we follow in order to design good quality into products at the early concept and prototyping stages during the new product introduction process.

You will probably be surprised as to how many design points need to be considered in order to have a mature product design that can be mass-produced with the minimum of quality problems, defects, safety issues, and more.

Our CEO Renaud has worked with clients on numerous products over around 2 decades in Asia and performing thorough DFQ reviews on their product designs is one of the key tools in Sofeast's armory when it comes to bringing great quality products to market. So, in this episode, he shares the lowdown on this important quality process.

Show Notes

00:00 - Introducing the episode 

01:14 - Why is the design stage of the new product introduction process so important? - Renaud gives a lot of background about what goes into product design and how the decisions you make about materials and processes impact product quality (considering 'what could go wrong based on what we know about them?'). Also, he explains the difference between manufacturing quality issues and design deficiencies.

09:14 - DFQ reviews often happen before you invest in the tooling. Here's why... - Tooling is very expensive, so making changes to the design before it's made is really preferable, but most Chinese manufacturers are not good at providing feedback on designs that can cause costly manufacturing issues (like scrap and rework).

11:30 - Changes are quick and cheap at the concept stage, but later on are an expensive problem - Renaud discusses this point which is also illustrated in this graph:

14:30 - What are the principles in DFQ that we follow when reviewing our product and its design? 

  • Understand past issues and learn from mistakes.
  • Identify issues as early as possible and ensure they are ‘designed out’ of the product (you can't inspect quality into a product).
  • Use error-proof design techniques - this will reduce scrap and rework for a start, so use fixtures that only allow operators to assemble parts in the correct way, for example.
  • Simplify the design to reduce quality issues, (one piece is better than two, fewer functionalities may be better overall)
  • Have robust tolerance understanding for each part.
  • Standardize parts where possible (try to reduce the number of custom parts and use off-the-shelf ones instead) - this also reduces supply chain risk, too.
  • Have a multi-functional team - try to get involvement from a number of different staff in the DFQ review, including design, engineering, and, importantly, manufacturing staff, too, as they know the production processes best.

24:11 - If you're manufacturing a new product, who can you rely on for information about your product at an early stage? - Manufacturers often say that they do a DFM/DFQ review, but they don't always take it very seriously. So a common concern is how reliable the review was. Therefore many importers choose to work with a specialist 3rd party engineering firm to help them perform a DFM review and assist with their product R&D (our company Sofeast is one example) in addition to their manufacturer.

27:32 - Some common mistakes that cause poor-quality products (that we try to weed out with a DFQ review):

  • Putting the incorrect tolerances on mechanical drawings.
  • Relying on prototypes' tolerances for critical dimensions when going into mass production (as prototype production is not the same as mass production).
  • Relying solely on feedback from designers about the product - they might think the product is designed beautifully, but it's not easy to use. In this case, it's still a quality fail for end-users as they won't enjoy using the product.
  • Not performing accelerated 'stress testing' to confirm serious weaknesses in the product's design - a product needs to be able to survive for a reasonable amount of time when being used by the end-user, so the normal usage needs to be tested (such as testing an office chair being sat on thousands of times to simulate its use over a number of years).
  • Confirm through reviews that the design is suitable for the manufacturing processes used and will result in good quality products - pilot runs which are observed by a quality engineer are a good way to assess this.
  • Not performing compliance testing - this could cause safety issues which lead to you being sued or getting your products stopped by customs. Either way, both circumstances are costly and damaging.

36:58 - Some examples of how DFQ reviews have improved products before they went into production - since this is something we actively do, Renaud shares some real-life examples, and more. Includes hazardous battery design (think Note 7), brittle magnets, products that need to be waterproof, and more.

39:54 - You may get helpful feedback from component/material sub-suppliers - good feedback can be found by forcing a dialogue with sub-suppliers which Chinese manufacturers may not do in their haste to go to mass-production. But if these sub-suppliers are specialists in the component or material in question they may have some very helpful advice about how the product design best makes use of the component/material in order to reduce quality issues during production.

40:47 - Wrapping up

 

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In This Episode...

Preventive maintenance in the factory is a topic of interest for many Sofeast customers, and manufacturers who rely on machinery in the factory and choose to put in place a preventive maintenance plan tend to keep operations running smoothly and keep ahead of equipment maintenance, repairs, and routine part replacements. This gives them numerous advantages, not least fewer quality problems, less cost sunk into inventory, higher labor productivity, and much more!

In this episode, our CEO Renaud introduces preventive maintenance, its benefits, and shares some examples to help illustrate how it works and how to implement it. We'll also share some of the key elements of a preventive maintenance plan and a free template that you can download, too.

Show Notes

00:00 - Introducing the episode 

01:02 - The example of what 'bad factories' do that we need to avoid - no preventive actions, lack staff to maintain the equipment, the equipment is too high-tech for them, make rushed repairs if it breaks down, trapped in a cycle of the equipment going down, being repaired, and then going down again.

03:03 - What is preventive maintenance? - minimizes the amount of unplanned downtime. Regular activities are performed to keep the equipment in a top operating condition (with short downtime). Being vigilant about certain components' lifetimes and standing ready to replace them with spares when they reach the Mean Time To Repair (according to the manufacturer).

04:36 - The overlap between preventive maintenance and 5S - both require people to follow pan and achieve set goals and 5S helps with preventive maintenance.

05:52 - Is preventive maintenance expensive in comparison to more 'reactive' maintenance? - if a machine goes down the impact on costs, quality, delivery times, staff productivity, and customer relationships are probably high. While preventive maintenance has its own cost, you need to weigh up that cost against the disadvantages of machines being out of order. Preventive maintenance is like regular dental appointments, small actions prevent larger problems later on.

09:18 - Some examples demonstrating how preventive maintenance works - time and age-based activities are usually undertaken (similar to car servicing). The objective is to keep machinery 'as new as possible.' Sometimes it's more like a process control plan where there are hourly, daily, or weekly activities.
For more information on these examples, you can read this blog post.

15:09 - Download the Sofeast preventive maintenance plan template - download the plan here.

16:00 - What kinds of challenges can we expect to face when trying to implement a new preventive maintenance strategy in a factory in China (or elsewhere)? - there will likely be pushback from production staff who will complain they're 'too busy' and are used to running machines until they break down. Also, there can be a lack of capable staff able to carry out the preventive maintenance, which is especially an issue in factories that have implemented a lot of high-tech automation quickly, rather than bringing it in step-by-step.

18:49 - The trouble with automation... - it's often down (30-40% of the time) due to a lack of experience to maintain it to a high enough standard. As automation increases in use, the issue of maintenance will become increasingly important for factories to be in control of.

20:46 - A rundown of benefits you can expect when implementing preventive maintenance - the reduction of unexpected downtime:

  • increases factory capacity so fixed expenses increase production
  • reduces inventory required to cover for downtime which frees up cash for other business requirements
  • reduces lead times and delays to customers which will please them and boost relationships
  • smart preventive maintenance + smart automation (implementing step-by-step), you maximize staff productivity and can go further and faster with automation
  • reduces quality issues and waste (faulty or worn machines produce poor-quality components/products) 
  • preventive maintenance + 5S + process controls work together well to reinforce one another (actions can be taken before problems become serious)

25:37 - Wrapping up - you have to do maintenance anyway, so, the question is, do you want to do it on your terms armed with a plan that vastly reduces the chances for you to suffer from unpleasant surprises and the many negative effects of unexpected equipment downtime? If so, preventive maintenance is for you.

 

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In This Episode...

Interested in setting up a factory of your own in China (or perhaps other countries in Asia, too)? 

Renaud and his business partner Fabien have been there and done it, so let's explore how they set up our Chinese contract manufacturing subsidiary, Agilian Technology, and how they've tried to implement best practices learned over decades in China to offer something better than other Chinese factories.

Show Notes

00:00 - Introducing the episode 

02:10 - What's the story behind Sofeast opening 'Agilian Technology' our contract manufacturing subsidiary (factory) in China? - Grounded in setting up a good, transparent supply chain in order to have better control - so opening our own factory for assembly, etc to close the loop for clients was a natural progression for the company.

07:32 - How going through this process was an education - being an actual Chinese manufacturer provided us with a lot of new opportunities, such as being able to agree on preferential credit terms with local Chinese component/material suppliers who would usually demand payment upfront from foreign customers.

The 6 phases we went through to open our factory

09:04 - Phase 1: Choosing the right site - how to find sites that fit our needs, dealing with estate agents, etc.

16:14 - Phase 2: Adhering to local regulations - includes fire regulations, battery storage, recruiting and training staff, preparing the production transfer from the old location, insurance, and more. 

21:14 - Phase 3: Decorating the factory - planning the areas and decorating happens before the transfer. This includes deciding on decoration, floor style, toilets, ventilation, lighting, and much more. Following up on the contractor is crucial as it usually a one-off job so they may not be someone you have a long-standing relationship with.

26:05 - Phase 4: Setting up the office - important points are different areas, lighting, wifi internet access, plugs and sockets, flooring, etc.

27:11 - Phase 5: Setting up the workshop - plan for the layout and material flow to avoid internal logistics inefficiency, line layout to be optimal (we use compact U-shaped cells and also longer lines for higher volumes), power usage, lighting and ventilation, security, and more.

32:14 - Phase 6: Setting up the warehouse - warehouse layout with a focus on material flow, also installing racking, forklifts, setting up doors, fans, and lights. A word on preventing theft and its impact on production and business.

34:53 - Take best practices and implement them - observe the factories you like and implement their good ideas! An example of this was keeping our office-based staff who are involved with production near to the workshop with a glass wall so they have visibility of production. In many Chinese factories staff like production managers and quality managers often have separate offices and avoid going onto the factory floor, but this reduces the value they can add. Continuous improvement and problem-solving are built into how we structured our factory, but this is opposite to many other local competitors.

39:47 - Wrapping up

 

Related content...

  • Take a look at Agilian's mass production in China page which includes a really helpful video from Renaud where he answers key questions customers have about Agilian before working with us on a manufacturing project.
  • Visualize the different areas of the factory by watching them in operation on Agilian's YouTube channel.
  • Renaud listed the phases followed to set up Agilian in this blog post.

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In This Episode...

Adrian and our CEO, Renaud, discuss how the current political tensions between the USA and other Western nations and China are affecting manufacturing and provide some more general observations on the 'Cold War' trends of containment and decoupling that seem to be gathering strength.

This topic stemmed from this recent Forbes article which suggested that Americans polled would be prepared to pay 20% more for goods manufactured in democracies...No prizes for guessing which country it casts doubts over.

So, how serious is this 'Cold War' that's developing, what are we seeing on the ground in China, what could be overstated by the media, and is it really causing a lot of upheaval in manufacturing and an exodus from China of Western brands?

Show Notes

00:00 - Introducing the episode 

01:13 - Discussing the recent Forbes article titled: Americans Fine With Paying More If Trading With Democracies, Not Chinahow realistic is this and has the poll been couched in an inflammatory language to elicit a negative response?

06:09 - Militant consumerism - Some aspirational brands, such as Apple and Nike, have lost customers due to high-profile corporate social responsibility issues, so they make efforts to control supply chains strictly. But 'China' seems to be more worrying for governments than consumers, and Chinese made goods are almost always generally accepted to be trustworthy and good enough quality these days by consumers and political factors, such as China's governance, doesn't really affect buying decisions by consumers much yet.

08:43 - Could this type of news constitute a threat to 'Made-in-China' products by stirring up anti-China sentiment among militant consumers? - militant consumers have already started to push back against brands with an environmental impact such as apparel, cosmetics, cleaning products, etc. Could China be put in their sights if they're continually exposed to news articles like this?

10:06 - The 'real effect' militant consumers are having on apparel - brands are paying more attention to environmental impact due to the concerns of militant consumers, but many fast-fashion brands are just 'greenwashing' their brands for marketing purposes rather than making meaningful changes. 

15:59 - The sentiment towards China - this has been on a downward trend since before the Trump administration and, enhanced by him, the prevailing attitude towards China in the USA is now negative. Australia, Europe, and the UK have also taken a stand against China in different ways recently and the results haven't always been positive for them. China's global PR isn't always the best and the leadership tend to be more focused on what Chinese people think of them than outside countries which doesn't help change attitudes quickly.

21:04 - Why a 'Western' viewpoint tends to cast China in a poor light - this coupled with politicians and the media means that sentiment towards China may not improve for some years to come.

23:55 - The growing 'Cold War' trend between the USA & China - what does this mean? Containment and decoupling activities are becoming more prominent. Is the media being used to contain China right now (including articles like that mentioned earlier)? Also, are we seeing real-world Cold-war scenarios where current tensions in the South China Sea, India, and also Myanmar (where the US-friendly government has been toppled by the military who are friendly to China), for example, mirror the days of the Cold War between the USA and the USSR where there were side conflicts rather than a war between the 2 superpowers?

28:25 - Is it 'wrong' that China is building up global power and influence, especially in Asia? - the Western media often paints this as a worrying or negative thing, but if we look at this situation from outside of the Western viewpoint, this is nothing that hasn't been done before by Western superpowers. What would Western countries do if they were surrounded by an opposing military power in the same way that China is? Renaud also makes some interesting points about China's government - they're making great efforts to build an extremely professional and modern government. The problem is, it seems difficult to imagine a time when China and the West will understand and agree with each other (this is manifested in the recent mistrust on both sides surrounding the WHO investigation in China regarding the origin of the coronavirus).

33:18 - Decoupling. Is this something that's having a strong effect on manufacturing in China yet? - in electronics, there has been almost no decoupling (this is echoed by Richard Barnett in this interview). At most, there has been some movement of final assembly to places like Vietnam and in some cases, some new products have been developed in Taiwan rather than China. The apparel industry has already decoupled from China to a large extent, but this was happening long before today's tensions. 
Even where supply chains have been relocated, the final assembly is a relatively low value-add and components are usually still made in China.

38:51 - Finding countries that can provide a complete supply chain for most products outside of apparel is unlikely...yet. Vietnam is mooted as a modern success story and a potential alternative to China, but it's still a tiny resource in comparison to its large neighbor.

39:57 - Wrapping up

 

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In This Episode...

Adrian and Renaud, Sofeast's CEO, return in this special Chinese New Year 2021 edition of the podcast! 🧧🧨🐂

During the CNY period manufacturing in China (and other parts of East Asia) is effectively on hold for several weeks, so during this time importers have a chance to 'Spring Clean' their supply chain, finding and eliminating risks and also looking for untapped opportunities to make improvements, costs savings, and more.

So, based on his decades of experience in dealing with Asian suppliers, here's an interesting checklist from Renaud for you to work through over these few weeks. 

Show Notes

00:00 - Introducing the episode - why now is a good time to 'spring clean' your supply chain

02:52 - Risks associated with your current supplier base - too concentrated in 1 country, no backup suppliers for key components/products, near-shoring an option? etc...

08:01 - Is assembly closer to home using Chinese components a workaround for importers who want to move some of their supply chains out of China? If substantial transformation takes place you can say products are 'made in' another country other than China which could be beneficial, but a very long and complex supply chain also has its own issues as we discuss...

11:37 - Consolidate and strengthen relationships with key suppliers - few key suppliers rather than many, and managing them differently - more hands-on management, helping improve operations, etc. Giving talented suppliers (new or current) with R&D capabilities more business and co-developing new products with them helps you to gain closer relationships and can help form exclusive relationships with great suppliers. IKEA, for example, also sends in engineers to help their key suppliers 'level up' and improve quality etc, so this is another way to strengthen relationships.

16:40 - Rank & yank: what about replacing the lowest-performing factory every year? - grade suppliers based on their results and capabilities and encourage some turnover amongst the poorest performers. Why you need to take a zero-tolerance approach to a supplier with a history of poor performance.

20:34 - Why are many importers are reluctant to get rid of poor suppliers? - discussing why importers often fear the upheaval of switching to new suppliers.

22:58 - Do you have legal agreements in place with suppliers? - if a legal and enforceable manufacturing agreement/contract is in place importers shouldn't need to fear switching suppliers as much. If you didn't put such an agreement in place it's not always too late, Renaud gives some tips on how to reason with your supplier and persuade them to sign one.

25:44 - Does your onboarding process for new suppliers need to be tweaked to encourage the signing of manufacturing agreements? - based on past experiences with manufacturing agreements (or lack of) you can plan how to make new suppliers sign one as a standard process in future. This can also work with current suppliers, where they can be persuaded to sign one with the promise of new orders if they do so. It's imperative that the contract is enforceable in your supplier's country.

29:15 - Transparency into the supply chain? - do you buy from companies who do only final assembly, not creating much real value, but you stick with them because they have the contacts of the key component suppliers? This is a lack of transparency in your supply chain. There are ways to work on getting those key suppliers' contacts from these suppliers and then set up a parallel supply chain that you control, as well as finally cutting away the deadwood as we discuss here.

32:45 - Redesign of key products for better durability & reliability - taking information from users of the products in the field about failures and using it to redesign the production process, change a secondary material, or something actually fairly simple in order to produce a far better product. Doing this is often left on the 'back-burner' until a V2.0 or V3.0 of the product.

35:07 - Do you collect and use data about quality issues, returns, complaints, etc? - setting up a database and analyzing the trends and key issues is a good idea. Performing failure analysis on these will help you improve. This is a commonly missed opportunity for many importers.

36:53 - Do you have a structured NPI process in place if you're developing new products in order to reduce risks without adding much time & cost? - letting a factory rush to production, as Chinese suppliers often like to do, increases your risks, especially for new and complex products. Implementing a structured process will reduce the chances of nasty surprises during production.

39:08 - Local teams for sourcing: are they working hard enough to find new sources? - can they be incentivised somehow to become hungrier to find better new suppliers? 

39:40 - Local teams for QC: are they competitive with external QC agencies? Do they work smarter over the years? - it may be that the cost of outsourcing QC to an external inspection provider compares favorably with that of your internal team and leads to less stress. Using an app to reduce paperwork and improve productivity could be something to consider for your inspection team, too.

41:02 - Inventory management - is it time to make better decisions based on risks of disruption based on the risk each individual supplier creates? This can be assessed using data to help you make decisions on how much inventory you truly need. 

41:42 - Using an ERP or other IT systems to improve how you manage your business? - maybe it's time to explore what other companies use to manage their key numbers and people.

42:15 - Wrapping up

 

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In This Episode...

Adrian interviews Richard Barnett, CMO of SupplyFrame, an AI-based SaaS solution which enables sourcing insights and decision support that improves the performance and resilience of electronics supply chains. 

US-native Richard has decades of experience in the electronics field and has clocked many years in Asia, so he was an ideal person to discuss supply chain risks faced by today's importers of Asian electronic products and components in 2021 and risk-management techniques and advice that can help you become less affected by risks, such as the coronavirus pandemic we have been facing, political issues, and more.

One particularly interesting topic that he raised is how design & procurement influence the risk profile of the resulting productions.

Show Notes

00:00 - Introducing the episode - topics around how to manage innovation, what do we expect post-covid across the global electronics value chain, and more

01:57 - Brief introduction of Richard and Supplyframe.com

04:50 - How does Richard's experience at Supplyframe fit in with an importer of electronics who is developing a new product? For a high-tech startup, for example, their solution would help provide new forms of intelligence to accelerate product design, identify and reduce risks of key component selections in the design phase, and think about how to align to ramp to volume considering key risks in the electronics supply value chain.

07:13 - Why risk reduction is more important than ever today and how the trend is becoming more widespread. The pandemic and the associated manufacturing shutdown in China in early 2020 forced many importers to react and work on making their supply chains more resilient, especially those in an industry where demand dropped off or ramped up quickly. Many importers have now been assessing how to improve supply chain resilience based on what they've learned and experienced which previously they perhaps didn't - this is 'the next normal.'

10:27 - A list of some of the risks which have exhibited themselves recently that importers should try to avoid. The pandemic spurred a number of risks recently that were unforeseen, but before the pandemic even occurred, there were key risks in the high-tech and electronic value supply chains such as US/China trade war tariffs, Korea and Japan trade tensions, FAB production capacity, memory production capacity, and more.

13:08 - If you've been hit by the risks described, what's the way out of this for importers? Optimizing your supply chain with flexibility, thinking through where opportunities for risk-sharing with a key manufacturer in terms of inventory or lead time, for example. Examining the multi-tier supply chain to find and eliminate bottlenecks and risks and understand where you can drive the greatest long-term impact, which is at the point of design. For example, de-risking the BOM by qualifying backup component suppliers so it's possible to pivot to procuring from them instead quickly if a problem occurs with a primary supplier is an important way to reduce risks.

17:43 - Is the 'US/China trade war' an ongoing risk that electronics importers should be wary of? The total impact of the transition out of China in the last few years has been less than 10% on aggregate, so the idea that decoupling from China will happen rapidly is unrealistic. Rather than uproot from China, Richard has seen additional costs absorbed by manufacturers or passed on to customers and he predicts seeing more of the same. 

22:52 - Some interesting dynamics that are not impacted directly by trade-policy. 2021 is a turbulent year: we're reducing COVID restrictions, working from home, especially skilled digital work, has exploded, autos are now starting to pick up, hospitality, too, will be, so there's a V-shaped recovery. He sees a shift in key component and commodity categories being reallocated into other more reliable and profitable industries, such as from consumer electronics to autos or medical technology. There is a resetting of what is 'just-in-case' VS 'just-in-time?' 'What is the appropriate inventory buffer we need?' 'How do I negotiate my agreements to balance risk-sharing rather than just chasing the lowest cost?' Etc.

26:25 - Why some companies simply weren't prepared for the pandemic. Even the largest companies often hadn't done business continuity planning around pandemic response, so smaller tech startups have certainly faced substantial risks. Therefore aligning and synchronising recovery with what's driving demand, and focussing on reducing lead time, bottlenecks and other risks, as well as reviewing design in order to build risk-reduction into the design itself are the key takeaways here.

28:10 - What is 'Design To Source Intelligence?' Explaining the new form of intelligence that is about finding new insights to influence decisions and be more effective in the global electronics value chain based on a distillation of information from big data including market demand, costs, and much, much more that perhaps wasn't available to most importers until recently.

30:45 - Wrapping up

 

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You will also like this series of blog posts on supply chain risks management that Renaud wrote, which includes topics like what black swan events like the pandemic could be described as being, business continuity planning, the benefits of supply chain scorecards, and more.

 

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