Typical patterns of failure in outsourcing the development of electronic devices

When outsourcing the development of electronic equipment, you may encounter unexpected problems depending on the contractor, which can cause development to take longer than anticipated. In the worst-case scenario, it could even lead to abandoning the project altogether. The patterns of failure when outsourcing the development of electronic equipment can be broadly categorized into the following five points.

1. Insufficient granularity in the specifications: This can lead to situations where "the final product is different from what was expected."
2. Delaying certification: Failing tests such as EMC, Radio Law, andPSEresults in having to redesign the product.
3. Prototype-to-mass production gap: A design that worked fine in oneunit may not achieve stable quality in mass production.
4. Failure to consider component end-of-life (EOL): Components are discontinued just before mass production, requiring the entire product to be redesigned.
5. Disruption of subcontractors: Design and manufacturing are handled by separate companies, leading to a lack of information transfer and resulting in accidents.

Many of these failures stem not from a lack of technical expertise on the part of the contractor, but from problems with the "method of outsourcing" and the "selection of the contractor." Most of these can be avoided if these issues are addressed beforehand. This article explains five common failure patterns observed by Macnica Manufacturing Consulting (MonoCon®) through supporting its clients, using real-world examples and data. At the end of the article, we also provide a 10-item checklist that can be used directly when selecting a contractor.

Please also refer to our related article, "How to Choose the Right Outsourcing Partner for Product Development: Differences Between OEM, EMS, and ODM, and Your Options Beyond That."

Three forms of development outsourcing and the areas each falls short of.

Failure Pattern 1: Insufficient granularity in the specifications → "It's different from what was expected" occurs.

How to fail

If the specifications provided to the contractor are too vague, the contractor will interpret them independently and proceed with the design, only realizing that the finished product is different from what was expected. The following cases are particularly common:

- Omission of information regarding operating temperature range and environmental resistance (waterproof rating, etc.)
- Design started with unclear communication specifications (Wi-Fi/BLE/LTE selection).
- Requirements for UI operation and feedback (LEDs, sound, vibration) are undefined.
- Insufficient description of the intended usage environment (factory, outdoors, wet areas, etc.)

Workaround

Creating a perfect specification document isn't the right approach. Rather, it's crucial to clearly identify the parts of the specification that aren't yet finalized and then work with the contractor to refine those details.

- List confirmed requirements and unconfirmed requirements separately.
- For items that are not yet finalized, clearly state "We are seeking proposals from the contractor."
- Agree in advance on the timing of regular design reviews.

Failure Pattern #2: Delaying authentication implementation → Millions of yen in losses due to redesign.

How to fail

The idea of "let's build something that works first and then think about certification" is one of the most costly mistakes you can make. Electronic devices have certification requirements depending on their application, and if you use components or circuit designs that do not meet these requirements, you will have to start over from the circuit board design once you fail the test.

• General equipment: EMC (Electromagnetic Compatibility) / Radio Law / PSE (Electrical Appliances and Materials Safety Act)
• Automotive equipment: IATF 16949 (Quality) / AEC-Q (Reliability) / ISO 26262 (Functional Safety)
Medical devices: ISO 13485/IEC 60601

Especially in automotive and medical devices, the certification requirements are numerous, so overlooking even one during the design phase could result in wasted development costs ranging from several million to tens of millions of yen.

Workaround

Please view certification as the "starting point" of your design, not the "goal."

・ We identified certification requirements from the PoC stage and reflected them in component selection. ru
・ Choose a contractor with a proven track record of obtaining certifications (ask, "How many certifications have you obtained?").
・ For wireless-enabled devices, priority will be given to using certified modules that have already undergone technical compliance testing. ru

Failure Pattern 3: The prototype worked, but the quality remained inconsistent during mass production.

How to fail

In prototyping, one unit is carefully tuned and its operation is verified, but in mass production, variations in component batches, differences in manufacturing environment, and differences in soldering quality occur. A design that "worked in the prototype" does not necessarily work in mass production.

As an example, in a project involving IoT sensors for disaster prevention equipment, two prototype units that worked fine in the development lab malfunctioned at the customer's site. The causes were a failure in the LTE module's response and a broken power supply line that occurred during shipping and packaging. Problems that did not occur in the development lab occurred at three stages: transportation, installation, and the outdoor environment.

The cost impact is also significant. In one project, it was necessary to switch from a Raspberry Pi (unit cost approximately 4,000 yen) to a mass-production circuit board (target unit cost 15,000 yen) during the prototyping stage. Development costs up to the prototyping stage alone amounted to 6 million yen, with several million yen more incurred for the transition to mass production. The cost of converting "it worked in the prototype" to "it can be reproduced in mass production" is far greater than one might imagine.

Workaround

"Mass production design" is a different design process from "prototype design."

- Incorporate component variations (tolerances) during the design phase.
- Manufacturing tests (inspection specifications) are formulated simultaneously with the design.
- A mass production design review must be conducted when transitioning from prototyping to mass production.

Failure Pattern ④: Parts reach end-of-life (EOL) just before mass production → The entire product has to be remade.

How to fail

Receiving an End of Life (EOL) notification for a component selected during the prototyping phase just as mass production begins is one of the most troublesome problems in electronics development. The following components, in particular, have a high EOL risk:

• Communication module (Wi-Fi/BLE chip lifecycle is approximately 2-5 years)
• Application-specific ICs (the smaller the production volume, the faster the end-of-life).
• Connectors and passive components (frequent changes in shape or discontinuation)

Workaround

Make the end-of-life (EOL) risk "visible" during the component selection stage.

- Create a list of the lifecycle status of selected parts (in mass production/recommended/end-of-life (EOL) not yet announced/discontinued).
Identify alternative candidates (second sources) in advance.
- Establish a system with our contractor to monitor PCN (Product Change Notification) from component manufacturers.
- Choose a contractor that works in conjunction with semiconductor trading companies → This allows for early access to EOL information and smoother proposal of alternative products.

Failure Pattern 5: Design and manufacturing are handled by separate companies, leading to a lack of information.

How to fail

When outsourcing is fragmented, such as "design by company A, circuit board manufacturing by company B, enclosure by company C, and testing by company D," information is lost during the handover between phases. In one actual project, the contractor for the prototype stage was unable to meet mass production quality standards, necessitating the search for a different partner for mass production. Changing contractors requires a significant amount of effort to transfer design intent and re-agreed on quality standards.

Furthermore, caution is necessary when changing subcontractors for repeat projects. In one project, when transitioning from an existing partner to a different subcontractor, "pay attention to the impact of changes (parts changes due to customer selection, change of subcontractor)" was explicitly included as a handover item. Switching subcontractors is a risk point in itself.

Workaround

The ideal solution is a single point of contact. A system where one point of contact, capable of making technical decisions from design to manufacturing, manages all partners, minimizes risk.

[Comparison Table ②] Quick Reference Guide to 5 Failure Patterns

Areas covered by Macnica MonoCon®

These are the areas of support provided by MonoCon® for five common failure patterns.

1. We select and combine the most suitable partners from our co-creation network of 26,000 companies and our 150 domestic and international collaboration partners.
2. With a global network of 91 locations in 28 countries, we select the optimal mass production factory both domestically and internationally (including direct overseas delivery).
3. We can also collaborate with domestic factories specializing in small-batch, high-mix production (strong in small-lot prototyping to mass production startup).
4. Contract terms and cost structure based on long-term support
5. With over 30 years of experience in various industries including fashion, food, housing, retail, home appliances, factory automation, building equipment, logistics, and healthcare, we can provide consultations regardless of your industry.

[Comparison Table ③] 10-Item Practical Checklist for Selecting a Contractor

Please use this when interviewing potential contractors.

Frequently Asked Questions (FAQ)

Q1. What is the average cost of outsourcing the development of electronic devices?

The cost varies greatly depending on the scale and complexity of the development. While some prototype development can be done for around 1 million yen, others, with complex specifications, may require nearly 10 million yen just for prototyping. Furthermore, mass production incurs additional costs. We will first conduct a consultation and then provide a rough estimate.

Q2. What is the difference between EMS and ODM (Original Design Manufacturing)?

EMS primarily involves "outsourcing the manufacturing process," where you provide design drawings and entrust the manufacturing to the supplier. ODM allows you to outsource from the design stage, making it effective when your company lacks design resources. However, both assume that "specifications are in place." If you need support from the stage where specifications are not yet finalized, a one-stop partner (such as a manufacturing consultant) is more suitable. For more details, please refer to "How to Choose the Right Partner for Product Development Outsourcing to Avoid Mistakes."

Q3. Can you handle the entire process from PoC (proof of concept) to mass production through a single contractor?

Yes. Macnica 's MonoCon® provides one-stop support from idea-stage proof-of-concept testing to product design, selection of mass production plants, parts procurement, and mass production launch. This helps you avoid the "valley of death" where you might have to switch contractors midway through the process.

Q4. Can you accommodate a change in the development contractor midway through the project?

Yes, it is possible to join the project midway by taking over existing design data. We will review your current design data and propose a transfer plan. We also handle partial requests, such as mass production of circuit boards designed by another company, or evaluation and certification only. Since changing contractors inherently involves a "point of change," we proceed only after carefully developing a handover plan.

Q5. Can you accommodate overseas mass production or reintroduction to domestic production?

Yes. Macnica has a global network of 91 locations in 28 countries, and we can select the optimal mass production plant both domestically and internationally, and handle direct delivery overseas. We also have cases where production has been brought back to Japan due to geopolitical risks.

Summary

The reason for failure in outsourcing the development of electronic devices is not a lack of technical expertise on the part of the outsourcing partner, but rather the "method of outsourcing" and the "selection of the outsourcing partner." Let's review five common failure patterns.

1.  The specifications lack sufficient granularity.  → Separate confirmed and unconfirmed items and finalize the details with the contractor.

2.  Delaying authentication support  → Incorporate certification requirements into the design from the PoC (Proof of Concept) stage.

3.  Prototype to mass production gap  → Design with mass production in mind from the very beginning.

4.  End-of-Life (EOL) of parts  → Check the lifecycle during the selection phase and identify alternatives.

5.  Division of the contractor  → Consolidate the point of contact to prevent information disconnection.

Checking these points in advance will significantly increase the chances of a successful development outsourcing project. Please make use of the 10 items on this checklist when selecting a development partner.

Related article

• How to Choose the Right Outsourcing Service for Product Development: Differences Between OEM, EMS, and ODM, and Your Options Beyond That.
• Turning ideas into reality: Proof of concept (PoC) support
• Pitfalls to avoid and the realities from prototype development to mass production
• Establish a mass production supply system that leads to business success
• Successful cases of domestic reshoring of outsourced manufacturing: Countermeasures for geopolitical risks and business reform
• "Manufacturing consultation" based on an idea