How Small Manufacturers Manage Large Volume Orders

How do smaller manufacturers like Worthington and CircuitHub manage larger volume orders? Recently we've seen a big increase in these types of orders so it only seemed fitting to have a discussion about it. We briefly touch on the financial and negotiation side of things before getting to the logistics of how we handle large-volume orders.  This includes how we decide if we're going to build and/or ship in batches, how large orders change how we buy parts, and why building this wa can be a very successful way of producing boards.

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Transcript

Chris: 0:08

Welcome to the Pick Place podcast, the show where we talk about electronics, manufacturing, and everything related to getting the circuit board into the world. This is Chris Denny with Worthington.

Melissa: 0:17

And this is Melissa Hough with CircuitHub.

Chris: 0:19

Welcome back Melissa.

Melissa: 0:21

Welcome back Chris. And this time it actually has only been a few days.

Chris: 0:26

This time it actually has only been a few days. Yes, we are back in the saddle getting some stuff recorded,

Melissa: 0:33

Yep. And this week we are talking about large orders.

Chris: 0:37

which we are getting a lot of lately. So, timely subject.

Melissa: 0:42

one of the reasons we haven't had very many episodes lately.

Chris: 0:44

Yes, indeed. This is

Melissa: 0:49

which is great for us.

Chris: 0:50

Yes. I mean, . That is, that is a significant part of why we do the show. Is it not

Melissa: 0:57

Yes,

Chris: 0:57

so that we have work to build in fact, go ahead. Go

Melissa: 1:00

no, and to inform the people of all the things that go on at the factory while we're building the boards.

Chris: 1:08

It really is enjoyable to share the experience of what it's like to work here. I really do enjoy it, obviously there's the net benefit of, hey, if you need boards built, oh, I trust these folks at Worthington and CircuitHub because, you know, I've been listening to

Melissa: 1:23

Because they have a podcast.

Chris: 1:24

cuz they have a podcast. Well, you, you do gain this weird sort of like, trust and like, there's certain, you know, bizarre, there's this bizarre concept of where people start to feel like they're friends with the hosts of podcasts. They

Melissa: 1:39

Yeah, yeah, yeah. Or like YouTube or anything like that, or, yeah. You feel like you know them?

Chris: 1:45

You feel like you know them. Yeah, exactly. And so then you start to trust them. Well, for example, a perfect example of this is guest of the show, Mr. Mike Conrad, Mike, Mr. Clean Conrad . I, you know, I had never met the guy but I had listened to his podcast for so long.. And then if I wanted to talk about cleaning or buy cleaning equipment, he's the first person I'm gonna call. Right? Because I, I've gained this sort of trust in him and feel this sort of kinship with him from listening to his show. So, yeah. So there is that benefit that hopefully they want to come to Worthington to order the circuit boards. But honestly, that's not the reason, in my opinion, it's not the reason we do the show. We do the show because we literally want. explain to people what is going on inside of an electronics factory and what, how all this stuff gets done.

Melissa: 2:30

Mm-hmm.

Chris: 2:31

And there is a certain, you know, sense of satisfaction to sharing that,

Melissa: 2:36

Yeah. Yeah.

Chris: 2:38

being a teacher or something, you know, it's a very satisfying career. And my friends who have been teachers tell me just how amazing it is, even though it's incredibly stressful. And here in the United States, I'm not sure about the rest of the world, but it's usually don't get paid well enough to do it. But, there is a certain level of satisfaction with it that doesn't come with everything. So,

Melissa: 2:57

Mm-hmm.. Yeah. So we're talking about what we know and what we know right now is large orders

Chris: 3:02

and what we kind of don't know too, is large orders,

Melissa: 3:05

Well, yeah, that's true.

Chris: 3:08

it's, it's, you know, one of my first notes here is that I'm a little out of my element on this, and Melissa, I think you might feel the same.

Melissa: 3:16

Yeah, especially, well, I mean, CircuitHub is specifically optimized for smaller orders, but we do have a lot of people coming to us that have built their small orders with us that want to turn them into very large orders cuz they had a good experience, which we're of course always very excited about

Chris: 3:33

yes, yes. And because CircuitHub is optimized for small orders and because., just everything is set up for small orders and, and the quoting system and the production system and everything is all set up for small orders. When you get the large orders it gets, it gets tricky and it's like, okay, we gotta make sure we still make money on these large orders. You know, it's not a you know, this, we don't, we don't come to work for fun. I mean, we do come to, I, I like to have fun at work, but you know, I would rather have fun at a racetrack or something, or

Melissa: 4:01

Sure.

Chris: 4:03

So, but yeah, how do we, how do we make sure that we continue to be profitable? You know, we rejected and pushed off customers who were interested in large orders for a long time. Like actively encouraged them to find other contractors to take on their large orders. And then it got to a certain point where customers were just insistent. They're like, no, no, no, no. We really like working with you guys and we wanna do these large orders with you. And so we just had a conversation with 'em up front and said, okay, well, , just know that we're not optimized for this, and so you're gonna be learning along with us. And some customers were fine with that. And yeah, so I, I feel like it's been a few years now, probably two, three years now, we've been taking on these larger orders and I think we're starting to see success, isn't it?

Melissa: 4:44

I agree.

Chris: 4:45

there was, you know, there was some, there were some bumpy roads there. And honestly, I, I still think we're learning about it. One thing that I think is important to understand, dear listener, is that Chris and Melissa are not on the financial negotiation side of things very often.

Melissa: 5:02

No.

Chris: 5:03

Melissa, more on the marketing side of things, would you say? For, for, I mean, the truth is you get involved. everything.. And then I'm more on the like manufacturing and engineering side of things, but same with myself. I get involved in everything somehow. Right. So, it's just how it goes. And but still I do feel a little bit outta my element talking about some of the more like financial aspects of this, because when it comes to large orders, you start to get into things like contracts.

Melissa: 5:37

Yeah, it gets complicated.

Chris: 5:39

that can get, and so you're talking about lawyers, you know, and so, yeah and so how do you, how do you structure this, right? Because let's say, let's say the orders for half a million dollars, which is not, not a, you know, we, we are looking at orders now that are close to that value. And when you start to talk about this kind of, You start to talk about risk and you start to talk about risk assessment. You know what, if there is a flood or a fire in the factory, are, are we insured? think about that. So you're customer and you've got this super, super cool next generation, you know, computer mouse, which is, I always love to come back to the computer mouse, but and you know, you, you've got a hot product and. You, you, you wanna hire a contractor who's gonna, who's gonna build this for you? If they're gonna hold, you know, say it is a half million dollar contract, then let's say it's $400,000 worth of parts. If they're gonna hold $400,000 worth of parts in their factory for you, are they insured for a flood or a fire? You know, cuz what happens if they have a fire and all those parts are destroyed? Are you on. are, is the factory on the hook? Who's paying for that? And that's, I think that's where it starts to get into the point where, okay, we need a contract here. We need to understand who is accepting risk. You know, how much money are we talking about here? How much time is it gonna take? How much work is gonna be done? You know, what if, what if all the boards, you know, we, they work great, they pass test and then six months later they all fail in the field. You know, just one after another, after another, after another, and now you've got 90% fallout. Who's paying for that? And this, this is where I definitely feel outta my element

Melissa: 7:20

Oh, yeah,

Chris: 7:22

same Melissa.

Melissa: 7:23

yeah, yeah. I mean, even, even the level of contracts that we would've worked on. Here is like nowhere near how complicated they, they can get

Chris: 7:36

You know, so that, I wanted to touch on that a little bit only because that's, that is a reality of, of larger orders is, is having these kinds of conversations. But honestly that topic is a little bit boring to me.

Melissa: 7:49

yeah, yeah, yeah, yeah. And, and we don't, there doesn't have to be a

Chris: 7:54

doesn't have to be a contract and Exactly. Yeah. And that's kind of what I was about to get at too, is you know, for, for small, say it's a hundred thousand dollars, you probably don't need a contract for a hundred thousand dollars. And for the most part, many of our orders that are in that. There's, there's no contracts for them. You know? Now what's, what's, let's talk about it from a technical standpoint because like, what do the logistics look like of, of tackling a large order? And, and you know what, Melissa, we should probably, we've been, how should we define a large order? What do you think? Like, cuz we've been talking about financially.

Melissa: 8:29

That's a great question.

Chris: 8:31

But it can also be per.

Melissa: 8:32

mean, I mean it also depends on many factors, like

Chris: 8:37

Oh,

Melissa: 8:38

or like the size of the boards, the.

Chris: 8:40

the size of the boards. Yeah, size of the parts.

Melissa: 8:44

Yeah. How many parts?

Chris: 8:46

How many parts? Yeah, so I'll, I'll like, I'll give you an example. We have one customer that we did like a $200,000 order for a couple years ago, and I think it was like 10 boards.

Melissa: 8:59

Mm-hmm. Yeah. Yeah.

Chris: 9:01

So it was a large order, but logistically it was a small order. A large order financially, but logistically a small order. And it was just, cuz it was like a, it was like a 20 something layer of board with, you know, each, the, the parts alone were like over $10,000 per board. Just the parts, you know, it was, I forget how much everything was in the end, I think, but I believe each board costs like close to $20,000.

Melissa: 9:25

Mm-hmm.

Chris: 9:26

That's what, that's how we invoiced. It was $20,000 per board or something like that.

Melissa: 9:30

Well, yeah. I, I, I think we're thinking of. More things that require a lot of time

Chris: 9:38

Yes,

Melissa: 9:39

is more the essential piece here,

Chris: 9:43

That, I think you hit the nail on the head. Thank you for, I think you hit the nail on the head. I've been trying to figure it out. It's time. Yeah.. Perfect. It's, it's more about when we talk about large orders, how much time is it gonna take us to fulfill the order? Financially that usually comes along with time. Time is money, money is time, yada, yada, yada. So, you know, you start to talk about scheduled releases with these large orders because you're probably not going to want to. Let's say you need 5,000 pieces of your, of your new mouse, okay? You probably cannot 5,000 pieces in a month. I mean, if you can, you're probably not going to Worthington or a CircuitHub to sell 5,000 pieces per month. You're probably going overseas, cuz that's the only place where they can, they can produce 5,000 pieces per month or per week, or whatever your schedule is. Right? But let's say, let's say, you know, it's, you don't want us to ship you 5,000 pieces all at once. You, you, what would you, what would you even do with it? You, you, you've still gotta put 'em into a case and into a box and you gotta, you've gotta have customers for 'em. And so you're just gonna be sitting on this stuff. You probably don't even want 5,000 pieces all at once. So you want them to be shipped in batches of some sort. So if we're gonna ship them in batches, we're probably going to build them in batches. and probably not always, but probably. So for example, I'm gonna talk about a Worthington customer. I'm not gonna use their name. I'm not gonna say what the product is, but I'm gonna, and mentally I'm gonna talk about this one particular job that we build for this Worthington customer. We've been building for them, for literally this one product. I think I found a schematic for it recently from 2000 and., okay. Like the prototype schematic for it. So it's literally a 20 year old product. It's gone through a couple iterations, but effectively it's the same product for 20 years. We have consistently built 2000 of these, like every single year for 20 years. I mean, it may fluctuate up and down a couple hundred, but it's usually right around 2000 pieces every single year. The customer does not. Us to ship them 2000 pieces of these on dec on January 1st, and then wait until the next January to ship them 2000 pieces

Melissa: 11:57

Yeah.

Chris: 11:58

they need, you know, they're, they're, it's a medical device and they're, they're selling these to doctor's offices and hospitals and, and so on.. And so, you know, the entire population of the United States doesn't suddenly come on with this disability that requires this medical device on January 1st. Right? So , it's obviously spread out throughout the year. And so there, they want us to ship them. I think it used to be they wanted us to ship them in batches of 27 because the literally the, the reason it was batches of 27 pieces was because the panel. that we built them in was was nine up, it was three by three. So we would probably ship them 27 every three or four days, something like that. Whatever. Whatever it worked out too. That's just how they wanted us to ship them to them. And maybe sometimes they would request 54 or whatever, right. It just worked out that way. So maybe, you know, on Monday they requested 54 and then they waited till the following Thursday and then they requested 27. However it worked out, they wanted them in these sort of scheduled releases. and we since ended up redesigning them to be a 10 up panel. Humans have 10 fingers. We use a 10 base counting system. 10 works very nicely. Everybody's very happy with 10 . So, yeah, when we redesign the product, when we help them redesign the product, we ship them in batches a 10, and now it gets quite interesting. From, from our customer's perspective, they just say, Hey send us send us 20 boards, send us 30 boards, send us 40 boards, however many they need at the time. And, and from their viewpoint, you know, we're just building 20 boards and shipping them.

Melissa: 13:35

Mm-hmm.

Chris: 13:35

But what's actually happening inside the factory is far more messy.

Melissa: 13:39

Yeah.

Chris: 13:40

it's far more complicated than that. Because you look at the various operations that it takes to deliver that. What, what does that look like? Let's kind of walk backwards how that looks. We, we know the customer likes to request these, let's just say in batches of 50. Let's just make it easy. Let's say batches of 50. So we will literally have a box on a shelf label. Taped up, ready to go, just waiting for a u s label, 50 pieces, 50 finished pieces sitting on a shelf. So as soon as they place the order, u p s label gets printed, we ship that box out the door, but now we have to replace that box. So what happens? See how we're gonna work backwards here? This is how we're gonna work backwards through the factory. We will have the, these devices go into a plastic enclosure and they get test.. So what will happen is that that empty box, there will be a, there will be an empty space on the shelf now, which triggers the, the next person in line to fill that shelf. They gotta put a box on that shelf with 50 pieces in it. Okay? They will have perhaps a, a finished goods they may have a hundred of these finished pieces finished assemblies sitting on the shelf that just need to be tested, right? They're all, they're all ready in the plastic enclosure, and they just need to be tested. So what they'll do is they'll pull one piece off the shelf at a time, test it, put it in a box, test it, put it in a box, test it, put it in a box until they've got 50, and they put that on the shelf. But now , they've worked through, however many, say they had a hundred pieces sitting on finished goods. Now they've gotta build up those enclosures. So what they're gonna do is they're gonna go to their rack where they have a bunch of finished circuit boards. And now these circuit boards are not depanelized. They're likely sitting in panels, sitting on a board rack, specifically designed to hold, in production circuit boards. And they're gonna to depanelize them and then they're maybe going to put them into the enclosure and they're gonna put the wiring harness on it for the enclosure maybe. And, and this particular thing has a little what's the word I'm looking for? It's a, a panel. A panel that goes on the front of the device that has buttons built into it. I'm not gonna think of the name of it.

Melissa: 15:52

Control panel. I

Chris: 15:53

Yeah, it's like a control panel. It's, there's, there's a specific term for it and, and I, I'm sure listeners are probably screaming at their radios right now, or their AirPods saying, no, this is what this thing is called. Sorry. If I think of it, I'll, I'll mention it again later. But anyway, they're gonna plug this into it and they're gonna get it into that plastic enclosure, and they're gonna set that on the shelf and they're gonna refill that shelf that had a hundred finished goods, ready to be tested . Well now they've pulled, a hundred boards off of that PCB rack. Maybe that PCB rack holds, I don't know, 200 boards. Okay, well, those 200 boards, once they work through that PCB rack that held 200 boards, and now it's empty, that means the team that was responsible for filling that PCB rack now has to fill that again. Usually that is somebody an inspection. So inspection. Is gonna go look at perhaps a shelf of 500 of these boards. And they're gonna go through and do their inspection and fill a rack of 200 pieces and put that into the, final goods department. So now they have their 200 pieces so that they can do their final goods whenever it's called now the inspector has pulled. 500 pieces off the shelf to get to the final enclosure people. That means now that she's gonna need boards before she can do her inspection, so, so we keep working our way backwards here. That means probably through hole has to get done. The, you know, there's gonna be connectors on here, there's gonna be maybe some transformers in this device. This device has a small transformer I happen to know, goes into it and some other stacking connectors and things like that. So, now the selective soldering team, the team responsible for putting the through hole components is gonna be going into, their stash of surface mount boards. So they might have 500 boards that came outta surface mount that they're then gonna pull from and start to, populate the through hole and solder all the through hole components into it. Now the AOI team recognizes that boards got pulled from there, and they're gonna pull from, the boards ready to be a wide and on and on and on down the line. Things get a little tricky once we get to surface mount because everything up until now testing de panelization inspection and to a certain extent through hole has, has been a relatively simple setup. to get moving through whole, a little more complicated than the rest. But an inspector, what do they have to do to get set up? Maybe they have to pull up some documentation about what a finished product should look like. Some images the polarity of certain components, the colors of certain connectors. You know, sometimes you have the same size connector, but they're different color cuz they signify something different. So they're very easy to set up. Same, same with a person doing the population. They've got a box of enclosures and they've got a rack of boards and they're doing the panels. There's not really a lot of setup involved in each of the steps we talked about Through Hole has a little bit of setup, and we'll get into that in a minute. But really it's, it's once you make your way to surface Mount Assembly, you talk about a large process. A time consuming process to build even one piece, let alone 500 pieces. Everything up until that point, you could pretty much build one piece fairly straightforward without a ton of setup, without a significant cost associated with it. So in. The surface mount that, that gets handled a little bit differently. That might get a, a work order generated that tells the surface mount team, Hey, we have to build 500 of these, or we have to build a thousand of these. That'll last the team three months or six months or whatever. The batch size is appropriate for that build and this particular batch size, I think we do 500 pieces, so it lasts us about every three months., and that's because the setup of the surface mount assembly line is kind of the most costly setup of all the operations. First of all, you're talking about very expensive pick and place equipment getting tied up. But also you're talking about very expensive feeders that get tied up. So for example, let's, let's talk about the difference between. A through hole soldering setup versus a surface mount soldering setup because in through hole you wanna set yourself up so that you can be efficient and keep the machines running as often as possible. And the same thing with a surface mount setup. You want to be efficient and keep those machines running as often as possible. Well, what does it take to get each of these types of machine running and efficient? Well, in through hole, you largely are just talking. Hand populating these components and so , you're just gonna open the packaging that the components came in, usually in bulk of some sort, literally like a bag. Holding all these connectors and things like that. Maybe some simple trays with foam, like I talked about the transformers earlier. Those might be just poked into foam trays that are in cardboard boxes. You know, very simple packaging, noth nothing particularly elegant about the packaging of these components oftentimes. And so you can just kind of empty those components , into simple plastic e s d safe bins. and then you just kind of set those bins onto a tray and, and it's like, okay, well, when we're ready to run, we just pull them off the shelf and, and we start running from these bins. Well, bins are very cheap. Couple bucks a piece, right? Trays are very cheap. Couple bucks a piece shelving. All right. You know, maybe a hundred bucks for a shelf. You know, it, it's not enormously expensive to have. Through whole components set up and ready to run when you need to run your next batch or through whole components through whole soldering process, surface mount's totally different. Now you're talking about a, a whole different level of cost of a surface mount. Machine. You know, if a through hole machine costs about a hundred thousand dollars, a surface mount machine's gonna cost $500,000 each, and you're probably gonna have multiple of them. Bin is gonna co cost a couple bucks to hold your through hole component. A feeder's gonna cost thousands, literally like the least expensive feeder is over a thousand dollars for for many pick and place machines. So you can't just have. Thousands of feeders. The way that you can have thousands of bins, you can just have thousands of bins. What's it, what's it gonna cost you? A few grand in bins. It's not, it's not crazy expensive. Thousands of feeders would literally cost you millions of dollars. So you have a limited number of resources, so you really need to think about how you're going to schedule the release of these things. You're, you're not gonna want to build just one board when you set this up because there's so much cost associated with, with the feeders and the parts, and setting everything. You're gonna wanna run as many pieces as you reasonably can. How do you decide what is an appropriate number to run? That is enormously complicated too . So see, the, the further back we get, the more and more complicated it gets to figure out just exactly what you're gonna do here. Do you have enough parts to build a bunch of these? Maybe. Maybe you just can't find enough parts. Surface mount parts are hard to come by nowadays, right? And you don't wanna set up your assembly. and run you know, a thousand pieces, but leave off one part. No, you want every single part. You don't wanna, you don't wanna forget just one part cuz then you have to reset up the line or, you know, run it back through and it gets complicated trying to run just the one part and tacky flux and all this it, you don't want to do it, it, it moisture sensitivity. There's all kinds of complications. You don't wanna do it. So you really wanna have all your parts before you build. So you want, again, you wanna try to run as many as possible, but. The boards are very large, and so you really can't run more than a few hundred of these because all of a sudden you'll just start to fill all your shelves and blah, blah, blah. You can't, you know, say the board is the size of a sheet of paper, typical, here in the United States, they're eight and a half by 11 inches. Think about how much Room 500. Boards the size of a piece of paper would take up at a factory. It's, it's a lot of room that, that's a significant number of boards. If those boards were the size of a postage stamp, you know, run 5,000 of them, they're not , it's not gonna take up much room. So, but so the physical space, the physical size of these things and, and whether or not you have shelf space for them is gonna be an important factor in how many you build through your surface mount assembly line. Shelf space is just not free. And, and because shelf space turns into floor space, which turns into facilities and on and on and on, it gets expensive to store finished goods that you can't ship yet. Right? Because our customer takes these at 50 pieces at a time. So if we're gonna build 5,000, it's gonna take us a long time. It's gonna take us years to empty those shelves. It just doesn't make a lot of sense.

Melissa: 24:29

What other customers orders are you not able to build because you're building all these boards?

Chris: 24:36

Exactly. Yeah. Yeah. So the time is part of it too. If the boards have a thousand placements per, that's a lot of assembly time. You know, depending on how, what your your placements per hour if it's tying up your assembly line for a long, long time. and yeah, you don't want to build 5,000 of these, you know, maybe just 500. So each factory knows kind of what's an appropriate size for themselves and how many that they can, they can kind of store and, and how, how often they're allowed to ship. Cuz at 50 boards a week you, you know, that's, you don't want to have a ton of finished goods sitting on the shelf because you're gonna consume that pretty quick. But 500 pieces. You know, it's 10 weeks to go through that. That's a pretty reasonable batch size. But now it gets even more complicated when you talk about buying parts

Melissa: 25:24

Oh no.

Chris: 25:26

because how much do parts cost? And so now you start to think about you know, who is going to pay for all these parts? And this gets back to talking to lawyers and stuff like we were saying. Who's taking on the risk of sitting on these parts? Who is shelling out the cash for all these parts? So for example, let's, let's say you know, just for easy math, what did I say? We ship 2000 of these pieces a year. Let's say each one of these is so let's just say each one of these is a hundred dollars. So we're talking about 2 million a. to fulfill this order for our customer. I don't think these are worth a hundred dollars, but they're, let's just say they are, just to make the math easy for us.

Melissa: 26:06

sure.

Chris: 26:08

Did I do that right? 2000 and a hundred, 2 million. Oh boy. Here we go. Chris. Chris. Chris is bad at math without a calculator. 200,000, excuse me. Okay. 200,000. Yeah., no idiot. It's 200,000, not 2 million. So $200,000, who is, who? Let, let's say it's $50,000 worth of labor, who is sitting on $150,000 worth of parts? Is the customer paying for all that upfront? Is Worthington paying for that all, all upfront? And if so, that's a, that's a lot of money, right? That's a lot of valuable money. And you, you know, we.. Let's say we had the cash, let's say we had $150,000 in cash and we could buy all these parts on January 1st, and then we fulfill all, all of our orders throughout the year. And you know, whatever we, we've satisfied the customer. Everything else went fine. Well, that's still $150,000 that maybe we could have invested in new equipment.

Melissa: 27:13

Mm-hmm.

Chris: 27:13

Maybe we could have finally bought one of Mike Conrad's washes for our customers who want clean boards, you know? So maybe we're sitting on$150,000 worth of material that we can't invoice for it yet, and maybe instead of using cash we take out a line of credit and now we're paying a bank you know, interest on that.. See, it's just, it's, it's just never free. Right? And, and it's not free for us. It's not free for our customer. So then you start to do things like, okay, can we talk to distributors about securing the material and giving them some kind of a, a guarantee or a hello contract that says, we guarantee we're gonna buy this material. no matter what happens. But we don't want you to ship this to us, and we don't want you to invoice us until we're ready for it. And because we build in batches of 500, we want you to send enough material to build 500 pieces every three months. And so you might structure it that way. So now you've passed on that financial., well not risk necessarily, but that financial load onto the distributor. And oftentimes because these distributors are exponentially larger than Worthington or Worthington's customers, , it's much easier for them to structure that and, and they can handle, they can handle doing that. And it's usually a lot of times how these things go. But there's certain parts that you don't want to do that with. You know, you're buying 10 K resistors, you're buying 0.1 microphone capacitors. don't bother, you know? But if you're buying microchip ics, you know, many dollars say each one is 10 bucks a piece. You, you don't wanna buy all 2000 all at once. You, you just tell your distributor, Hey, send me 500 of these on such and such a date. And then you plan your build to be a few weeks after that date. So then you're only sitting on that material for as long as it takes you to fulfill the order. And, and so you, you. you know, stretch out your, your production builds that way. And you know, it's, you see how complicated this gets. The further back you get , the more complicated it takes to or more complicated. It gets to try to, you know, structure these larger builds. But I will say this method of building things is a tried and true method. This has been going on this way for many, many decades. This is very much a very normal build pattern for any industry. This is, this is how they structure it. They, they build in as small a batch as they possibly can. It's reasonable according to their process and their setup, and they, and, and they will rethink their process and set up to make those batches smaller and smaller and smaller. You know, back in the day in electronics manufacturing, , it would take many, many, many hours to set up and change over a surface mount assembly line. And so the batches had to be huge. You had to run a thousand, 2000, you know, 10,000 at a time. And it was cuz it was just so expensive to change them over. But, you know, the, the manufacturers of this equipment have gotten much, much better at making, you know, better feeders. Feeder exchange carts and better software. So now you can, you know, we we're doing changeovers in 10 minutes or less now, and my goal is to be 30 seconds. But that's our, that's our big hairy, audacious goal. That's our bhag. Big hairy, audacious goal is to be 30 seconds. But, you know, we're doing it in less than 10 minutes, sometimes less than five minutes. We're doing a changeover. It's totally different from back in the day where we literally take hours to change these things over. So now we can build batches smaller than 10,000 pieces. You know, may, maybe, maybe 50 pieces is still too small for a bulk 2000 piece order. But you know, we're getting closer and closer and closer every day. And cuz the smaller you can build those orders and the smaller you can respond to those things, then you just see the, the. Knock on effects of how beneficial that is, cuz now you only have to buy 50 parts at a time, you know, of that $10 part. And, you know, again, less and less financial stress and you can almost match the customer orders 50 at a time. You produce 50 at a time. That's the ideal. If the customer wants one, you can produce one.

Melissa: 31:33

Mm-hmm.

Chris: 31:34

it's just obviously not, not realistic most of the time.. But as I was saying, this is a tried and true method. This is a very successful way of producing circuit boards. We've done this countless times with many, many customers, and as a whole, it goes very, very well. The first, you know, let's say we're doing those 2000 piece build, the first 500 pieces., you're, you're a little bit like Bambi on ice, , you know, you're still, you're, you're trying to figure it out. You're running into the weird quirks of the design, you know? Oh, there's a, there's a via here. You have to avoid there's a, there's a surface mount component super close to these pins. And so your first 500 pieces, ah, you mess this up, you knock this part off, you, you know, oh, you put this part, the polarity is wrong on this, and you know, you're really trying to figure it out at., but then you've, you've really, you've paved that road after that and, and you know, all the quirks and you we're gonna hand outer the two pins of these 20 pin connector, cuz they're way too close to the surface mount part. So we'll, we'll soder the other 18 parts. And then this two, these two pieces will be hand soldered. And now you're not whacking out that, that surface mount part and getting it into the solder pot and having to repair it. You know, you, you've, you've, you've figured out all these weird quirks and it just goes smoother and faster and more efficient. And then, you go, Hey, you know what, we could develop a. Little simple $500 tool that will save our customer you know, a dollar per board. And so it pays for itself after the first 500 pieces. Just all these sorts of things, and then you just, it's, it's a really nice system. Whenever we've sort of nailed it down, it's a really nice system. We just keep banging out the boards. There's no questions, you know, everybody's comfortable with it. You train up everybody, everybody in the factory can kind of. Push and pull and get flexible about where they go, Hey, I'll handle a de penalization on this. I know there's that weird quirk because you showed me how to do it before, you know, I gotta avoid this right angle, l e d. So we de, we depa this side by hand and the rest of it we can do the machine and just all these sorts of things. You, it's, I don't know, I just, I really do enjoy. The knock on effects of these large orders and these batch releases because you, you just get this sort of a rhythm going, you know? And I dunno, the best way I can think to describe it is sort of like when , when I used to run, I used to be more of a runner, not such, not so much of a runner anymore. I got runner's knee and that, that was the end of that. But, When you're, when you're running, you know, it hurts so bad. The first mile. It's like anybody who tells me they just went out for a one mile run, I'm like, why? That's the worst part is the first mile, like , and after that you, you get into a rhythm, everything kinda loosens up, your joints get comfortable and everything's moving and shaken and you just sort of, you're, you're just sort of in the. and you just go 2, 3, 4, 5 miles and next thing you know, you, you bang out a half marathon because you've just gotten into that beautiful rhythm and it's actually very comfortable after that first mile. And it's, it's much the same way with manufacturing. Once you've sort of paved that, that road building the rest of the batches is really nice actually. So we do actually like these larger volume orders. It's just been a bit of a learning curve for us these past few years to try to get better at them.

Melissa: 34:51

Hmm.

Chris: 34:52

and logistically, as clearly as I've just waxed on for the past 30 minutes, I know quite well the logistics of how to do this. It's all the financial negotiation stuff that I , I don't know how to do. Right. And it gets, it gets even more complicated when you start to talk about tests. And I, and I know we, we've, I think we've discussed this before, but who takes on the risk of a failed assembly,

Melissa: 35:17

Hmm.

Chris: 35:18

right? When you're doing these large batch.. If, if, you know, something fails, but we built it 100% correctly, all this auto joints are correct and yada, yada yada. But, but something fails about it. Who, who do do We invoice our customer for that still because we built it right. If we don't, if we, if, if, if the negotiation, the customer says no, if, if it doesn't pass test, I don't want it then we have to. More closely at how we're pricing the build cuz we have to take on more risk. And you know, it's just that, that gets all very sticky and weird and . It's just, you know, as you can tell, it's not something I'm totally comfortable with and, and don't know how to handle. But we have people here who do and you know, but it does require a conversation upfront when you're talking about a 200,000, 400, $500,000. Thank goodness for those people cuz I'm not

Melissa: 36:13

need them. Yeah.

Chris: 36:14

Yeah, what do you think, Melissa? Did I miss anything? You got questions for me?

Melissa: 36:18

Yeah. Yeah. I do have one question before we move on to, you know, what

Chris: 36:24

what My favorite part of the show. Don't hold me back.

Melissa: 36:26

So I guess just something we always do. What, what advice would you give to customers that are looking to scale up into bit of a higher.

Chris: 36:38

Yeah. Yeah. So, great question because I'll give a, I'll give kind of a not bad experience, but a, a, an experience we had recently that was, Reasonably well managed but not, not as well managed as I was hoping. And that is, you really need to kind of scale up to this, you know, if, if we successfully built 20 boards for you and now you want 2000, building 20 and building 2000 is really totally different. It's totally different cuz we might have just done something by hand on the 20. Whereas when we go to build the 2000, we really might need some custom tools to do it. Maybe a custom nozzle, maybe a fixture, a pallet of some sort. So going from, you know, say, hi, hey, I, I want 20 or I want 2000 pieces, we will warn you ahead of time. Okay. Well we have to, we have to build some first articles just to make sure they work. And we, we had a whole episode episode. Somewhere in the mid thirties you'll find an episode about first articles. But we, we talked about first articles cuz we need to know this is a risk mitigation. You want to know that? This is gonna work. So the 20 P piece build is perfect for first articles to know that the boards are gonna work, and then nothing about the board has changed. Nothing about the bill of materials has changed. We go and build, you know, okay, we'll accept the order for 2000 pieces. But if anything changed, if you change the bill of materials, you change the board. We're gonna, we are gonna wanna build first articles again, because if you get 2000 boards that don't. you're gonna be angry at us

Melissa: 38:23

Yeah.

Chris: 38:24

Right? And, and we're gonna wanna help and, and it's gonna be a mess.

Melissa: 38:27

We don't like angry people.

Chris: 38:29

yeah. So, so it's best to build, if you change anything about the board of the bomb, it's best to build another first article, 20 pieces, something like that. But there's a still a difference between 20 pieces and 250 pieces, or 500 pieces because. We may not wanna build 200 pieces by that, do that one part by hand for 200 pieces. We may want to invest in that fixture to do that. So we learn even more from a 200 piece build than we do from the 20 piece .Build. And, and then, you know, then you go to a thousand pieces and then you go to 2000 pieces and, and usually once you get to a thousand pieces, You get it now, and you can, you can scale to 10,000 or whatever you need to scale to. But the low, low volume of 20 pieces doesn't always scale well to 10,000 pieces. You, you, you know, you, you need, you need a bit of a ramp to to, to the volume. So plan ahead for that. Understand that your manufacturer's gonna want to ramp up to that. And it may take, it may take weeks and months to ramp up to that. But we have done this now many, many times and, and it's been hugely successful. Usually where it's not successful is when the ramp goes from 20 pieces to 5,000 pieces, and I guess it's not that it's not successful, but it's a herky jerky start. It's, Hey, I know you want 500 of these in a few weeks. We've got a lot of lessons to learn here and we're still doing all, everything by hand here. You know, we're not quite ready to ramp to 500 pieces every week for you. You know, we'll get there, but it's, it's gonna take some effort for us to get there, so just kind of be prepared for that. There there is a ramp process that we didn't talk about, so, Excellent. Excellent question. I g I guess it's just, it's just about being prepared and having the conversation and understanding. What do you think that ramp is gonna be? We're gonna make an estimate. Communication. We're gonna make an estimate. We're not gonna know. We will not know how long that ramp is gonna be. We're gonna make a best estimate based on our experience. We'll try to stick to it, but we may not know for sure.

Melissa: 40:41

So be flexible. Alright.

Chris: 40:43

now?

Melissa: 40:44

Yeah. We are ready now.

Chris: 40:45

All right. I gotta get this one off of my chest. Pet peeve of the week. So I had a recent experience where my here we live in New England. We get this white, fluffy stuff in the winter called. and if you want to drive a vehicle or walk outside, you need to remove said snow. And a common tool for doing this here in New England is what's known as a snowblower. And I've had the snowblower for 15 years, something like that. I got it from my father who got it from this business he used to work for that went out of business and was liquidating everything, and he picked up the snowblower from them. Snowblower has a device designed to fail in the event of a catastrophic event that costs just a few pennies each, or maybe a dollar each, called a shear pin. Are you familiar with these Melissa shear pins?

Melissa: 41:39

No. Well, I am now that you told me about it a few days ago. But otherwise, no.

Chris: 41:46

So a shear pin is for those of you that live in, you know, the tropics or something that don't have a snow.. A shear pin is a, is a pin, it's a metal pin designed to shear in the event of excessive load on the auger of a snowblower. In other words, it's got a weak point. It's, it's it's normal size, kind of like bolt shaped device, except it will have small sections in it that are deliberately designed to be weaker than the rest of it, and it will break on purpose and save the rest of your snowblower from destroying itself. Well., whoever worked at the business that my dad got this from, cuz he never remembers replacing the share pen. And I never re remember replacing the share pen. They just threw a bolt, just a straight up, regular old fashioned steel bolt into, you knows. So somebody broke a share pen, didn't know where the she pins were. So instead of replacing it with another shear

Melissa: 42:43

what a share pin was.

Chris: 42:44

yeah, didn't know what a shear pin was. Replaced it with a bolt. And then when we went to use it and we had this big chunky ice. The auger got stuck on the ice. And rather than the shear pin braking, cuz it wasn't a shear pin, it was a bolt, it completely destroyed the transmission. They don't call it a transmission, what they call it gearbox. It completely destroyed the gearbox. And and you know, now that the thing is like over 15 years old, it's probably over 20 years old. You know, I called, I called a local supplier or repair. and they're like, are you crazy? Like it's gonna cost me $600 to repair that. You're not gonna wanna pay that for a 25 year old snowboard. So what is my pet peeve? My pet peeve is use the proper part. Use the proper part. If you're going to replace something or fix something, or if you're trying to repair something, use the proper part. Use the proper tool too. You know what I mean? Like if you're in a pinch, I get., you know, maybe you're gonna use, maybe you're gonna use your drill to drive a screw rather than a, rather than an impact driver. You know, all right, we just gotta get this one. Screw. I get it, I get it. But if, you know, use the right tool, use the right parts. Don't be going like, you know, using, using toothpicks and chewing gum to try to repair things here,

Melissa: 44:02

Mm-hmm. That's a

Chris: 44:03

because if he had used a sheer pin, I wouldn't have had to have gone out and bought a new snowblower. which I didn't. I actually bought a used one. And here's the funny part, here's the best part. The, the guy I bought it from, I bought it on Facebook Marketplace. It has six sheer pins in the auger system. My, my old one had two sheer pins, has six sheer pins. Two of them had bolts in them,

Melissa: 44:25

Oh no.

Chris: 44:28

The first thing I did was bought some sheer pins on Amazon and replaced those

Melissa: 44:34

Clearly not enough people know about she pins.

Chris: 44:37

Clearly. Oh my

Melissa: 44:38

Now. Now all of our listeners do.

Chris: 44:41

yeah. Yeah. And I guarantee there's some listeners who are like, yep, same thing happened to me. You know, destroyed my snowblower. Cause I didn't put sheer pins in it.

Melissa: 44:50

I'm trying to think of other examples of if that's happened to me. Like this same situation. I'm not sure. I'm sure there's stuff in our house that I've seen and like you go, who did the why? Why? Yeah.

Chris: 45:05

Ugh. It's like when I, when I moved into my new house we bought a couple years ago I was, I, I was trying to do something with the electrical system and I'm going, what? This is the strangest thing. I was reading. 60 volts instead of 120 vol., which in the United States we, we have 120 volt system in our power grid instead of, instead of 240 like most of the rest of the world. And I'm like, what is going on here? I can't figure this out. Well, low and behold, they switched the neutral and the hot and the electrical outlets, unlike almost every electrical outlet on the house. I'm like, did you have your child wire these things up? Like for goodness sakes, what? This is crazy. Just I. Hi, hire, hire smart people who have licenses to do things if you don't know how to do them., that's my other pet peeve. somebody could have gotten hurt.

Melissa: 46:08

Oh yeah.

Chris: 46:09

I'm, I'm, I'm the I'm the pot calling the kettle black because I I, I wired so, I, I built a, I built a racing simulator at the and for myself and my friends, and it's an aluminum racing simulator. I built it all out of extrude aluminum, and I bought a used BMW M four seat. this, this BMW was in a wreck and so they were selling the seat. So I bought the seat, but I wanted to have the power right. I wanted to be able to adjust it. People are different heights and different length legs and everything to be able to use this racing simulator. So I I bought a 12 volt power supply, and I don't know if you're aware of this, but those seats take a tremendous amount of power. It's like you can't just buy like a little 12 volt transformer and plug it in. You need like a big honk and 12 volt power.. So you need to power this thing with a significant amount of power from 120 volt system. So I mounted a, a metal electrical box to my aluminum rig and, you know, drilled it into the aluminum and, and wired up the electrical box and grounded it and everything. Well. Wouldn't you? No, I take that back. I did not ground it. That is the problem. That is, that is literally the problem. I, I grabbed a cable that didn't have, it only had two wires instead of three wires, so it didn't have a ground wire. And I and I wired the electrical circuit backwards. So instead of tying the neutral into the aluminum rig, I tired the hot tied the hot into the aluminum rig through this metal electrical box. And every time I would go to touch the aluminum rig, I would shock myself the hundred 20 volts. And I have my 16 year old nephew come over. He is like, what's wrong with you I dunno, man. Oh, that was embarrassing. That was embarrassing. And eventually I'm like, wait a second. I take my meter and I put it on the exposed. Section of the aluminum rig and this, this whole thing is made of aluminum except for the seat. See, the only thing I, the only reason I wasn't electrocuting myself is cause I was sitting on a leather seat that wasn't grounded

Melissa: 48:24

my gosh.

Chris: 48:28

But I'm, I'm pressing these metal pedals that I have 120 volts running through them. And the only reason I'm not getting hurt is cuz I'm sitting on a leather seat anyway. So, I take my meter and I touch it to the exposed aluminum and I touch it to the ground and I'm getting 120 volts. I'm like, what in the world, So I open up the box and I realize what I did, and, you know, may, maybe there was some consumption of beer involved when I was wiring this electrical box or something. I don't know. Either way. I've, I'm lucky to be alive, to be honest with you. Oh yeah, yeah. Lesson learned test things. Ugh. I felt so foolish. And then, and then I put a proper, grounded cable to this electrical box, and now I have hot, neutral and ground, and there's no risk of electrocution. You know, if I had wired it wrong and I had grounded it with a proper grounding wire, it would've just tripped the breaker right away. And I wouldn't have hurt myself or my nephew. Oh yeah, yeah. There is the pot calling the kettle black right there. Picking on my, picking on the homeowners before me that wired their electrical boxes wrong.

Melissa: 49:35

So, don't go to Chris for your electrical questions, only for your PCB assembly question.

Chris: 49:44

Yes, for sure, for sure. There, there you can come to me with questions. I am. I am known as a What did I came up with a funny term for, for Mike Conrad when he was on the show. Oh, did I call him the Grand PBA of circuit Board Cleaning?

Melissa: 49:56

Did you something?

Chris: 49:58

Maybe not a Grand PBA of, of Circuit Board Assembly, which is a Flinstones reference if, oh boy. Now we're getting, we're going. All right. We gotta end the show. We're getting punchy here. Melissa, one of us is at least one of us.. Yeah. It's past lunchtime and you know what, no Turkey sandwich for me today. Beef stew.

Melissa: 50:18

Okay.

Chris: 50:19

Yeah. Which I don't think you would care for Melissa

Melissa: 50:22

Or the Turkey sandwich,

Chris: 50:23

or the Turkey

Melissa: 50:24

so,

Chris: 50:27

This is true. Oh, this is true. Well, if you wanna know how the beef stew was, be sure to get in touch with us. You're welcome.

Melissa: 50:35

I hope they do. I truly hope they do.

Chris: 50:38

I really do. I'll give you the recipe. It's delicious. Contact pick place podcast.com. As always, you're welcome to tweet at us at CircuitHub and at w Assembly, and as always, please tell a friend about it. That's the best way to spread the show. And gain more listeners and, and please keep those show suggestions flowing in. We're gonna be addressing some of them. I know, I promise we'd be addressing them like four episodes ago, but I promise we will be addressing them in a future episode. But yeah, if you have questions about larger orders or anything else about a circuit board assembly, by all

Melissa: 51:09

beef Stew

Chris: 51:11

in touch or beef stew. Yep, yep. I'll give you the recipe and by give you the recipe, I will text my wife and ask her for the recipe and then I will email that as a reply.

Melissa: 51:22

Excellent. Thanks for listening to the Pick Place podcast. If you like what you heard, consider following us in your favorite podcast app, and please leave us a review on Apple Podcast or wherever you get your podcast from.

Chris: 51:34

Thanks very much everybody. Thanks, Melissa.

Melissa: 51:36

Thanks, Chris.