MENUMENU
  • Services
    • Product Design & Build
    • Difficult-to-Outsource Manufacturing
    • Factory Equipment Design & Build
  • Markets
    • Semiconductor and Display Capital Equipment
    • Medical Device
    • Solar and Energy Storage
    • Data Storage
    • Emerging Technologies
  • Applications Expertise
    • Laser Process Development
    • Materials Handling
    • Process Technology Integration
    • Control Systems and Software
    • Flexible Manufacturing
  • Case Studies
    • Wafer Flipper Module for Manufacturing Processes
    • Wafer Heat and Cool Stations
    • Semiconductor Platform for Metrology and Inspection
    • Phased Automation Strategy for Emerging Technology
    • Rapid Production Ramp in Solar Cell Processing
    • Expertise in Medical Technology Manufacturing
    • Enabling Volume Manufacturing for Hard Disk Drive Media
    • Optimizing Production Line for Assembly and Test
    • Product Upgrades for Film Frame Handling
  • About Us
    • Our Team
    • Career Opportunities
    • Blog • News & Events
    • Privacy Policy
  • Contact Us

Owens Design

Engineering, Technical Manufacturing and Program Management

Decision-making flowchart to search for an optimal solution for your equipment needs

What will you do with your custom manufacturing equipment?

January 13, 2021

In the last blog entry of this series, we talked about how to find an “off-the-shelf solution.” (OTS) But if OTS is not the right solution for you, it’s time to figure out how to get the custom machine that fits your needs. The first step is to understand what type of customer you are.

Who’s Who

From the perspective of companies that provide factory equipment, customers come in two distinct flavors:

  • Original Equipment Manufacturers (OEMs) are customers for whom the factory equipment is their product. This includes companies that sell process or metrology equipment based upon specialized technologies or intellectual property (“IP”).
  • End Users are customers for whom the equipment is for making their products. End Users are anybody who operates a factory; the equipment that fills the factory either came from OEMs or some flavor of custom equipment supplier.

Of course, often one company can have both aspects, so when searching out a custom equipment supplier. the first thing you should do is figure out which kind of customer you are for this equipment.

Whether you are an End User or an OEM matters for how you think about potential suppliers.

If you are an End User

For an End User (who will “use it”), the factory equipment is a means to an end; making your product.  The equipment does not need to be fully optimized; it just needs to work.  End Users want safe, reliable, inexpensive equipment of course, but in the end low ongoing operating costs (Cost of Ownership – CoO) is what really matters.  Metrics such as cost per unit over the equipment lifetime, or ROI are important. Any distinction between NRE (“non-recurring engineering” to design or integrate the system) and the cost of the system itself is often irrelevant. The net cost to get the system is all capex and all goes into COGS (“Cost of Goods Sold”) as depreciation.

For many end users, the thing that is unique is the parts being handled, not the process per se.  For customers who are not differentiated by their manufacturing technology, good enough is, well, good enough.  The process is not complex and looks don’t really matter.  In this case, the best choice may be the lowest cost supplier you trust to get the job done.  For typical handling and assembly applications, systems integrators may be a good choice because they have a portfolio of components & sub-systems that can be inexpensively tweaked and integrated to perform almost any assembly manufacturing task.

If the process is truly novel or challenging, most systems integrators lack the specialized skills and capability to incorporate the process.   A lower risk approach will be to work with a custom equipment company that has knowledge of similar processes and experience in integrating innovative processes.

If you are an OEM

For an OEM (who will “sell it”) the strategy is different and often fits well with the business model of custom equipment suppliers. The system IS the product (or part of it). NRE and unit cost are different things and need to be treated separately. NRE is a one-time development cost and assuming any decent volume of sales is not all that important. As we’ll discuss in another post, any NRE is cheaper than hiring, training and sustaining a suitable engineering team yourself. Heck, the NRE may even be a tax deductible R&D expense…!

The unit cost, however, goes directly into the product COGS and gross margin. This matters a lot. OEMs are often willing to spend more on NRE to get the lowest possible unit cost, a more attractive system, better performance or a finely optimized design. For OEMs, vendor design and manufacturing skills, their ability to ramp (up and down) with your needs, compatibility with the internal product design teams and knowledge of the OEM’s industry requirements is crucial. An OEM differentiates on the performance (hopefully not just cost…) of their product.  It is not acceptable to have part of their precious product be “merely OK”.

OEMs see the value of engineering expertise and flexible manufacturing prowess, and an ability to execute & refine prototype and pilot builds.  Custom “design & build” firms that have the right skill and experience with the OEM’s industry make a lot of sense.

If all goes well, and after the design is stable, they’ll need the custom equipment supplier to ramp production or help with the transition to a CM. These are specialized skills & services “buried” in the NRE, and OEMs see the value in that. OEMs typically don’t have any need for systems integrators, unless for their assembly lines, but then in that case they are an End User.

In summary, End Users and OEMs have significantly different needs when searching for a custom factory equipment supplier. Knowing which type of customer you are and your key needs will simplify your final decision.

Our next article in this series will focus on the needs of the End User. Follow us on LinkedIn for our next blog update. If you have questions or comments on the blog or have need for custom manufacturing equipment, feel free to contact us and one of our team members will be happy to help you through this process.

Filed Under: Blog Tagged With: advanced manufacturing, build services, custom equipment, Custom Manufacturing Equipment Supplier, custom solution, new product development, NPD, OEM, off the shelf solution, OTS, PLM, product design, product lifecycle management, ready-made solution, semiconductor manufacturing

blank

Recent Posts

  • What will you do with your custom manufacturing equipment?
  • Tips for the early phase for laser processing
  • Off-the-Shelf Manufacturing Solutions
  • Engaging the Hidden Customer
  • How to select a Custom Manufacturing Equipment Supplier

Tags

advanced manufacturing advanced turnkey manufacturing automation best of fremont award build services changing requirements contract manufacturing control design custom equipment Custom Manufacturing Equipment Supplier custom solution Design-to-cost equipment supplier flowchart hidden customer hidden stakeholder lyophilized beads manufacturing market requirement statement medical new product development newrequirement NPD off the shelf solution OTS owens design PLM press mention processes product design product development product lifecycle management program management project definitions project development project management project planning project requirements ready-made solution scopecreep semiconductor manufacturing stages stakeholders system integration unique materials
Blog Home ›
  • Services
    • Product Design & Build
    • Difficult-to-Outsource Manufacturing
    • Factory Equipment Design & Build
  • Markets
    • Semiconductor and Display Capital Equipment
    • Medical Device
    • Solar and Energy Storage
    • Data Storage
    • Emerging Technologies
  • Applications Expertise
    • Laser Process Development
    • Materials Handling
    • Process Technology Integration
    • Control Systems and Software
    • Flexible Manufacturing
  • About Us
    • Our Team
    • Career Opportunities
    • Blog • News & Events
    • Contact Us
    • Privacy Policy
  • Home
  • Case Studies
    • Wafer Flipper Module for Manufacturing Processes
    • Wafer Heat and Cool Stations
    • Semiconductor Platform for Metrology and Inspection
    • Phased Automation Strategy for Emerging Technology
    • Rapid Production Ramp in Solar Cell Processing
    • Expertise in Medical Technology Manufacturing
    • Enabling Volume Manufacturing for Hard Disk Drive Media
    • Optimizing Production Line for Assembly and Test
    • Product Upgrades for Film Frame Handling

Contact Information

Owens Design
47427 Fremont Blvd.
Fremont, CA 94538
Get Directions ›

T: 510.659.1800
F: 510.659.1896
Sales: 510.770.8479
sales@owensdesign.com

Connect with us

Site Credit: Bright Bird Creative blank   :   Copyright © 2021, Owens Design, Inc. All rights reserved.

Made in California  Make it in America
This website uses cookies to improve your experience. Accept Read More
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are as essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.