The TXP factor
Texas Prototypes is helping OEMs take the guesswork out of crucial design and manufacturing processes.
Crista Souza
My-ESM
(11/15/2004 10:00 AM EST)
Coordinating a global manufacturing operation is no simple task, but sometimes the trickiest connection to make is the one that links the design and supply chains.
Mike Bell knows this only too well. As new-products supply chain manager of a business unit at Hewlett-Packard Co., Bell witnessed numerous failed attempts over a seven-year period to bring up a quick-turn-prototype partner to build complex printed-circuit assemblies and test boards for the company's high-end servers.
Working with the New Product Introduction (NPI) centers of electronic manufacturing services (EMS) companies, Bell said he found the recurring problem at HP's Business Critical Systems unit (Richardson, Texas) was a gap in capabilities that prevented a smooth transition into production.
When HP sold its Richardson, Texas, pc-board operation to a large EMS company in the late 1990s, the HP unit gave outsourcing another try. "They knew our products, they understood our business," Bell said. Before long, however, the EMS company abandoned the NPI center because it wasn't bringing the kind of returns the manufacturing company had hoped for.
"The types of boards we're building — approximately 2 x 2 feet in some cases — cost $30,000 to $40,000 apiece once they're assembled," Bell said. "[Our EMS suppliers] were building them over in a corner on a special hand line. It didn't match the way they did business."
The Texas Prototypes solution
It was time to try something new. About a year and a half ago, HP decided to outsource the pc-board prototype assembly work to Texas Prototypes Inc., a privately owned op-
eration in Richardson. By focusing exclusively on prototypes and small-lot production that can be transferred to virtually any factory in the world., Bell said, Texas Prototypes (TXP) fills a niche that EMS companies often can't address.
TXP's founders formed it to bridge what they saw as a gap between the needs of OEMs on the design side and the EMS operating model on the manufacturing side. The company's hands-on approach worked wonders for HP, executives at the two companies agreed.
"Based on their background and the knowledge they brought, they've been able to provide that [NPI] service a lot more successfully than we were able to get in the past," Bell said. "And it's primarily because they understand the business."
The HP Business Critical Systems unit still engages with EMS prototype centers. If it's a sure thing that the EMS provider will get the long-term production business, handoff is less of a hassle. But when the manufacturing decision is not clear up-front, "we go with TXP," Bell said.
"To bring up one of these complicated assemblies at a remote site takes a tremendous amount of information, communication exchange, as well as sheer labor and dollars [associated with] having the right resources available to make sure that all the questions are answered and the supplier understands the requirements," Bell added.
"That's what TXP does for us now," Bell said. "They're engaged and interfaced directly into our systems, they see what our demand is, they see the engineering change notices as we're developing the product, so they're able to put that together and hand it off, whether it's to these remote locations or our internal factory."
In the end, the business unit is saving time and costs, Bell said, though he declined to quantify the savings, citing company policy.
No loose ends
TXP understands what has to be done because, while most of its 31 employees are engineers, its roots are in the EMS arena, said co-founder and general manager Michael Shores.
The company began life as the design team of an undisclosed tier-one EMS provider, doing engineering, board layout and prototype assemblies for large OEMs. When an internal reorganization pulled the plug on the operation in 2001, site manager Shores and Thanh Tran, a senior process engineer, bought the equipment for pennies on the dollar, hired back the staff and reopened as an independent company.
Shores likes to call TXP a "manufacturability laboratory," a term that suggests an unusual fusion of designers and manufacturing process experts under one roof. And while the service it provides is not in the purest sense unique, key to its business model is that several of its resident process engineers are also electrical engineers — hybrids, Shores calls them. This, he said, ensures that design issues are properly communicated to the factory and vice versa, instead of being handled under the traditional silo mentality, in which designs are "thrown over the wall" for manufacturing to figure out.
There's nothing better for instilling confidence that a customer's design is in good hands, Shores said.
"I don't know of any prototype shops that do what we do," Shores said. "We help with supply chain by qualifying components for wherever the product will be produced, and design out as much cost up-front instead of coming back in after production release and doing cost reductions. Then we hand off purchase orders so when it leaves us, it can go right into production."
In the case of HP's Business Critical Systems' unit, TXP even ships test boards directly to the production site for testing.
TXP's biggest competitors are NPI centers at tier-one EMS companies, though its emergence so far hasn't quashed the aspirations of design-minded EMS companies. Still, Shores believes the economics of supporting onesy-twosy production for the sake of winning a larger-volume contract down the road will eventually prove an unwieldy objective for EMS companies — the same economic reality that has already led many OEMs to outsource the task.
"No one OEM or contract manufacturer does enough new product launches to support the caliber of team we have and keep them occupied 100 percent of the time," he said.
Today TXP claims more than 40 customers, and releases designs to all the top EMS companies. Increasingly, its capabilities are being sought out by midtier EMS companies that would like to offer NPI services but can't afford the advanced machinery and skill sets.
The qualities HP found most valuable in its relationship with TXP were the company's ability to seamlessly integrate within the operating unit's product development team, and the flexibility the service afforded in the way of manufacturing site selection, said Desiree Ballard, NPI procurement specialist for HP's Business Critical Systems division.
"A real advantage to HP is, if for some reason we made the decision to have multiple [manufacturing] sources on a part, Mike can hand off to both of those and it isn't apparent to them that there's anybody else necessarily in the game," she said.
Outsourced, yet in-house
TXP operates as if it were a part of HP's Business Critical Systems' internal design team, engendering transparency within the system.
The company participates in planning meetings, engineering change order meetings and design reviews, and can access HP's system to receive privileged information throughout the design process. It receives engineering change orders and signals to procure parts at the same time as the HP unit's own engineers. "They get automatically notified when there are changes," Ballard said.
Once materials are procured, TXP has a two-day turnaround for the prototypes. A detailed design-for-manufacturability report is then reviewed by the entire design team to address any problems before the next revision.
"What's key about that is it ensures we've designed a product that, one, can be built, and two, can be built efficiently and cost-effectively, because we're going to hand this off to someone to build over time," said Bell. "They're actually proving out our concepts and making recommendations for how we ought to improve those or make changes."
The feedback TXP provides helps HP in its design-for-supply chain activities — whether it's a suggestion to use a different component, different placement, different package or even changes on the board itself to make it easier to test, Bell said.
HP isn't the only company to have had TXP solve a recurring problem with just one attempt. One of TXP's first projects as an independent entity was for an OEM that was designing a complex third-generation basestation board. An EMS company had launched a previous version of the board through its NPI center, but it took two weeks to build it and three weeks to get it debugged.
On the next revision, the OEM turned to TXP. "We built the product in two days and three days later they had them all working," said Shores. "They called down here and you could hear the engineers whooping and hollering in the background. They wanted to come in and meet us, they wanted to see who was able to do that for them."
The original EMS still got the production business, but now TXP gets the call when it's time for the next design iteration. "They felt like they got better focus from us, [because] this is all we do," Shores said.
"Usually engineering and manufacturing do not get along, and the reason is neither of them understands what the other one is doing. It's two totally different worlds — like putting a square peg in a round hole, but in the past the OEMs owned it all and they just forced it," Shores said. "They don't own it all anymore. So we're the round peg for the round hole in the middle between the OEMs and the contract manufacturers."
Crista Souza can be reached at csouza@cmp.com.
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