Life at a Photonics Startup: Lessons Learned Manufacturing Integrated Photonics Or—So You Want to Be an Entrepreneur?

Part 1: Getting Off to the Right Start

By Michael D. Evans, DESc

Getting off to the Right Start

Where do new products come from? Does some engineer or marketing expert wake up in the morning and somewhere between coffee and their shower shout, “Eureka, I have it!” Sure, that happens and so does the spark of a thought that occurs on a production line or the insight that matures after seeing unrelated patterns that coalesce into a better method, product or feature, Figure 1. Disruptive products often have a “Eureka” moment or epiphany where a developer or small team gains new insight through the spark of an idea or a new way of considering a challenge. However, many products are the result of weeks or years of systematic discovery that fits into a complex system with planned changes and predictive improvements in cost and performance. Obviously, an incumbent with a reliable systematic plan has an advantage with customers that expect performance and see proof from a supplier. Even for developers that spontaneously combust, it is essential to spend time in the patent database (USPTO.gov) and do background research to see how others have solved the problem. It’s always entertaining to see the same “Eureka” ideas happening throughout industry and academia every decade or less just because homework wasn’t done during the race to a marketing announcement. The epiphany is only the beginning, but successful development takes a team of experts, skills, and character. Consultants and contract researchers can reduce the time of evaluation, and many successful companies include independent consultants to provide expert analysis at reviews of requirements, preliminary designs, and critical designs being released for prototype fabrication. Even the smallest company can integrate the design process for traditional or disruptive products using computer-aided design and manufacturing software tools that generate lifelike renderings of products, solid models for size and feel and incorporate engineering and scientific information in a coordinated file system for collaborative design, protection of intellectual property and streamlined, faster delivery of higher quality results. Some marketing people are rebranding this and calling it “digital engineering.” Embedded simulation provides linear and nonlinear demonstration of thermal, mechanical, and electromagnetic performance for a virtual product built with the properties and materials designed into the system. Collaborative tools include Solidworks with Simulia (Abaqus, CST studio) by Dassault or ProE (now PTC) Creo and their partnership with ANSYS for modeling and simulation of nearly any product. Specialized tools are used by optical architects and electrical engineers for design and simulation including SPICE, Zemax, Synopsis Code V, or Fred Optical Design. A careful standardization of tools across an organization improves design speed and reduces software costs and maintenance. This is even more important with multinational design teams working on collaborative product advancement. Costly multiphysics simulation tools or specialized technical analysis can typically be performed as a service or as a parallel activity. It is important for a design champion to plan the program with enough modeling and simulation but not have the program get lost in the boundary conditions and variables of the simulations. Many contemporary design tools have excellent design transfer capability. The ability to transfer proprietary electronic files is essential for any new product supply chain. Agreement on formats and expectations should be defined in engineering processes that provide clarity, from idea creation through toleranced component designs, solid models and through manufacturing, test and tooling reviews.

Product families start with a product plan and are built from several related platforms that are simply similar components made with the same manufacturing tools and processes. Some have come to call this “modular design.” Modularity increases the probability of successful product introduction and the likelihood that this cycle of invention and reward is continued. It optimizes the cost of tooling and training and is comfortable for steady product flow in manufacturing. A different product without visual or functional similarity may be made from the same processes or production line and is equally a modular component from the manufacturing point of view. A semiconductor silicon foundry is an example of an entity with modular processes like metallization, lithography, dielectrics and planarization, but that generates diverse end products.

In the endless process of product planning, a disruptive change may require new tools, new processes, new materials, and introduction of new brands and capabilities. Legacy products with the legacy tools are often continued even with new capabilities. For example, a communication network may work perfectly with copper twisted pair or coaxial wire, but introducing more expensive optical fiber increases network data capacity and enables new services, new capabilities, and advances in unrelated sectors like finance, imaging or medicine where communication technology is peripheral or unrelated. Free space optical communication offers advantages for 5G communication when seamlessly integrated with legacy equipment. The legacy technologies continue but the new technology requires a commitment and market opportunity. A new manufacturing process is at least as significant as a new product designed for legacy production.

The Importance of the Team
Any technology change requires a champion, a visionary that sees the plan, initial cost, and the business reward for success. The technology champion attracts a group of critical participants in the creation of results including: an executive champion who can integrate the changes and ideas into the corporate plan and budget; a marketing and sales champion to act as the “pull” drawing forward the new opportunity with favor-able projections; a manufacturing champion who develops the cost of goods through supply chain considerations and tools of production for yield estimation, reparability and the production tool capacity considerations needed to satisfy current and emerging products. With a self-appointed or chosen development champion and a core team the question of funding usually precedes other concerns. Within a corporation the use of internal research and development funds (IR&D) usually requires paperwork and executive advocacy. Every successful transition takes a team with communication skills and the ability to work past disagreements and moods, failures, and successes. We will return to this concept again.

Some U.S. companies have taken advantage of the small business innovation research (SBIR) program which provides grants to small businesses with competitive business proposals. The research topics usually are associated with a potential acquisition or market opportunity and are a percentage of any government extramural research budget. The Department of Defense conducts the majority of SBIR programs as a function of the department R&D budget, but the Department of Energy, National Science Foundation, National Institute for Health and others also are active participants. The funds can provide a development budget and market opportunity for a new product or fund a new area of pursuit for a traditional small business. Corporate investment is still available, but finding the right point of contact may require a consultant or other experi-ence. Note that a corporate partner can work with a developer and small business even from the earliest stages of the development, and the corporate partner can be subcontracted to provide insight into potential manufacturing resources and other tools for business advancement.

To summarize getting off to the right start, an idea is the most abundant of things, but a good idea is rare, and a very good idea is the product of experience, know-how, and intellect. A good idea will inspire a small, integrated product team to do extraordinary things particularly if they have:

• a product plan
• system engineering requirements and rigor
• common and complementary development tools
• a suitable supply chain strategy
• manufacturing expertise
• program management expertise
• a willing product champion and
• executive support (budget, time, and material.)

A design for production philosophy encompasses integration, repair, maintenance, customer key requirements, and affordability. System Engineering is a discipline that focuses on interfaces, requirements, hardware, and software as well as testability, integration, and the methods of validating and verifying reliability and performance. Many product champions end up assuming a system engineering role, particularly in small streamlined businesses. In any case, the system engineer is a vital function for new product advancement. Similarly, any integrated development team focused on rapid advancement requires program management rigor to structure the overall development program and to streamline reporting to those interested in financial, hardware, and product progress. A core development team will naturally have experts and consultants roll on and off the project at reviews and milestones of the program plan. This is not to say that a developer can’t succeed without this structure but rigor in the ever-increasing complexity of systems that integrate fiber components with MEMs structures and E/O or O/E integrated components with system logic, memory using processes at chip-scale and unique aligners, discrete components and fasteners will exceed the expertise of most individual contributors. Development process rigor makes exceptional individuals even more productive.

Building Things Takes the Right Resources and Discipline With a small tactical team, common development tools, and a plan, the product confronts the challenge of being production ready. This goal can be broken down into two separate activities that require consideration from the beginning of the development cycle. A successful supplier strategy is necessary to get the parts and integrated systems required for any product. The second activity is the establishment of the processes and product flow that takes materials and supplies and concludes with a testable, saleable product. A developer may consider these two activities and conclude neither are their responsibility, to their peril and ultimate demise. Designing parts using foundry rules, tolerances and materials of real suppliers makes it possible to design once and build from the result. Developers own the design requirements and test limits, configuration, process, and approval on quality based on design and active market input. Hence, the developer must work with the supply chain experts to use valid sources or develop new sources that meet pricing, quality, import/export, and schedule rules. The developer also works with the production and manufacturing engineering staff to optimize: product flow, design processes for new product operations, address packaging, tests, tools, and any other material or tangible change required for handling or assembly of the product. All changes are thoroughly documented for each step, material, requirement, and tested outcome. Process documentation is usually proprietary to a specific company or supplier and closely held, often as a trade secret. Yields, reparability, labor content, and the cost of compliance significantly impact the profitability of a new product. The team is guided by marketing experts who assure that the product will not be obsolete upon delivery. Market leaders parallel manufacturing introduction with scheduled commercial release and advance sales for new products. Profit motive and bonuses can lead to over-ambitious product release commitments so it is frequently found that both development and manufacturing don’t get along with marketing, and the balance is a challenge for a product champion. This is a typical feature of the development environment.

Transition to Production Manufacturing engineers are a vital part of the integrated product team and are the arbiters of production considerations. New processes or new materials may have handling restrictions, license requirements, new tool acquisition, safety considerations or other concerns that must be addressed before production. The product throughput and production capacity, reliability, and resilience to downtime or loss of tools is addressed by the production floor through capital investment, training, and consideration during development. Yet developers always have an implicitly adversarial impact upon manufacturing, generating manufacturing resentment that must be mitigated, often with transition staff that eases changes into operations and forges a cohesive development team through demonstration and communication. A product champion minimizes transition complications by assuring that roles, responsibilities, material tracking, and objectives are clear and coordinated. The transition process decreases the role of developers and increases the ownership of manufacturing. Transition staff and product champions maintain contact with the development team to answer questions, provide clarity, avoid premature handoff or prevent last minute adjustments that aren’t documented or proven. The art of technology transition is to introduce new products and change while production efficiency and yields continue to improve. In other words, new products should enter production seamlessly with ongoing manufacturing. Defense production may include other specific controls on access, quality, measurement, acceptance, and security particularly for emergent photonic and electronic products. When the design is optimized for a production process with a resilient supply chain, the company will have the fastest production cycle contributing to first-to-market, customer satisfaction, and improved profitability.

The Supply Chain The supply chain is a specialized area of consideration without which a business will have limited or no success in commercialization. It is common for a small firm to allow engineers to use whatever they have in the past or to farm the internet for supplies. This strategy has specific utility, but without developing an approved supplier list, quality and capability requirements, and understanding the reliability and resilience of a supplier, the engineer ends up repeating the process with hit-or-miss accuracy. One must understand the sources and limitations of the supplier: Do they buy their components from distributors and risk counterfeit or substandard parts? Does the material come from abroad where source restrictions, supply, and quality may be compromised or violate restrictions on imported content? Are the suppliers’ production processes sloppy and vulnerable to contamination or costly delay? Is the quality system acceptable for providing the reliability and performance specified for the new product? Is the product a commodity or a unique and specialized part made with interim processes instead of stable production methods? Very often the schedule drives engineers to cut corners unless they build a list of capable suppliers and develop commodity expertise to assure competitive pricing and performance. Organizations often staff supplier quality engineering in manufacturing or quality organizations, but developers should have working knowledge of quality systems and the performance of the materials and parts in their product. In the interest of speed, it may be acceptable to take risks with untested suppliers, but these should be understood and considered during program and product reviews.

Photonics suppliers occasionally partner with Universities to gain access to clean room capabilities and tools that can be used for rapid prototyping or small-scale production. Although this is frequently done, the common user base for academic resources and the challenges of production setup and stable operations tend to plague such operations with quality and scheduled quantity issues. The enterprise resource planning (ERP) flow should consider captive—where all operations and material is controlled by the manufacturer—contracted— where some portion of the manufacturing process is conducted at an outside facility under outside control—and dedicated or partnered—where some component of production is achieved on dedicated tools and equipment not located at the manufacturing company but subject to only that company’s product, materials and rules.

The suppliers are all broadly considered within the context of enterprise resource planning. Small organizations often use spreadsheets, QuickBooks and Sneaker-net to manage the early company reports, but as companies grow and product lines expand this rapidly becomes unwieldy. Finance tools by Deltek [https://www.deltek.com] or Unanet [https://unanet.com/ erp-for-govcon/overview/] have government contract compliant labor and financial tracking but are primarily focused on service companies lacking the materials and work tracking of a production ERP system. These financial tools can be modified for production with customizing effort and expense and are widely adopted so worth a look. Global Shop Solutions [https://www.globalshopsolutions.com/] is an example of a production-focused ERP system, though it also has financial and back-office reports. Most production tools do not handle labor and service categories for back office, relying on finance-specific tools and entering data in summary form from the production tracking systems. Emerging manufacturing software tools include Manufacturing Execution Systems (MES) that link the production tools to a database that defines production, quality, and inventory status. It is highly desirable to have an end-to-end ERP system or at least well-designed interfaces between the ERP modules to assure accurate and timely communication of manufacturing and back-office information. Software evolves rapidly so Global Shop is also worth a look. Defense compliance should be discussed if the manufactured photonics product is for a defense customer.

Two common ERP names used by very large companies are Oracle and SAP, which both have excellent scalable data structures with the ability to customize reports and satisfy any ERP requirement, but the support expense and costs of customizing reports and training are typically prohibitive for small manufacturers below approximately $500 m annual revenue. Similarly, with the ERP requirements of a photonics manufacturer in mind, one can shop the offerings of these giants. There are a very large number of ERP software solutions on the market, and some are unique to market segments, though there is no apparent ERP solution that is specifically designed for integrated photonics or photonics and semiconductor manufacturing, Figure 2. It is often an advantage to hire a consultant, engineer or finance staff expert who is intimately familiar with the product area to manage the progression from spreadsheets to enterprise tools. Net, cloud, and scaled solutions are offered by Oracle [https://www.oracle.com/ smb/] and SAP [https://www .sap.com/products/erp-financial-management/small-business-erp.html] so there are many to choose from. Internal expertise and an affordable support staff is necessary before structuring the ERP system for a photonics manufacturer. Use deliberate consideration if supplying product to commercial and defense markets, and confirm back-office and manufacturing modules communicate and report accurately. Meaningful reports, tools for tracking inventory and production as well as quality and cycle time are as important as balance sheets and revenue statements, time card tracking, and labor statistics.

A supplier database includes the location and point of contact for each vendor and the type or category of their product. Each item is uniquely identified and named within design documents. The approval status of a supplier is listed along with any issues, certifications or relevant details required by the quality system or convenience of engineering and purchasing. Suppliers include contract manufacturers that are building to prints obtained from a developer. The use of approved suppliers with established quality systems favorably contributes to the task of certifying the manufacturing operation for new products and simplify the tracking and control of materials used for production. An integrated ERP system incorporates the manufacturing data which may also provide quality control and tracking modules as well as back-office financial statements and tools, forecasting and risk assessment. Testing a new ERP system should include all phases of the operation from daily operations through audit and compliance assessment. Survivability of the business and continuity planning can be facilitated using an ERP system. The ERP system provides a system of reports that show business health and status, manufacturing progress, product tracking demand, and facilitate communication within the organization. Sales organizations often have customized ERP systems that focus primarily on customer tracking, order status and sales forecasts. It is highly desirable to have one system or at least systems that can directly interface and provide necessary reports.

A Bit About The Author

I grew up in western Pennsylvania in an era when computers were getting started for military and government programs. Access to computer resources required punch cards, yellow ticker tapes or magnetic disks. Personal computers were a thing for the future, and the costs of calculators were similar to those of the contemporary personal computer. Scientific institutions were abundant in industry, including major laboratories in telecommunications, automotive technology, power electronics, heavy industry including mining and metallurgy, agriculture, defense, aerospace and consumer products. NASA was started with a new mission. Science and engineering were as essential for progress then as now, but corporations recognized the need for investment and sponsored graduate programs, startups and extensions of internal research with tax incentives and market intent. Product development was driven by advances that offered cost savings, improved performance or both. The reputation of the firm was built on quality, reliability and timely performance. I was awarded a bachelor’s degree in chemistry from F&M and received my masters and doctorate of engineering science (DESc) in materials science from Columbia University. As a former technology transition leader at AT&T Bell Laboratories as well as small to mid-sized corporations and nonprofit institutes, it is observed that each business focuses on rapidly getting products to market based on inventions and ideas. My work with government advanced technology transitions in consumer and defense segments led international programs through import/export and multiparty international collaboration. In each project there comes a time when an idea is demonstrated as a prototype, and the need to produce a product or offer services is scheduled. These transitions need: finance, reliable design, a resilient supply chain and timely market access. This brief article focused on the significant shift from development to production and considers the challenges that accompany this process.

About this Column This is a regular column that explores business aspects of technology-oriented companies and, in particular, the demanding business aspects of photonics startups. The column touches on a broad range of topics such as financing, business plan, product development, program management, hiring and retention, manufacturing, quality, sales methodology and risk management. That is to say, we include all the pains and successes of living the photonics startup life. This column is written sometimes by Daniel Renner, the column editor, and sometimes by invited participants, so that we can share multiple points of view coming from the full spectrum of individuals that have something to say on this topic. At the same time, this is a conversation with you, the reader. We welcome questions, other opinions and suggestions for specific topics to be addressed in the future. Please send us your views and opinions here. The expectation for this column is to provide useful business-related information for those who intend to start, join, improve the operation, fund, acquire or sell a photonic startup. A fascinating area that can provide enormous professional reward to those engaged in it.