Manufactured products can seem like a daunting area to tackle if you’re not used to hardware and manufacturing processes. In this series of posts, I’m going to examine a hypothetical scenario where you’ve been given product management responsibility for transforming a line of pedometers into a line of advanced fitness trackers and health monitors for outdoor adventurers.
The legacy pedometers are rudimentary devices that simply count and display the number of walking steps an individual takes in a given time period. You are expected to use your experience in software development and wireless networking to make your product line competitive in the wearable technology/IoT industry.
You’ll learn quickly that much of your past experience can be put to good use in this environment, but there are many unique aspects about the management of manufactured products that few software product managers have been exposed to. Here, we’ll examine some important considerations about product requirements that can be very expensive to fix if they aren’t accounted for early in the development process.
Manufactured products are often required to meet certain certification requirements related to safety, performance, and environmental impact. Product managers must understand which certifications will be required for their products and ensure this information is reflected in their product requirements documentation, budgets, and timelines. A high-performing product manager establishes a set of certification requirements that aren’t too hard, or too soft, but just right. Here is a list of some common ones that should be considered:
- The CE mark is a product safety standard desirable for many markets and critical for selling most products into Europe. Achieving this marking typically relies on meeting standards created by the International Electrotechnical Commission (IEC), and other countries or markets may require their own individual marks, such as Canada (CSA) and China (CCC).
- FCC, CFR Title 47, Part 15 regulates nearly every electronics device sold into the United States for radio emissions, so this must be considered anytime a hardware product is upgraded to become “smart”, such that it contains a RF emitter.
- The Center of Devices and Radiological Health (CDRH) is part of the US FDA. Those in the food and medicine field know the FDA well, but the FDA also becomes involved via the CDRH for any radiation-emitting devices that have medical applications. CDRH also establishes compliance requirements for any devices containing lasers.
- RoHS/WEEE and REACH are the most common environmental standards and are often required for products to be sold in Europe. Though compliance responsibility lies with your company’s environmental health and safety (EH&S) department or contractors, the product manager must be aware of their target customers’ requirements in this area and hold their EH&S function accountable for delivery.
- ASTM International standards focus more on product performance, ranging from industrial to consumer products. For example, the first standards specified the quality of railroad steel late in the 19th century, but more recently ASTM has become involved actively in child toy safety. Businesspeople are able and encouraged to serve on their standards committees, which provides an opportunity for product managers and developers to influence how the performance of their products will be evaluated.
- Compliance with military standards is required for selling products into the defense market. In non-defense markets, these standards can be used as performance differentiators for consumer products such as mobile devices or watches. MIL-STD-810G is most often encountered as it covers resistance to environmental conditions such as wind, rain, vibration, and impact.
In these cases above, just saying that your product compliant with a given standard is rarely enough. The product manager must ensure that compliance documents, ideally signed by an independent third-party, are made readily available to their sales team and customers to avoid unnecessary delays in closing business deals.
As part of the requirements definition process it’s also important to consider how a product will be maintained. Just as with bugs in software, wear and tear with manufactured devices is a certainty and your product line strategy needs to consider how you’ll manage this inevitability with your customers. As key requirements you should establish the desired service life of the product, expressed in time or cycles, and how any maintenance actions will be conducted, which will be dependent on the level of expertise of your users and the ability and availability of repair centers.
Customers often consider a product’s “-ilities”, which can refer to capability, durability, usability, and so on. But, affordability may trump all of these in the end. While there are many factors that contribute to the market price of a final product, the item within control of your development team is the cost of goods sold (COGS). Both material and labor costs contribute to COGS.
Most developers understand their responsibility for controlling material costs. They also understand that materials cost more when purchased in low volume versus high volume. This is why you not only need to state a cost requirement, but also a cost at volume requirement. That volume should be at a realistic scenario based on your market size and expected share.
Your developers may feel less responsible for the labor component of COGS, which is why you need to ensure that manufacturing engineers are part of your development team. All design choices should be made with an understanding of the impact to manufacturability and labor costs. Some well-intentioned material and design choices can have a severe impact the amount of labor that will be required to manufacture the product. On the other hand, some design choices may reduce labor requirements, even if the material costs rise.
Putting Theory into Practice
Let’s put all of this into action to set some requirements for the scenario introduced at the beginning of this post. By adding functionality to connect your pedometer to a smartphone, you trigger FCC compliance requirements. Because Europe is a target market in addition to the US, CE marking and RoHS/WEEE compliance is also required. Ruggedizing the device to differentiate your offering for outdoor adventurers is a good idea, so you target MIL-STD-810G compliance. You also recognize that having your device alert a user to the signs of oxygen deprivation by including a small laser in the device to monitor blood oxygen levels is a killer feature, and now CDRH compliance is necessary. Finally, to protect your core technical advantage you begin to work with ASTM International to establish a standard for pedometer accuracy that all players will be required to meet.
Next, let’s look at the maintainability implications of these performance requirements. With the added pulse oximetry feature, the new device will need to be recharged more often than your current products, and periodic calibrations will be required. Your requirements may state that the device operates for 72 hours between charging cycles, 180 days between calibration cycles, and that the calibrations will be performed by a network of authorized repair centers.
Finally, this is clearly a case where you’re moving upmarket and this product will be priced significantly higher than legacy pedometers. To prevent the cost from getting out of control, you’ll need to set a COGS requirement in this type of format:
“The target COGS at a quantity of 1,000 units is $299 and must not exceed $399”
This requirement communicates a target cost, which you’ve derived from your intended market price, but also gives room for your team to make design choices that may improve product performance and/or compress the development schedule, all while staying under a firm cost ceiling that must not be exceeded.
With the full requirements set established, my next post will examine the unique aspects of the development process and launch planning for manufactured products.