Mass production- my experience and your help.

Using Arduino Project Guidance
#1

In the last month I was struggling to find a decent pcb house that will manufacture and assembly our pcb’s.
The main problem is buying all the parts, for example, the Atmega processor cost in the assembly houses 2-3$ where in Ali-express you get them for 0.5$ and less.

You get a digital compass at 5$ , and on Ali at 0.9$ . In mass production this is a difference between life and death.

I used to manufacture pcbs easily with seeed , and it works without any problems. The moment you try to deal with assembly it becomes hell. They are amazingly bad.

The treatment I got from Seeed is horrible, really horrible there is no other way to describe it . They don’t even care, they are so apathetic, and I really do not feel secure manufacturing 1000 or even 100 like that.
No support at all .

I really wonder if there is some pcb house where you can get a human support, with real people, manufacture and build 10, be sure where they buy components and their prices, then proceed to 100 and more .

I also can not understand how is that Ali-express is 200% cheaper then mouser/digikey .
If I assembly the board from Ali, parts will cost 10$ , and with the rest it will go to 25$ .

Any suggestions, or common knowledge about the matter would be very appreciated .

Thank you .

#2

Where are you located?

I know you can get things in any part of the world but it may help to know.

Weedpharma

#3

Try another company for assembling if you are not satisfied with current supplier, e.g. Itead but I ordered only PCBs from them so far.
The problem with the prices for parts Chinese vs others I know very well, but I have personal experience that the parts form the ebay and ali are oftentimes fakes. They didn't pay for development. On the other side, original Chinese parts are not documented well or only Chinese guide exists. Also the quality is low. It is good for hobby but probably not commercially.
For illustration, I've made my Arduino version (http://forum.arduino.cc/index.php?topic=277260.0) time ago and the price for one piece only for parts without assembling is about 20EUR. In compare with this fact the price for similar one from ebay sounds like a joke.
About the Mouser and Digikey, I compared the prices several times with for me local suppliers (TME, SOS) and the prices seem to me significantly higher. TME or SOS are cheaper but still far from Aliexpress or ebay.

#4

I also can not understand how is that Ali-express is 200% cheaper then mouser/digikey

Because the parts you get from All-express are not quality assured and are not available in reliable quantity. No manufacturer will want to buy parts from them, put them on a board and then find out 10% don't work or don't meet the spec.

#5

in my one project, the board house wanted me to supply every part except the board and the solder.
I was to supply every resistor, cap, chip, etc.

yes, it costs more, but you control the suppliers.

if you think you can design and produce a board and have the cost anywhere near what is being sold on e-bay or AliExpress, you are in for some fun trying to get that to happen.

what you do not know is that the Chinese Government owns that fab house, the delivery trucks, the parts suppliers, the chip fab plants, all of it . as a Communist Country, there is no individual business or corporation like in most of the world.

so, if the Chinese government owned fab house wants to send some chips to the Chinese government owned PCB fab facility, there is no cost to sell, or ship and even the Chinese government owed post office does not have to charge for shipping.

your cost to ship parts to China will be higher than their cost to make the PCB, etch it, make the chip, ship and assemble and then ship out of the country.

=========================

here is a tip. do all your aiiexopress searging at home and write down the search terms.

log in to your computer at work adn buy, NEVER aliexpress search from that IP address.

when you hit a page, the piice might be $1, but if you re-fresh, shipping is $1.98 and the parts cost is $3.
they have a # of visit counter/cookie and prices change. if you ask for a quote, it is often higher than the cost on aliexpress for the same thing from the same manufacturer.

#6

If you're into serious bulk, design a pcb and buy all the parts. Then you can set up a line and do it yourself - expensive, or use a reputable assy subcontractor. I've worked on the design and production support of pagers and mobile phones, and wouldn't trust dubious quality sub-assemblies.

regards

Allan

#7

in my one project, the board house wanted me to supply every part except the board and the solder.
I was to supply every resistor, cap, chip, etc.

There are generaly two categories of service - Turnkey is where you supply the documentation and the board house provides a completed board. (Or, even a complete unit in a case ready to ship, like Foxconn does for Apple.)

Consignment is where you supply all of the parts (including the bare board) and they provide the assembly.

In either case, testing is usually optional/additional. You can have in-circuit testing which uses a custom bed-of-nails fixture than runs on their machine. The board house (or separate testing house) will usually design & build the fixture and do the programming (at your expense).

And/or they can do functional testing using a set-up and procedure that you provide. (That could be anything from just a procedure, or an empty case with a power supply to put the boards in, or a custom built test-box or test-cables, maybe with a multimeter & 'scope, etc., or whatever is needed to confirm the board is meeting the specs.)

Smaller manufacturers usually choose consignment because they can purchase certain parts in quantity without committing to the same quantity of full-production. i.e If you have a turnkey purchase order for 100 boards, the turnkey manufacturer will only order parts for 100 boards. If you are buying the parts, you might be willing to buy more parts to get a lower price.

yes, it costs more, but you control the suppliers

With turnkey, you generally supply an approved parts list so as the customer you are in control of the parts that go into your product. But, you generally approve the manufacturer, not the distributor. You are the customer and they do whatever you want.

#8

Grumpy_Mike:
Because the parts you get from All-express are not quality assured and are not available in reliable quantity. No manufacturer will want to buy parts from them, put them on a board and then find out 10% don't work or don't meet the spec.

I kind-of want to agree with you since I cannot remember the last time I caught you wrong :o ...
BUT surely all of those e-parts suppliers cannot be selling to only hobbyists? I've always pictured teenagers sitting behind a discarded IBM PS/2 waiting for an order to come thur, then hustling off to the market to buy the items and dropping by the China Post on their way back home to wait on the next order.

Maybe in the early eBays days my vision was appropriate but experience with Aliexpress over the past 2 years has been a dream come true ... 100% received what I purchased excepting one instance and Aliexpress caught a vendor selling non-stocked items, shut 'em down, emailed me, and the credit card company showed the funds returned next day.

Now, I have boxes of small parts which have not been tested, but I pull from my stock weekly and have not had any DOA items. Maybe I am just lucky.

I know my experience with a few $100 of merchanise is not like running a $500K productionn run, but I am pleased. Some orders make it from Taiwan to Atlanta in 2 weeks.

What I do know of Aliexpress and their vendor network is that it has allowed a retired EE to play with the fun toys and keep a decently stocked inventory of parts that would have cost 25x if I had purchased from Allied Electronics or Jameco. I'm so thankful to Aliexpress that for the first time I am able to follow my own advise about electronic hardware; "Always buy 2 of everything - one to prototype and one to keep in the event you need to decide between a hardware issue and a software issue."

Ray

#9

"Always buy 2 of everything

Good advice, I always try and follow it. But "Always buy at least 2 of everything"

The thing about a lot of Far East traders is that they have limited stock. The stock might be from left over production runs, they always have to buy more parts than the number of boards they are making because of rework issues and production failures. Once stuff has been delivered, these parts are of not much use because they are from part reels and so they get rid it it to traders.

There is all sorts going on and real bulk purchases are an eye opener, if you ever get the opportunity to sit next to some one dealing with millions of dollars orders on the phone. It is not my field but I have dipped my toe in the water enough to know there is a lot more to it than meets the eye.

#10

mrburnette:
I kind-of want to agree with you since I cannot remember the last time I caught you wrong :o ...
BUT surely all of those e-parts suppliers cannot be selling to only hobbyists? I've always pictured teenagers sitting behind a discarded IBM PS/2 waiting for an order to come thur, then hustling off to the market to buy the items and dropping by the China Post on their way back home to wait on the next order.

considering how long it takes, maybe it is not a PS2, but a LISA !

#11

DVDdoug:
Smaller manufacturers usually choose consignment because they can purchase certain parts in quantity without committing to the same quantity of full-production. i.e If you have a turnkey purchase order for 100 boards, the turnkey manufacturer will only order parts for 100 boards. If you are buying the parts, you might be willing to buy more parts to get a lower price.

in some cases if you buy 1,000, use 100, you can unload the rest on e-bay at the1,000 lot ptrice

Digikey wants $3.38 for 1 arduino 328 chip
but $1.69 per chip in lots of 1,000.
you could buy 1,000 use 100, sell the rest for $2.50 per chip in lots of 10 on e-bay and in the end, get your chips for free AND put some $$$ in your pocket.

#12

dave-in-nj:
in some cases if you buy 1,000, use 100, you can unload the rest on e-bay at the1,000 lot ptrice

Digikey wants $3.38 for 1 arduino 328 chip
but $1.69 per chip in lots of 1,000.
you could buy 1,000 use 100, sell the rest for $2.50 per chip in lots of 10 on e-bay and in the end, get your chips for free AND put some $$$ in your pocket.

Actually, with turnkey, many times we will purchase many more components that necessary to get the price break and give the customer the benefit. We never use left over components for other customers because they cannot be traced back to a particular purchase from a the vendor. Many times the customer will make a follow-on order and the parts will get used.

Consignment has it's problems, too. We recently had a customer bring all the components for a build of one panel of 49 boards. 7X7. The pick-and-place operator had to stop the prep because the micro controller had the wrong package. Customer had ordered incorrectly. That costs us time and lost money.

The OP needs to set an hourly price on his time and keep track of it.

Paul

#13

Wow thanks so much knowledge .

There are some things that are not possible, take Bluetooth from example, today on the market, the cheapest modules are called HM-11 , they made by some strange Chinees company , but they works great (we have tested maybe 100 ).

If you try to buy them in Mouser/Digikey , you will never find them , so then you say - ok I will look for alternative, but then you find out that all alternative Bluetooth modules costs more then 10$

How can you pay 10$ for one part and sell your product at 29 or even 39 ?

This is one (important) example of something that turn your business to be irrelevant if you are going to use the expensive alternatives .

Take Wifi for example, the only Cheap version is ES8266 , made by some strange company in China, then you look for alternatives you find TI who sell modules at 30$ (!!!!!!!!!)

How the heck somebody can sell something where one part cost 30$ ? even if you buy 5000 it goes to 22$.

Something is missing here, I don't really know how companies can actually build things if they go with the known firms who costs so much , even for 5000 units bulks .

Think of a well known headphones company , lets say Parrot , they make Bluetooth headphones, they are not Apple, so I guess they only buy a bulk of 5000 , at 5000 , you will barely find a bluetooth model that is lower then 10 , not Audio and not BLE .

There must be some knowledge here that you will not see on Mouser web pages .

#14

GIL22, you are trying to apply hobby/experimenter thinking to electronic product engineering. A well engineered product will put all the stuff you call modules on a single circuit board, including blue-tooth. Then the product is all built and ready to go into an enclosure.

There are hundreds of distributors around the world. Not all have offices in the US or even Europe. We have only one customer that is building their product using “modules”. So far they have built about 50 units. If they want to get the price down, they will have to pay an engineer to design a single board to do all the functions now done by three. That should reduce the cost by 1/2.

Paul

#15

so I guess they only buy a bulk of 5000

No they will buy much more than that. A run of 5000 is just out of the prototype / testing numbers. They would expect a production run of at least 100,000. Most of the production cost is in the set up time for small numbers like 5000.

Also with a distributor, if you regularly spend a lot of money with them, then you can negotiate special prices off the list. You can also negotiate 100,000 off prices but to be taken in batches, over say a year.

Finally if you do have the numbers you do not go through distributors but negotiate directly with the manufacturer.

There is also the ploy of saying this place will sell them at this price, can you beat it.

Paul is right commercial electronics is a whole other world from hobby / prototype and proof of concept electronics.

#16

@Paul_KD7HB are you serious ? I do not think I am mixing hobby here. We have a very complex pcb.

I don't know how much you know about it, but developing a full Bluetooth into a pcb(using CC2540) can cost 35k and take 7 months, not because its hard, but because RF regulations costs a lot of money and time .

So, this is why only in this cases, you use modules(even this website do it with its new boards). So no, its not a hobby, but I bet that nobody in this forum is really capable to build a wifi system by himself, then go the long process in order to FCC it .

Particle is a company with 30+ people, they also use a "module" for their wifi and 3G.

Anyway, I don't think I am going to get answers here, the questions remains, engineers that starts a company needs BLE/Wifi, and they can't put 100k order right away, so they will loose money if they buy these modules.

Thanks anyway.

#17

I think this all goes to illustrate the discrepancy between what an item retails for and the cost of the individual components that go to make it up. My hobby is aviation, a typical flight computer might contain $50 worth of components (GPS module, pressure transducers, electronic compass and accelerator/gyro) but will retail for several thousand $$. It's always tempting to think 'i could do better myself' but then when you take into account the running costs and overheads of such an operation, and bear in mind a company may only be selling a few items every month you realise why they have to charge so much.

#18

gil22:
Anyway, I don't think I am going to get answers here, the questions remains, engineers that starts a company needs BLE/Wifi, and they can't put 100k order right away, so they will loose money if they buy these modules.

it seems your idea is that you must sell a device for the lowest price possible.

your iPhone costs how much ?
how much do you think all the parts cost ?

you can buy an ultrasonic sensor for 99 cents, but they sell for over $100 USD when in an enclosure

an LM317 voltage regulator and some caps.. maybe $3 ?
computer power supply over $100 USD

GPS ? arduino, LCD, battery and gps ? $20 ?
how does $1,695 sound ? http://tinyurl.com/hhqxfdj

wanna put that into an airplane ? how does $14,500 sound ?
https://www.gulfcoastavionics.com/products/2404-gtn-750.aspx

all glass cockpit? got about $50,000 to spend ?
want to buy a used Cessna 172 airplane to put it in ? $30,000 will get a nice one.

want noise canceling headphones ?
Banggood about $20
or you can spend over $1,000 for some Bose.

people make money in selling goods. Bose and Apple make a LOT of money per unit, but do not sell a lot of units.
Wal-Mart makes a little bit on each thing, but sells a LOT of product.

it seems you want to make a very high end product, spend a lot of money to certify, then sell it for less than the competition. you would be well served to read up more on how China makes products and how they arrive at their costs.
if they wan to own the airplane cockpit panel market, they can sell them for $100 and in a year, no other company would be in busiess. then they could sell for $200,000 and no one else will be selling against them.

I do not believe that you grasp the concept that people who sell product sell at market rates.
why would anyone sell parts for pennies when they can sell for dollars ?

#19

@dave-in-nj thanks thats an interesting thought .

But there are some markets in which above a certain price you can't really sell, take Arduino for example, in the DIY world, you cannot sell a dev board for more then lets say 50$ , and it doesn't matter what you have inside.

So yes I want to provide a very good value to users, and not empty their pocket, but that means I have to take a chance of 5000 units and more.

I really wonder how all these emerging development boards (pcb) are making money, selling their board at 19$, where only the BLE module is 10 . They probably do not buy 100k or even 15k .

#20

gil22:
@dave-in-nj thanks thats an interesting thought .

But there are some markets in which above a certain price you can't really sell, take Arduino for example, in the DIY world, you cannot sell a dev board for more then lets say 50$ , and it doesn't matter what you have inside.

So yes I want to provide a very good value to users, and not empty their pocket, but that means I have to take a chance of 5000 units and more.

I really wonder how all these emerging development boards (pcb) are making money, selling their board at 19$, where only the BLE module is 10 . They probably do not buy 100k or even 15k .

considder a US product.
you have a founder/inventer
he gets one or more to work with him or hires them,
buy the chips from a chip manufactuer that spent close to a billion $$ on a fab facility.
every part is priced as materials, overhead (phones, electric, mortage, taxes, etc )
so, there is a bottom cost of some money.

considder china.
no cost for the fab facility
labor, even engineering is less than $1.00 /hr
no phone bill, no electric costs, no mortgage, no taxes.

just to make one in the US might require $5.00 per board
From China, it might be 25 cents.

you sell for $10 and make 50% profit
they sell for 50 cents and make 50% profit.

here is an example. Mobil/Exxon, makes 6% a gallon profit. at $2.00 that is 12 cents.
my state of NJ makes over 15 cents and is going to raise that to 75 cents.
the federal govenmnet makes 18 cents a gallon.

the gov't makes more than double the profit per gallon than the manufacturer.

if you want to compete in a field, get into a field in which you can sell millions and make a little money or sell one or two an make huge money.

3 years ago, the NANO was over $15, the pro-mini was under $5, the UNO was around $20
what that tells us is that China ramped up production and now cranks out parts to the point of excess. they are now selling at a high profit margin, but low actual dollars.