As a manufacturing term, it can mean different things, depending upon the industry. Volume production for an automotive OEM means hundreds of thousands of units. For an industrial CNC manufacturer, lifetime sales over decades might be in the tens of thousands.
For many small design companies, producing even “low” volumes may be a manufacturing challenge. It takes success to be able to invest in infrastructure that supports higher volumes. It also takes market demand, which for many companies is even harder to generate.
In previous decades, the key manufacturing decision would be about how many of a product to manufacture. Making 2000 costs more per unit than making 5000 units. To maximize profit, companies would try to estimate how many units they would sell. There were three typical outcomes:
- They made enough: Hard to achieve since it’s more likely they’d be short or over in their estimates.
- They made too few: Tough scenario to swallow. It meant they could have sold more if they had made them. Lots of potential profit lost. Maybe they’ll raise their estimates next time…
- They made too many: Terrible outcome. All profit lost, even on a high-margin product. And now the garage is full of stuff that can’t be sold fast enough.
It turns out there’s a fourth scenario:
- Relevance: Something changes in the market. Perhaps prices drop. A competitor comes out with an equivalent and less expensive product. Consumers are calling for a new feature your product doesn’t have. It could even be the colors are wrong. Whatever the case, there’s a ton of inventory that isn’t going to move as quickly as it could.
For today’s small design companies, there’s a new way to approach going to market: continuous manufacturing. Instead of having to guess how many units you’re going to sell, you can make a number of units that makes you a reasonable profit with a safe amount of risk (i.e., potential unsold inventory). You have enough product to sell to meet demand but not too much if the demand is there. The key is a production cycle that is agile enough to enable you to get new product quickly to meet unanticipated demand.
Continuous manufacturing is possible because of increased automation in the manufacturing process. Consider how Gumstix makes it possible to take a design built on Raspberry Pi or Arduino to volume. Using a modular design approach, boards can be built using a drag-and-drop interface. These modules are well-tested designs and have been designed to be easy to build by an automated system. In addition, a module approach makes it possible to automate much of the firmware creation and board testing processes. The result: a highly efficient manufacturing process that provides a high level of reliability at a much lower cost than is typical for a custom board.
Relevance works here too because if you have the right manufacturing flow, you can evolve your product between manufacturing runs. It’s kind of like a software update but with hardware. What this means is that you can move with the market.
And that’s one of the greatest advantages of being a smaller manufacturer. The big guys have to make large estimates to minimize their manufacturing costs. So that fourth scenario can really come back to bite them if the market changes. And the market is changing fast. Especially because of agile companies like yours.
Consider the IoT market and how many new products are coming on board. As soon as a cool feature is introduced, every product without that feature is going to sit on the shelf until it goes to clearance.
With continuous manufacturing, you can start work on that new feature immediately. And as you sell off the last of your “legacy” inventory, you’ll already be a part of the next wave and ready to capitalize upon it.
Take a look at some Gumstix customer success stories or contact Gumstix today to learn more about their products, design tools, and services. Or try out Geppetto for yourself.