It was an improbable scenario. A not-for-profit organization wanted to manufacture a very low-cost, low-margin product in a highly developed country not known for bargain-basement tax rates or wages. In fact, some potential partners in the deal wouldn't even entertain the proposal, saying it simply couldn't be done.
"With the initial production run being something along the lines of 2,000 pieces, the volume wasn't there to make it practical to build in the West," Mike Buffham, global head of electronics design engineers at the UK distributor Premier Farnell plc (London: PFL.L), told us. "It was very frustrating."
The UK inventors of the $35 Raspberry Pi, a computer the size of a credit card, wanted it to be manufactured in the UK. The Pi was meant to stimulate young people's interest in computer programming, so it had to have a very low price. There wasn't a lot of room for profit margin. So the initial run of the product took place in China.
The initial release of the Pi in February was a huge success. Two exclusive distributors, Premier Farnell and RS Components, sold out their supplies within hours. Future demand looked promising, so the inventors, along with executives from Premier Farnell, looked for a UK manufacturing partner. They found one in Sony UK Technology Centre.
It wasn't an automatic win, Buffham said. Sony UKTec, like any other business, has to turn a profit. The partners started with the Pi’s bill of materials (BOM) and broke down the cost of each component. They looked for efficiencies and savings in the sourcing process. In this case, since Premier Farnell distributes both components and end products such as the Pi, it could provide some economies of scale.
"That was the challenge we faced at the end of the day," said Buffham. "These are the parts we need, and here are the prices of those parts. So we had to look at how we could get the landed cost of the Pi where we needed it to be. We spent as much time talking about the shipping of the product as the product itself. We looked at the total cost of acquisition and what [the BOM] would cost anywhere in the world."
Eventually, the partners were able to get the costs in line. Sourcing and shipping efficiencies offset other costs of manufacturing in the UK. Sony UKTec now manufactures the Pi for the Raspberry Pi Foundation. Premier Farnell supplies components and sells the device.
According to Buffham, local manufacturing has its advantages.
For one thing, if there is a problem, it can be addressed and fixed within the same time zone. We can get things done efficiently. But we started with the premise that we would prove it could be done here as cost-effectively as in China. But it had to be profitable for everyone.
The Pi will still be manufactured in China as well as in the UK. Premier Farnell said in a press release:
Sony UKTec will be investing in additional equipment to fulfill the order requirements, providing flexibility and scalability to cater for potential increases in demand. This will include additional automated circuit board equipment and double side reflow machinery. Furthermore, the site will be extending its manufacturing process capability to include a technique called package-on-package (PoP). This process allows the processor and memory to be stacked on top of each other, reducing the PCB footprint and the distance that high-speed signals need to travel, improving overall reliability.
Sony UKTec will add 30 jobs as a result of this effort, Premier Farnell said.
"Pulling this together took a lot of commitment from everybody," Buffham said. "But from day 1, Sony UKTec had a 'can do' attitude. They wanted to do this. And we all wanted to prove a product could be designed and manufactured in the same country."