Essential Manufacturing Terms

Learning and using manufacturing terms is important for product developers to define processes.  In manufacturing, process is the road-map to keeping the promises we are making to potential customers:  delivering consistent quality on-time, every time.

When building prototypes we, are usually very connected to the process.  We are building a few products with people we know.  Mass production of that very same product requires building many of the same product with many people involved.

Creating relationships and clear lines of communication with possible Contract Manufacturers (CMs) is essential to creating these processes.

For this purpose, we’ve started a glossary of Essential Manufacturing Terms.

We will continue to add to this glossary as we define the path to physical product development.  Unlike traditional glossaries, these terms will not appear in alphabetical order but in groups pertaining to the function of each.

Please note that some of these terms may be used interchangeably in different regions or industries.  Please feel free to send me your comments and or suggestions about the use of these terms in your experience, industry or area.

Let’s start the conversation.

 

Types of Manufacturers

OEM:  Original Equipment Manufacturer.  A company that makes the components, parts, systems, subsystems and assemblies which are used in another company’s end product.

ODM:  Original Design Manufacturer.  A company that manufactures products which are branded and sold by other companies.  Also known as White Label or Private Label Manufacturer.  Any company could buy from this manufacturer and sell their product under its own brand.  The ODM owns the tooling and processes that make these products.

CM:  Contract Manufacturer.  A Company that manufactures for another company.  A form of outsourcing.   Many times this term is interchanged with ODM but CM’s mostly do not own the IP or tooling of the products they are manufacturing.

EMS:  Electronic Manufacturing Service.  A Company that provides design, manufacturing, testing and assembly of electronic components.  Also known as a ECM or Electronic Contract Manufacturer.

 

Design and Engineering Terms

CAD: Computer-aided Design.

EE:  Electrical Engineering

ME:  Mechanical Engineering

DFX:  Design for X.  Includes the following.

DFM:  Design for Manufacturing. (You’ll to present these designs with your first RFQs.)

DFA:  Design for Assembly. (If necessary, you’ll also need to present these designs with your first RFQs.)

 

What you’ll need to get started

NDA:  Non-Disclosure Agreement

RFQ:  Request for Quote.   Asking for hard quotes and not just estimates.

BOM:  Bill of Materials.  A list of all the materials needed and their specifications.  These items should also be listed in your DFX.

PRD : Product Requirements Document.  Specifications for materials, critical dimensions and process details that are critical to the product.  This will include, not only, DFX drawings but also any other details and compliances your manufacturer must know about including what your product is, what it is supposed to do and how it will perform.  Quotes should be based on these specific demands.   The development team (you) should start putting together these document early in the development process.

 

While Working with a Manufacturer

EVT:   Engineering Verification Test.  Basic functionality tests performed on prototypes. Some engineers or product developers may use this term when assembling first run parts in the manufacturing facilities by hand and checking the engineering basics and function.

DVT:  Design Verification Test.  The process of verifying the final produced product specifications, manufacturing requirements, functionality, performance, climate testing, reliability, mechanics, safety certification, interface standards and mean time between failures (MTBF).  Basically, checking all the details of the product on the production line before beginning mass production.

PVT:  Production Verification Test (or Process Verification Test). Focused on making sure the production line process is making the product using the SOT (see below) and verifying the results.

SOT:  Standard Operating Procedure

CO:  Change Order or ECO: Engineering Change Order. Capture specific changes to the manufacturing of your product through a written and numbered change order.  Manufacturers may charge to make changes unless they are simple.

AVL:  Approved Vendor List.  A list of raw material and component vendors that is approved by the development team (you).

 

Other Details

COGS:  Cost of Goods Sold.  The cost of actually producing your product.  Includes all components, manufacturing, fasteners, packaging, assembly, finishing, taxes, tariffs, etc.

IP:  Intellectual Property

PO:  Purchase Order.  A formal written (or electronic) document which officially orders a product.  You are bound to the terms on the order as is the manufacturer when they formally accept it.

Shipping and Handling

F.O.B.: “Free On Board” or “Freight on Board” is a term in international commercial which specifies at what point respective obligations, costs, and risk involved in the delivery of goods shift from the seller to the buyer.  In other words a quote with shipping terms as F.O.B. your location, the shipping and handling is included in the quote.  If it is F.O.B. the sellers local, you will have to arrange for shipping.

D.D.P:  “Delivered Duty Paid” In a quote, DDP will be followed by a physical location.  This means that the seller is responsible for shipping costs, duties, taxes, etc. up to that point.