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Factory Layout – What are the Options

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:

  1. The proper and efficient use of the available floor space
  2. Work should proceed from one point to the next without delay
  3. Adequate production capacity and flexibility, including potential to expand, at least in the short- to medium term
  4. Lower material handling costs
  5. Employee health, safety, accident and injury prevention
  6. Efficient labour and equipment utilization and productivity
  7. Maintaining quality standards, managing waste and storing inventory
  8. Ease of supervision, and control
  9. Plant and equipment maintenance
  10. 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.

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Factory Location: How to make a choice

India

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:

  1. Natural or climactic conditions
  2. Cost of land or land lease
  3. Availability and access to raw material
  4. Transport costs – inward, to bring in raw material, and outward, to sell or distribute finished products
  5. Availability and access to market
  6. Availability and access to infrastructure – developed industrial sheds, link roads, transport hubs, public utilities, civic amenities, means of communication
  7. Availability and access to both skilled and unskilled labour, as required, and local labour rates
  8. Availability and access to banking and financial institutions
  9. Safety and security of the plant, its workers and its assets
  10. 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
  11. 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.

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Quality testing for prototypes

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

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.

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Why We Need to Near Source Electronic Components

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

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. 

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Agritech: High-end Hardware Applications for Indian Agriculture

The global human population is projected to reach 9.8 billion people by 2050. Food security is a critical concern worldwide. Resource availability, distribution and access imbalance, higher agricultural and dairy output, and sustainability are major challenges.

The Indian agriculture sector is valued at over $370 billion. It employs 40% of the population and contributes nearly 20% of India’s GDP. Agritech is vital to ensuring our nation’s food security issues. A 2020 E&Y study estimated that the Indian agritech market could reach $24 billion in the next 4 years. Another study put the number at $35 billion.

Indian Agritech has great potential

Over 1,300 Indian startups are working in this space as of October 2021. They use AI, ML, IoT and other digital technologies to improve productivity, efficiency, revenue and profitability for farmers. In 2020, Indian agritech startups received $242 million in funding in just ten months.

These startups offer a range of products and services including sensors, signal conditioning, processing and security, power management, connectivity, and positioning. As a precision-engineering EMS manufacturer, Podrain works with IoT-driven agritech startups to create the hardware required for smart farming. Some of the many applications are:

Precision agriculture and farm management.

Geospatial and weather data, IoT sensors for humidity, temperature and other variables, resource and field management, energy and water use, and robotics on farm equipment.

Farm infrastructure and equipment.

Industrial automation using machinery, tools and robots to seed, harvest, and handle materials. Greenhouse systems, temperature and humidity monitoring, environmental controls, irrigation and water management, heating and ventilation monitoring.

Dairy farm optimisation.

IoT sensors monitor the health parameters, milk production, eating patterns and nutrition, fertility and reproductive cycle of individual cows, and overall herd health. Diseases can be detected early. Digital milk analysis devices measure fat and water content, SNF and contaminants at every stage.

Cultivation and land use.

GPS data have applications in land mapping, soil quality, crop placement, soil sampling, weed identification, determining the right time to harvest, pest management and optimum pesticide use, and water availability and irrigation, among many others.

PCBs are a foundational component of IoT-based digital technology. Podrain has vast expertise in developing customised solutions and solving highly complex problems for our clients. We apply our talents to the vital area of agritech. It presents a large and growing opportunity to harness the power of digital technology to improve the quality and quantity of agricultural and dairy output, and the economic well-being of 40% of India’s population.

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Access to capital: the Msme money maze

Capital Access that looks easy on paper is difficult in practice

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.

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