Getting funding and Purchase orders

I haven't made new posts in the past month or so, because price and term negotiation is normally confidential between the two parties. I had analyzed the Innogetic quotation for development costs and for unit BOM costs; then I met with the Evergreen Board of Directors, of which I'm a member, to get approval. I assembled a project update and quotation summary in a power point for the board. This was well received, the board was happy with the progress and the prospects. There were some minor issues to clear up like logistics details and how we could use this project for fundraising.  Today, I'm am preparing the Purchase Order for the Faith, the Evergreen President to sign; once Innogetic receives the PO, they will proceed with procurement and building prototypes.

Quotation Analysis

I received the quotation from Innogetic Technologies for the non-recurring development cost; and for the per-unit production cost. I have begun the process of evaluating the quoted costs: I started with the development cost by making my own estimate on the number of person-hours - this estimate is based on my experience and knowledge of what it takes to develop this product. Next I divided their dev cost by the hours to get a per-hour rate. Then compare this estimated rate with professional rates in China. 
To get the production cost, I made my own costed Bill of Materials (BOM) adding in estimated transformation cost (mfg cost), and of course the Chinese 17% VAT tax. This will help me judge the quotation to find out if it is reasonable or if further negotiation is necessary.

Minimum Production Quantities

Innogetic did some research on developing the supply chain for the forcast. Seems at least one supplier (solar panel vendor) has a minimum order quantity of 500 units. Using this feedback, we revised our forecast for 2 batches of 500 units. Evergreen is commiting to this quantity; although we would like to order more in the future.

Forecasting production

Today, I had a meeting with Faith, the President of Evergreen Education Foundation. I showed her the product design rendition; and she loved the design concept.  We put together a forecast for deployment at the schools...we'll do an initial production run for delivery in January at two schools for the Spring semester.  Then we will do a larger run for 10 more schools for the Fall semester. The schools are in 6 rural China provinces.

Innogetic will use this forecast to purchase material and plan production.

zeroing in on a product design

Recently Innogetic has been working hard on the product design details. We came up with an issue with the solar panel size being too large for the current enclosure mold - it would require expensive reworking of the tooling to use. We came up with two options: 1. to reduce the performance specs and use a small solar panel which would fit in the current mold.  2. Design the product in 2 pieces, by seperating the solar panel in it's own enclosure.  The team did a detailed trade-off analysis, and in the end recommended the first option with the small solar panel. They provided analysis that showed the specs would be lower but still acceptable in the user scenario. I agreed with the team and we are able to continue with the development. We now have an electrical and mechanical design to use as our prototype.

Development progress

We have been making product development progress on the solar lamp project; Innogetic Technology has done some good engineeing work refining the details of the product design. So we now have a completed product spec and a conceptual design model. The team is on schedule to finish the initial design by the end of July; after that we will work on sourcing and building the prototype.

End user testing to find the answer

In our conference call this week with our development partner, Innogetic, they pointed out that the lighting power spec might be too high power. I asked them to run some user scenario testing to find out an optimal lighting level. Once we find the optimal lighting level from user scenario testing (basically we qualitatively test to find what level of light is needed to read and study), then we can properly size the battery and the solar panel to match. 
Questions like this should always consider the end-user because that is what is most important in any product development.