Factory Layout – What are the Options

November 23, 2022
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In my previous post we covered what to consider for factory location. Having selected a location in which to set up a factory, the next question is how to lay it out.

Factory layout refers to the arrangement of physical facilities so as to have the quickest flow at the lowest cost and with the least amount of handling in processing from the receipt of material to the dispatch of the finished product. The aim is to allocate and arrange space and equipment to minimise operating costs.

As with location selection, factory layout is a long-term commitment. To optimise the relationship between output, floor area and manufacturing process, an efficient layout must achieve multiple objectives simultaneously:

The proper and efficient use of the available floor space
Work should proceed from one point to the next without delay
Adequate production capacity and flexibility, including potential to expand, at least in the short- to medium term
Lower material handling costs
Employee health, safety, accident and injury prevention
Efficient labour and equipment utilization and productivity
Maintaining quality standards, managing waste and storing inventory
Ease of supervision, and control
Plant and equipment maintenance
Complying with local regulations

Factory Layout Options

There is no one-size-fits-all option. Each factory, location and industry is unique, though the basic principles remain the same.

For small and medium manufacturing units, there are three main layout options, for which the main pros and cons are laid out below:

Product (Line) Layout

Equipment is arranged in a single line determined by the sequence of operations in this layout. Advantages are that it is low cost, operations are smooth and have continuity. The production control process is also simpler. However, the layout lacks flexibility. One process breakdown can bring the whole factory to a halt.

This layout is best suited for mass production where the process is repetitive, demand is stable and material availability is reliable.

Podrain expects to use this design for our larger ‘volume production’ factory.

Process Layout

Sub-process equipment and staff are grouped together in this layout. This is flexible and adapts fast to changes in volume and product variety. It’s also possible to ensure specialised supervision where needed and ensure high utilisation. However, more skilled labour is needed and production controls need to be strong to avoid time lags and inventory accumulation.

This layout is best suited for non-standard product lines, smaller quantities and where frequent changes to design may be needed. Podrain currently uses this layout in its prototype and small batch manufacturing facility.

Combined Layout

This blends the product layout and process layout where some steps of production are laid out by product line and others have sub process equipment and staff grouped together. this is a very complicated layout to design. When done right, it can offer efficiency and better production controls. However even a small error can lead to being stuck with bottlenecks in the production process. It’s typically used in very large manufacturing organisations for FMCG items.

Single-Storey vs. Multi-Storey Factory

Land is scarce, and suitable land is scarcer still. So, having selected a location and figured out the plant layout, one is left with the decision of a single-storey versus a multi-storey building.

Single-Storey Building -Advantages:

Greater floor loads, no structural strength needed to support upper storeys
Lower noise transmission and building vibration
Ease and lower costs of building and expansion
Natural light and ventilation
Higher floor area usable for processing – no stairwells, lifts, shafts, etc.
Concentration of service facilities centrally yields lower operating costs
More efficient layout and material handling, product routing
Lower cost of supervision

Multi-Storey Building – Advantages:

More efficient utilization of land area, and smaller land area requirements
Temperature management costs are significantly lower
Greater structural strength, higher construction quality, fireproof and longer-lasting
Upper storeys dust-free, especially for precision manufacturing operations
Downward chutes are cost-effective for material movement
Compact, more efficient layouts – though there is a limit to the benefit of this

Whether single- or multi-storey factories are more economical to build and operate per square foot of usable floor space is hard to determine. Local and regional considerations regarding regulations and land prices may play a significant role and costs may vary over the course of time. For example, our Bangalore factory is a multi-storey facility. While production control is a little more difficult, land availability at a central location in the city is a key factor in our choice.

In conclusion, siting, designing and building a plant that’s conducive to business success is all about balancing the trade-offs between costs, time, complexity and benefits in pursuit of the goals of the company.

November 16, 2022
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India

Entrepreneurship is all about making decisions and one of the key decisions every manufacturing entrepreneur faces is the best location and layout for the plant or factory. Should it be in a city, semi-urban or industrial area? Is proximity to an employee pool, educational centres and public transport important? What about public utilities? Taxation and incentives? Which amenities are likely to be most vital to success?

We’ve been thinking about this at Podrain and went back to basics on it.

Plant location is a strategic decision that is nearly impossible to change without incurring considerable losses. The ideal location is one that minimizes the cost of production, supports a large market share, maximises social benefit and eliminates risk. Locational analysis that takes into account demographics, trade area (availability of and access to customers), competitive, economic and traffic analyses and can help determine the right location.

A location in which some costs are higher may still be the best choice if it maximises net advantage, i.e., its overall unit cost of production is lowest.

Here are some things we are considering when selecting a suitable location for a factory:

Natural or climactic conditions
Cost of land or land lease
Availability and access to raw material
Transport costs – inward, to bring in raw material, and outward, to sell or distribute finished products
Availability and access to market
Availability and access to infrastructure – developed industrial sheds, link roads, transport hubs, public utilities, civic amenities, means of communication
Availability and access to both skilled and unskilled labour, as required, and local labour rates
Availability and access to banking and financial institutions
Safety and security of the plant, its workers and its assets
Government and regulatory environment – positive and negative incentives, including cheaper utilities, tax relief, liberal local labour laws, pollution control and waste disposal regulations, among others
Personal reasons, such as being close to family, familiarity with a particular place, or a network of known associates whom we can call upon for financial, operational and emotional support. This isn’t intuitive to admit but it’s really important to have a good support system.

Not all these considerations carry equal weight. For example, government incentives cannot compensate for poor public infrastructure. Running costs at a plant can contribute significantly to the overall cost of manufacturing, and poor location selection can cause a business to fail as its growth and efficiency are constrained.

MSMEs like us often do not have the financial or operational capacity to compensate for the shortcomings of public infrastructure , so our ability to adjust to an unsupportive environment is extremely low, particularly in the early stages of the manufacturing journey.

Is there something else we should include? What is your experience. Do write to us or add your comments to let us know.

October 20, 2022
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In PCB manufacturing, repeatability and consistent quality are critical – whether for large-scale production, small batches or prototypes.

Skilled and experienced technicians can and do create excellent work, but relying on individuals to establish, deliver and sustain top-quality results is risky. Programming Automatic Inspection Machines and processes is expensive, time-consuming and not always practicable, especially when prototyping.

Testing

Prototype QC needs to ensure that the design will work; that it is safe, and meets certain standards of quality and reliability; that it performs to expectations; and that it addresses its purpose.

Small batch PCBs have some rather unique attributes:

High Mix, Low Volume (HMLV). It’s likely that the PCB manufacturer builds several board designs in this environment to ensure efficient use of their production infrastructure.
Higher performance, reliability and quality requirements. Small batch and prototype PCBs are often intended for critical applications where more stringent IPC standards apply, like aerospace, automotive safety or medical devices. Quality and reliability expectations can be significantly higher for these critical system applications.
Complex designs. Prototypes are created to solve specialized and often complicated challenges, which means their designs are complex, requiring atypical manufacturing processes

How to ensure the best quality standards for prototypes and small batches

In-circuit testing (ICT). Provides a reliable, high-fault coverage verification method for the majority of PCB assembly electronic components that’s free of human error. It’s great for big assemblies or ball grid arrays and after assembly.
Short circuit testing. The main cause of PCB prototype defects is a short circuit between its larger components. For example, a fastener between two proximate pins can damage the microcontroller by triggering a short. It is vital to gauge the impedance each voltage node to the ground. Faulty components or incorrect soldering can cause components to overheat.
Flying probe test. A practical, cost-effective technique for prototypes and small batches that tests PCB probes from one spot to another, looking for singular issues in the circuit – shorts, capacitance, resistance, inductance, opens and problems with diodes.
x-ray inspection. As the prototype is being manufactured, an x-ray technician runs tests to locate defects, looking for elements that may be hard to discern with the naked eye – for example, joined connections, internal traces or barrels.
Functional testing. The #1 criterion for a prototype’s success is, “Does it work?” Performing a functional test requires the parameters for ‘success’ to be clearly defined. Functional testing takes a long time, because it simulates the real-life environment in which the prototype is expected to work. But in terms of long-term value, it’s worth doing. A great deal of money and time can be saved by identifying potential operational pitfalls and eliminating them at the design stage.
Burn-in testing. Intended to identify failures early and initiate load capacity. Burn-in testing helps identify potential dangers relating to power being pushed through the electronic components for extended periods of time. One must keep in mind that individual prototypes may be partially or even completely damaged by a rigorous burn-in test, and the test’s utility to prototype QC should be decided based on the destination application of the PCB.
Automated optical inspection testing (AOI). Camera-based visual inspection to identify issues that may emerge on the board during the preliminary phase of assembly. It’s wisest not to rely entirely on AOI, but to complement it with an ICT or flying probe for more accurate QC results.
Inverted polarity testing. The more manual assembly, the higher the risk of human error. The simple act of ensuring that each individual component is set up based on its polarity can prevent the complex and delicate components of your prototype being badly damaged. Protection diodes can protect PCBs but add to their power consumed.
Populated components testing. A simple BOM cross-check to ensure that the components selected fit the board design can save investigative time and effort later in the process.

Several other QC approaches, including tests for PCB contamination, solderability and peeling; micro-sectioning analysis; and time-domain reflectometers, can identify faults or be used in combination with those discussed above, like ICTs and flying probes.

Choose the right QC test(s) for your prototype

It begins with clearly defining the purpose and desired performance levels of the PCB; weighing the pros and cons of the available tests – which include costs, time required, destructive vs. non-destructive; and always keeping in mind, especially when prototyping, that the design-test loop can flex and adapt as the product design is iteratively perfected.

It’s always a good idea to partner with a manufacturer who is committed to the best quality; has documented and traceable processes; has the necessary quality and classification standard certifications; is experienced at HMLV manufacturing; and leverages technology to ensure high-quality, repeatable results.

Podrain collaborates closely with its clients when prototyping and producing small batches, and meets the highest quality and classification standards. We advise clients on the right mix of testing to ensure that their prototype PCBs meet the final test of quality – sustained, reliable, top-level performance in the field.

The Goal – A book that I highly recommend

October 12, 2022
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The Goal by Eliyahu M Goldratt is among the most important management books of the 20^th century. It has significantly influenced my journey as a professional engineer, employee and entrepreneur.

My first manager gave me the book when I started my career twenty-odd years ago. I am grateful for many gifts of learning from him, not least of which is that he placed this book in my hand. It made a huge impression on me, as did his act of trusting a green 24-year-old with so much responsibility and giving me a great tool to learn how to deliver.

The book is written as a novel, quite different from the majority of management books. Most of the action takes place in a manufacturing plant. The protagonist, plant manager Alex Rogo, is facing two crises: his supervisor has given him a 3-month ultimatum to turn around the plant’s fortunes, and his wife has left him. One day, Alex meets his old professor at an airport and begins a series of conversations that help him identify his true goals and navigate towards them. By using this novel-like structure, Goldratt is able to lay out several valuable ideas without preaching.

As an engineer on the factory floor, I could easily relate to the lessons of The Goal. The concept that stayed with me the most was what Goldratt calls bottlenecks. The common-sense principle is that the weakest part of the system constrains the efficiency of the whole system. But there are lessons everywhere in The Goal, and as I gained more work experience, I began to appreciate them even more. When the entrepreneurial bug bit in 2014, seeing the principles of The Goal in action influenced how I approached the setup and operation of the business.

Here are a few things I learnt from The Goal:

Know the ‘true’ goal

If we don’t have clarity on what we are trying to achieve, we may waste a lot of effort without making progress.

Identify the bottlenecks

Everything is interconnected, and the weakest part holds the stronger parts back. So, understanding how things are connected, finding and focusing on the constraints is vital to getting better results.

System is more important than its parts

Designing a system or process that is more efficient is key – even if it means that a few individual steps or parts are less efficient. In other words, when we think of optimization, we should think big, because local optimizations may interfere with each other.

Knowledge and help are everywhere if we just look

Alex Rogo is trying to do everything himself and failing miserably. Over time, he realises that he and his team – all people with years of experience – can do more collectively than any of them were able to do on their own. Even his wife, who knows nothing about his work, contributes to solving some of his most pressing challenges because she has a fresh perspective

A fresh environment can give birth to new ideas

The problems at the factory are overwhelming, and the questions posed by Alex’s professor seem unanswerable until Alex takes his son’s hiking club on an outing. He is then able to relate the problem of how to keep the kids together and reach their campsite on time to the issues he is facing at the plant.

Asking people can be better than telling people

Alex’s professor never tells or advises. Instead, he asks Alex and his team questions that force them to think and work things out for themselves. Because of this, they develop the habit of considering things carefully, collaborating, finding their own solutions, and figuring out the right questions to ask.

The Goal was first published in 1984. Many great, transformational ideas about management, operations, systems and other concepts have come about in the four decades since then, but the fundamental lessons of the book remain relevant even now. They apply to any industry, even those that did not really exist in their current form in 1984, such as software and services. As the book demonstrates, the ‘bottleneck’ framework can even be used to deal with the challenges in our daily lives.

Over two decades after I first read it, The Goal is still very meaningful to me and I often gift it to others (most recently, our Head of Operations). I highly recommend The Goal to entrepreneurs, employees and anyone who is looking for a rational approach.

Why We Need to Near Source Electronic Components

June 16, 2022
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Why we need to Near Source Electronic Components

The past two years have offered some harsh lessons to all in the PCBA industry on the value of inputs. For a long time, the cost paid was the only consideration. The supplier might be located on the other side of the world, but if the cost was marginally lower, the choice was clear. But the pandemic changed all that. The cost of logistics / transport that used to be negligible ballooned beyond expectations. And for some parts – no matter what cost we were willing to pay – the availability just did not exist.

PCB Assembly

In India, we import more than 90 percent of the components required for assembling PCBs locally. These imports come from 4 countries – China, Taiwan, Vietnam, and Malaysia. A break down at one source country, as we saw in 2020 and 2021, drives up the cost of doing business for all.

Here’s our experience with supply trends for some of our major inputs:

Bare PCBs:

Bare PCBs are the stronger point in our supply chain. We have seen reliable suppliers of Bare PCBs based in Tamil Nadu and in Gujarat. We (and many of our customers) have been able to source Bare PCBs in the past 18 months with no major issues. Supply lead times have remained consistent and price increases have stayed within tolerable limits.

Assembly Machinery:

Machinery needed for PCBA is mostly manufactured outside India by majors like Yamaha, Fuji, Panasonic, and Siemens. While prices have stayed stable, lead times have increased considerably. What used to be available in 4 weeks now takes 4 months to get delivered. We’ve had to plan and order earlier than ever before for any capacity enhancements or repairs and replacements.

Other Components / Services:

Integrated Circuits (IC’s), their component resistors, capacitors et al, solder paste etc. are mostly imported and have all seen prices and lead times zoom up. 52 weeks is now the new normal! Companies like Micron, TI, Cypress, Infineon, Latis, NXP have factories based in China, Taiwan, Malaysia, and Indonesia. When supply and manufacturing centers were shut and major ports slowed down, component shortages have visibly hit every industry from automotive to computers and mobile phones. Even stocks held by major distributors Avnet, Future, Arrow, or online suppliers like Digikey, and Mouser could not tide the industry over for long.

This is the area where India needs to attract investment and build manufacturing capacity.

What Next:

The government has already recognised the need for building an electronics components manufacturing ecosystem. It is doing its part by offering Production Linked Incentive programs and other sops to encourage manufacture of components in India. It is now up to us in Industry to pick up the challenge and partner in building a strong local eco-system for components.

Electronics Manufacturing Opportunities and Challenges for India’s Aerospace Industry

January 4, 2022
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India’s Aerospace and Defence (A&D) market is estimated to grow to around $70 billion by 2030 with government encouragement and improving infrastructure. There are opportunities beyond commercial and military aviation. Private players are entering new areas like unmanned flight, space transportation and commercial satellites.

When most people think of India and space, they see VSSC and ISRO. In recent years, several impressive private startups have entered the domain. These startups are driven by strong R&D, and they are changing the profile and perception of Indian high-tech. Here are just a few:

Asteria Aerospace combines robotics and AI to create customised hardware products and software solutions for UAVs.
Bellatrix Aerospace, incubated at IISc, develops in-space propulsion systems and orbital launch vehicles.
Agnikul was incubated at IIT Madras, and is part of the Airbus Accelerator. This company uses 3D printing to build launch vehicles and engines.
Dhruva Space, based in Hyderabad, is a National Award-winning start-up that offers full-stack space engineering solutions from ground stations to launch solutions and satellite platforms.
Skyroot Aerospace is developing Earth-to-space transportation systems for both materials and people.

These startups, and many others like them, are based on the combination of decades of space research expertise from ISRO and VSSC, and the new generation of IT entrepreneurs. The new entrepreneurs have an understanding of how to win over investors with deep pockets and the appetite for risk.

This industry faces two unique challenges: massive amounts of capital and long development cycles. Companies in this area are not just developing software. They are building physical products which must go through an extended design, development and testing process, are highly regulated and require precision engineering.

Ancillary manufacturers of aerospace components and assemblies face new challenges to supply these startups. Aerospace-grade materials and components require special design, materials sourcing, transportation, manufacture and storage.

PCBs used in aerospace equipment must be able to withstand extreme temperature, high humidity and excessive vibration.
Their lifecycle must be measurable in decades.
In some cases, replacing a PCB may be nearly impossible – for example, a PCB used in a GPS satellite.
Aerospace PCBs must be absolutely uncontaminated to perform reliably.
PCB size is severely restricted by the high cost of transporting equipment to space.
Aerospace PCBs are also highly complex, requiring double-sided and multi-layered designs.

Many of these challenges have no Earth-bound equivalent. Replacing a PCB in an aircraft engine is expensive, time-consuming and complicated, but it is possible; replacing one used by an orbiting satellite is near-impossible. Solving these challenges requires new and revolutionary thinking at every step of component/assembly manufacture.

Podrain works with several of these startups. We are AS9100-certified as a top-quality manufacturer for the aviation, space and defence industry. Podrain is one of the few EMS companies in India with this level of quality. This is an exciting new industry for us. There are many new challenges and problems to solve. The possibilities are only growing.

Will private spacefaring companies be able to sustain and be profitable in the long run? India’s low-cost, improvisational manufacturing philosophy and engineering expertise make Indian EMS companies perfectly positioned to manufacture aerospace components. Podrain sees huge domestic and international potential for Indian EMS companies as space becomes democratised. Podrain stands ready to seize the opportunity.

Complex assemblies – some samples

December 14, 2021
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Telit ME910 / LE910

Part number: ME910 / LE910 — Telit ME910 / LE910

Part Number: ME910 / LE910
Make: TELIT
Dimensions: 28.2 X 28.2 X 2.2 MM
4G LTE, CAT 1, 4
Mobile IoT 3GPP REL 13, 14 – LTE CAT M1, NB1, NB2
3G and 2G Series
Voice Capable Variants – Volte, Analog, and Digital Audio
Certified with Regulatory Bodies and Mobile Operators Worldwide
Multiple I/O
Optional GNSS

Digi International : CC-WMX-JN58-NE

Part Number: •CC-WMX-JN58-NE
Make: Digi International
Dimensions : 29mm X 29mm X 3.5mm
Description : Bluetooth, Wi-Fi, 802.11A/B/G/N/AC, Bluetooth v4.0 Transceiver Module 528 mhz Surface Mount

Quectal: EG95EXGA-128-SGNS

Part Number: EG95EXGA-128-SGNS
Make: Quectel
Dimensions: 29mm X 25mm X 2.3mm
Description: Cellular, Navigation Beidou, Edge, Galileo, Blonass, GPS, GNSS, GPRS, GSM, HSPA+, LTE, UMTS, WCDMA Transceiver Module – Antenna not included Surface Mount

Telit: GE310-GNSS

Part Number: GE310-GNSS

Make: TELIT

Dimensions: 18mm X 15mm X 2.2mm

Description: Automated Manufacturing Process Friendly. Miniature and Futureproof footprint. BT 4.0 Transceiver. GPS, GLONASS, Galileo and Beidou navigation, Ideal solution for applications such as asset management, utilities, and telematics. Battery-friendly operation with 2.8V GPIOS.

Quectel: EG91NAFB-512-SGNS

Part Number: EG91NAFB-512-SGNS
Make: QUECTEL
Dimensions: 29mm X 25mm X 2.3mm
Description: Cellular Navigation on Beidou, Galileo, Glonass, GPS, GNSS, LTE, UMTS, WCDMA. Transceiver module- Antenna not included surface mount

Honeywell: LGA_299_35MMX35MM_BETTER_SOM

Part Number: LGA_299_35MMX35MM_BETTER_SOM
Make: Honeywell International Inc.
Dimensions: 35mm X 35mm X 6mm
Description: SOM , I.MX6 SOLOX-2 , 4GBYTE EMMCFLASH , 1GBYTE DDR3L

New Technologies Inc: A-365-MQ-A00

Part Number: A-365-MQ-A00
Make: New Technologies Inc
Dimensions: 22.5mm X 15.05mm X 1.13mm
Description: The A-365-MQ Fingerprint sensor is a fingerprint scanner in an LGA Style package. The sensor is based on capacitative contact technology with hardened surface and enhanced ESD immunity.

complex assemblies

November 30, 2021
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Electronics have become essential to daily life. Everything from refrigerators to military aircraft contains electronics. Today’s critical advanced assembly challenges mainly fall into three categories: performance, usability and productivity. To build and visualise product designs quickly and economically, engineers must address all these challenges.

On the other hand, manufacturing techniques are becoming more advanced and aesthetics are increasingly in demand. Project lifecycles and budgets are constrained. Sometimes, these constraints mean that DFM standards are overlooked in PCB design. For example, if the PCB has to fit in a box of fixed dimensions, the PCB design has to be tweaked accordingly. Or, components with different reflow profiles may be used on the same sid

Newer design houses or inexperienced engineers and designers may be prone to these mistakes. But not validating designs with tool and industry standards is bad practice. Here are just a few examples:

Pad mismatch

If the copper termination pad separates partially or completely from the board, it can be hard to identify the fault; the pad may look intact as the solder usually remains attached to the component. The cause is usually mechanical strain that begins during testing, manufacturing, vibration while being transported or even when connectors are attached. PCB performance is impaired and performance is inconsistent. Extensive or even destructive testing may be required to positively identify the cause. Podrain follows a painstaking process to minimise the risk of damage from pad mismatch at each step.

No silkscreen.

The silkscreen does not impact the electrical functionality of a PCB, but it is still extremely valuable as it provides essential information when assembling the PCB. It provides simple visual feedback that helps to catch deeper problems. It is not merely for aesthetic purposes. It is information that should not be separated from the board. Unique ID numbers, warning symbols, certifications etc. should be displayed on the board. At Podrain, we treat correct and comprehensive silkscreens as an integral part of the PCB.

THT vs. SMT components.

When SMTs were developed in the 1980s they were expected to completely replace THTs. But THTs and SMTs are not always interchangeable. THTs offer reliable and useful in test and prototyping applications where frequent manual adjustments and replacements are needed. But SMTs are almost always more efficient and cost-effective. Podrain’s extensive experience in a wide range of applications gives us the expertise to know which type of components to use for a given project.

Incorrect polarity marking.

To prevent polarised component packages from being inverted during assembly machine setup or manual soldering, accurate polarity marking is critical. It is only necessary for land patterns that have a specific rotation during assembly. Incorrect polarity markings can cause equipment damage, short-circuiting, serious injury, fires or even explosions. Podrain follows stringent Post Assembly Inspection Process protocols to visually validate that assembly insertion is done correctly

Incorrect component separation.

Most designers are used to PCB clearance rules for spacing between traces in a single layer. However, many design houses overlook PCB clearance between layers. Today’s circuit designs often involve a single PCB with power and controls on the same substrate. This may put high-voltage traces close to low-voltage signals, creating a risk of arcing. The resulting sparks can permanently damage the port of the low-voltage component. Podrain designers and engineers keep ourselves up to date on the latest IPC-2221B design standards to ensure optimum manufacturability with minimum risk.

Podrain’s customers have brought us some interesting design challenges.

A top manufacturer of electric vehicle charging stations found that the PCBA yield was below 90%, lower than expected. The company approached Podrain to investigate. The issue was all the more challenging because the assembly was ROHS. Planning and finding the right profile, especially on a PCB that uses BGA + LGA, is an art. By devoting our experienced people to solve this, we iterated through a range of 11 temperature profiles in a reflow oven within just 2 days to find the solution.

Another customer set us the challenge of setting the right profile for a board designed with a heavy BGA connector having multiple ceramic BGAs, including micro BGAs, on a 2mm thick PCB. The issue is these kind of connectors use very high temperature for soldering. 265 degree Celsius plus is needed for soldering but a normal BGA can tolerate only 245 to 255 degree Celsius. We designed and conducted multiple trials by changing the solder paste for each profile. After 15-20 trials supported by some fixtures, we were able to determine the best profile for the customer’s board.

Podrain has solved many such complex assembly design challenges for our customers.

Access to capital: the Msme money maze

November 16, 2021
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The government’s Make in India strategy demonstrates how important MSMEs are to India’s growth story, but capital is still hard to get. If you are considering launching a startup, here are some things to keep in mind:

KEEP FRIENDS, FAMILY AND FOREIGN FUNDS CLOSE

Most credit schemes are aimed at MSMEs that are at least three years old. If your company is newer, informal sources like family and friends must be part of your fundraising strategy. Quite often, this means looking abroad for help. Even if you are looking at a VC / PE funding, the Indian ecosystem is in its infancy and you are likely to go beyond India’s borders. But this can lead to a problem. Indian financial institutions need at least 75% Indian ownership to qualify you for most of their loan products. This is intended to encourage Indian entrepreneurs, but as a startup that might be considering all options for support – make sure foreign investors hold less than 25%.

CAUTION: COLLATERAL AHEAD!

Typically, financial institutions ask for collateral that equals (or exceeds) the loan amount. This can be a term deposit or a mortgage on your home. Indian financial organizations are very cautious about lending. Read the loan terms carefully and include all supporting documentation with your application.

PLEASE MIND THE GAP

The Small Industries Development Bank of India (SIDBI ) was established to bring MSMEs and capital together. This is excellent news for MSMEs but the execution is not perfect. Rules can be unclear and confusing. Decision-making does not always follow the on-paper criteria. If your application is rejected, you may not know why.

Government schemes to support MSMEs working on Covid-19-related projects face similar challenges. Companies that qualify for credit on paper may still be rejected without an explanation.

WHAT CAN CHANGE

Podrain’s experience has taught us that patience is key. It also helps to have an experienced, trusted financial advisor or mentor who understands the options and provides guidance on processes and documentation. Some signposts and directions from financial institutions will make navigating easier.

MSMEs should be able to quickly and easily understand what each regulator is responsible for. Clearly stated eligibility rules for each scheme and a simple explanation of the risks and benefits of each option will help entrepreneurs who are not always financial experts make the right choice. A single-window approach to clearances will make MSMEs’ search for capital much easier. Regulators can also help to match MSMEs with the right funding source for their needs. We can then rely on financial institutions and their lending officers for guidance on the right capital products and schemes.

Financial institutions also need to look beyond traditional collateral-based criteria. Very often these show only the borrower’s existing financial strength and not the intent to repay. To help new MSMEs get started, lenders may consider performance-based criteria to approve loans. For example, whether a startup pays its employees’ salaries, its taxes, and its statutory dues (GST, PF, etc.) on time is a good indication of its intent to pay. Market-based criteria used by PE/VC funds may also be used with modifications that reflect the lower risk appetite of the lender. These forward-looking strategies are consistent with the idea of financial institutions as partners in the Indian MSME growth story.

By adopting a partnership mindset, financial institutions can make capital more easily accessible to MSMEs who want to Make in India.

The Art of Quick Turn Prototype Manufacture – Some learnings

November 5, 2021
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As a PCB assembly and manufacturing unit, we face several challenges in ensuring we can meet the turnaround time our clients ask for while still delivering a quality product. This is a short post on the challenges we face and how we solve them.

6 M framework based thinking helped Podrain find solutions for quick turnaround manufacture

Managing Part Availability Delays

Every manufacturing organization has dealt with issues in this area. The critical part is held up in customs. A normally reliable supplier doesn’t have stock just now. The wrong part got shipped. The list of such issues can be long. Our clients purchase the parts for us in most cases because we are a “job-work” oriented partner, but there are many occasions when the part isn’t available on time but the end date to finish the manufacture is the same!

We’ve seen clients work hard through the day and the part reaches us at the end of the regular workday. We have adapted by having a 3 shift operation in place so that we can take up the order manufacture at any time and ensure client timelines are met. We also ensure that our strongest team members are available on the late shift. It can be tough working late at night on an important order and we put our toughest people on the job to make sure it gets done right.

There are some consumables, that we must order and here we invest in supplier relationships. Our stencil suppliers, for instance, deliver within a few hours because they know they can trust our volume commitments and payment cycles.

Kit Condition Checks First

For larger clients who have their own kitting teams, 99% of the kits arrive in good condition and we can start manufacture immediately. However, many of our clients are startups or design houses that are still experimenting. The parts are directly shipped to us without kitting checks at the client’s end.

We solve this by frontloading our effort in checking kits. Where other manufacturers would ask two people to run kit checks, we allocate 6 people. And we work with the client to solve for deficiencies right away – if there is a part shortfall can we run a smaller batch? Is there additional testing we can do on a smaller batch, while we wait? Is there an alternate part or source we have seen that we can connect them to? We work flexibly with our partners to ensure their goal is met.

Data Package Standardization

In the past when we accepted all client data packages as-is, we would spend a day verifying the documents – gerbers, assembly drawings, additional assembly instructions, etc. – and then mapping them to our process to ensure there were no misses. Working with our clients we realized many of them were flexible on giving us this information in a format that we requested. This saves us time and ensures we can follow a Total Quality Management process even within a 48 or 72-hour manufacturing turn.

We’ve used the 6 M framework – Manpower, Method, Machine, Material, Milieu and Measurement to think through problems and find some of these solutions. I highly recommend this to anyone working in Manufacturing or even in other industries.

That’s it for this month. I’ll write again with more of our learnings next month.

If you want to know more about Podrain and our electronics manufacturing services contact us and we will get back to you at the earliest

Electronic Manufacturing Services