The Utility of Vertical Integration in Outsourcing
Integrating Electronics and Plastics Design in Outsourcing Can Save Time and Money
Art Rutledge, Fawn Electronics Inc.
Bob Wilkins, Fawn Plastics Inc.
Many OEMs outsource design and manufacturing because their internal core competencies primarily are application development and marketing. It’s no secret to readers of this magazine, however, that OEMs face a variety of challenges in outsourcing product development for their medical products and equipment.
Compartmentalizing the design process across multiple suppliers can create the potential for miscommunication, adding time and cost to the design process. But it is critical for companies to understand the compartmentalized disconnect within their respective customer bases.
One example of effective collaboration in the design process involves medical instrumentation used in a hospital wireless data collection application. The product, designed by a third-party service provider, was failing initial field tests. The OEM’s original design team had done a good job on the electronics but had demonstrated less expertise in specifying the plastics. The issue was that material selected for the photo eye lens was allowing in too much ambient ultraviolet light, which disrupted the signal the unit was trying to receive. A change in material selection solved the problem.
Some of key issues medical device OEMs should consider in outsourcing system-level design include
• Design for manufacturability (DFM)
• Material selection considerations
• An understanding of total cost
• Application-driven design considerations
• Agency approval support
All too often, small issues can create product introduction delays and add cost to the product development process. Following is a more in-depth look at some of the above-described issues that routinely should be reviewed in integrating electronic, mechanical and plastic design.
Design for Manufacturability
This critical area may present options for cost reduction in both packaging and tooling. For instance, parts may be designed with geometries that are difficult or even impossible to mold with a conventional tool. If a tool has to transform (ie, move) during injection molding, for example, it will cost more.
Another issue relative to tooling is whether to use hard or soft tooling and how many cavities to tool. For low-volume parts or those that start low volume and may have some packaging design changes prior to entering higher-volume production, soft tooling may be more cost effective, since tool life is less of a concern. Multiple small parts may be produced with a single tool. When higher volumes or tight tolerances are present, hard tooling is likely the more cost-effective choice.
A substantial portion of material and assembly cost in many electronic products is related to packaging, mechanical and electromechanical components. As a result, it is important that the product development process address both cost and quality issues driven by the individual custom components as well as those associated with final assembly. Photo courtesy of Fawn Electronics.
For instance, lower-cost units that are disposed of (rather than repaired) are most cost-effectively assembled with an ultrasonic weld or snap feature than they would be with screws. However, each of these designs requires specific types of joints within the plastics housing. Secondary processes such as pad printing may be eliminated by use of colored parts, but adding color to resin also increases cost.
In electronics manufacturing, small design changes can translate to processing cost reductions and contribute to improved quality. For instance, some electronic manufacturing service providers supplement industry-standard DFM guidelines with additional guidelines designed to reduce processing time and potential errors.
Standalone design houses may not automatically consider these issues. Areas of DFM and design for testability focus include
• Panel size and arrays—some manufacturers try to standardize this area to reduce changeover time or minimize the potential for damage in de-panelization
• Tooling holes and fiducials—manufacturers may have preferences based on equipment capabilities and a desire to ensure optimum placement accuracy
• Component orientation—aligning components in a single direction improves solder quality
• Hole/pad sizes and spacing—lead diameters and equipment considerations are factors in determining these layout issues
• Node accessibility—this is important in facilitating automated testing
Material Selection Issues
Material selection can be a minor part of a tooling choice. For instance, China offers very cost-competitive tooling options, but the quality of the steel used in the tool usually is not comparable with tools fabricated in other parts of the world. Understanding what grade of steel is required and having a supply base that will deliver a tool of the specified quality is important in making the most cost-effective choice. Steel grade should be certified.
In plastics, color and material grade drive cost. In some cases, companies specify a higher grade of material than is needed for the application. It is important to analyze material costs against structural integrity requirements and the cost of finishing operations. Another area of potential cost reduction can be conversion from sheet metal to plastic—when this option is pursued, though, it may be necessary to make changes in packaging geometries to maintain equal strength.
Most medical manufacturers are not concerned about the impact of the European Union’s Restriction of Hazardous Substances (RoHS) directive, since it doesn’t apply to medical products. However, the directive is influencing material availability and integrity, as most component manufacturers now produce RoHS-compliant material and, in some cases, have not clearly segregated RoHS-compliant inventory from leaded inventory. Component life should be carefully evaluated in the design stage to ensure that selected leaded parts are not being discontinued. In addition, it is important to ensure that selected suppliers have a methodology for validating that their leaded component inventories are actually leaded versus RoHS compliant and can demonstrate a clear segregation process in their storage and manufacturing operations.
Understanding of Total Cost
A challenge for any OEM is in understanding the long-term cost impact of the choices made in the design process. For instance, some Asian plastics houses offer low- or no-cost tooling. What is not clearly stated is that the customer does not own the tool. If a choice is made later to move the business, the tool is not provided. In some cases, the solution may be as simple as fabricating a new tool, but in the other cases the actual packaging design also is owned by the supplier and simply licensed for use in that product.
At the board level, panelization and component orientation have an impact on labor cost, machine time and quality. Photo courtesy of Fawn Electronics.
Disconnect between the tool design and molder also drive hidden cost. It is important to understand potential molding issues and life of the tool in the design stage. The molder also should be able to support the tool with regular maintenance. Repair and warranty responsibility should be clearly defined between the tool fabricator and molder to ensure that each supplier is providing appropriate levels of support.
Choices of custom versus off-the-shelf components can carry hidden costs as well. Painted screws, custom components or components with limited sources of supply can create long-term costs if availability becomes limited or a sole source discontinues the product or leaves the business.
Design capabilities also are important. Workstations with 3-D modeling software such as Pro-Engineer allow design change assumptions to be visually “tested” for fit in the package prior to implementation. In addition, they can help with reverse engineering when trying to reconstruct documentation on an older package design.
Understanding the track record and level of commitment of the supply base is critical in avoiding unanticipated opportunity costs over the life of the product.
Application-Driven Design Considerations
An OEM faces two challenges in this area. First, technology is changing in many medical products. Second, most medical products operate in fairly challenging environments.
For example, radio frequency (RF) technology increasingly is being used in hospitals, which aren’t typically RF-friendly environments. Designing a product that incorporates RF technology requires a supplier with expertise both in the technology as well as likely issues such as RF and electromagnetic interference shielding and sterilization.
Agency Approval Support
A final issue is the ability of the supply base to support the regulatory approval process used by the FDA. Medical product manufacturing has distinct design approval stages and traceability requirements. In some cases, material selection options may be limited as a result.
The manufacturing environment for final assembly also has specific requirements. Suppliers experienced with medical products document appropriately with the approval process in mind and have stringent procedures and material procurement controls.
Suppliers that primarily support consumer products are not always cognizant of these issues and may not include the cost associated with meeting these requirements in their initial estimates.
In the worst-case scenario, poorly documented design processes or lack of traceability in the manufacturing process may impact product approval processes. It is important to understand the medical industry expertise of a given supplier.
When one lead supplier is subcontracting critical operations such as plastics fabrication or design to other suppliers, it is important to know whether the leader’s supply base is equally experienced in the supporting medical applications.
Finding the Right Team
Using a vertically integrated supplier or a supplier with design expertise that spans packaging, electronics design and tooling design can save both time to market and cost. In the long term, it also can help ensure that design changes driven by market factors such as material availability are addressed rapidly and cost effectively.