Productive Forces: Why Contract Production Is Growing
What tasks of high-tech companies does contract manufacturing help to solve? Why should a digital twin be associated with the financial one? What does modern production culture include? We will tell about all this from the experience of TechnoSpark Сompany from Troitsk.
Within the first two months since the beginning of the pandemic, TEN Group’s productivity has doubled. In Troitsk, the production of protective screens (3D-printed facial visors) was launched from scratch, a portable device for detecting the virus was created, laboratory tests with a capacity of 1 million units per month were established, and the company became a supplier of medical components... and all this was done not to the detriment of the execution of other orders. How is this possible? The secret is simple—through the contract manufacturing.
TEN Group is the umbrella brand of all contract businesses of TechnoSpark located on the outskirts of Troitsk. The companies in the group cover a wide range of production tasks of customers from design to shipment of finished products. “That is, we can make both new products and establish mass production of existing ones,” explains Oleg Lysak, Director of the TechnoSpark Contract Businesses.
It is worth noting that the customers of this production infrastructure are not only Troitsk companies and third-party customers from Moscow, but also startups of the entire network of nanocenters of the Fund for Infrastructure and Educational Programs from St. Petersburg, Ulyanovsk, Novosibirsk, Tomsk, Saransk, Kazan, Zelenograd, and Dubna. The RUSNANO’s portfolio companies, concentrated in Novosibirsk, have also recently appeared together with contracts. “We see that Russia has finally come to the transition of production to a contract form, when there is need not to think how to produce, but how to keep a focus on the development and sale of its product,” explained Ruslan Titov, Deputy Director General of the Fund for Infrastructure and Educational Programs of the RUSNANO Group. “Our contract companies specialize in the production of sophisticated equipment and high-tech parts. They are capable of ensuring engineering of mechanical and mechatronic systems —from sketch to production prototype and serial production. They have more than 300 customers in their portfolio engaged in the development of robotics, medical and industrial equipment, optics, and lasers.”
A tour at the production sites in Troitsk is impressive. Not every mature company, let alone startups, can afford a metal 3D printer or installation for spraying optical coatings. A brading machine that weaves preforms from composite materials is the only one of this size in Russia. Business processes also match modern equipment. “While a customer is focused on what to do, a contract manufacturer is focused on how to do it, and more efficiently in terms of both price and quality,” says Oleg Lysak. Over the past year and a half, TEN Group has been investing heavily in digitalization. Now in automatic mode you can get data on how much time a part is produced, how much it takes to build it, apply the coating, etc. Digital doppelganger is closely related to financial one, which helps to quickly make the necessary management decisions, finding a balance between speed and costs. For example, a well-established serial production does not require constant supervision and a lot of employee engagement since such orders can be bumped to night time.
The process of working on a specific product is also built differently than in the customers’ own workshops. Firstly, the contract manufacturer has a completely different attitude to documentation. “I am sure that only a contract business is capable of making a serial, industrial product. The Russian reality is that many companies produce their products without any documentation requirements. Launching a product into a large series, trying to work with large companies or exporting their products, they face the fact that a lot is missing, from certificates for all materials, components, and production sites, and ending with technological documentation for the product itself,” says Oleg Lysak.
Secondly, the entrepreneur is relieved from the liability for all production-related issues from the choice of suppliers to logistics. “We have different volumes and different conditions from suppliers. We better understand who delivers, who transports, what the conditions are, and what the defect level is. What is important, we check the quality at the input. Starting to work with us, the company frees up the inside resource to create a new product,” explains the CEO of TechnoSpark.
Thirdly, contract production allows for a rapid scaling of production. A striking example of this is the anti-COVID products, which took only a week to launch.
While at the start the majority of TEN Group’s workload was provided by the companies created within TechnoSpark, now the share of external revenue is on average 90%. At the same time, 50 orders are in operation at different stages, representing 200–300 different parts at different stages of production. Many customers return. “For us, working with a client is always building a long-term partnership in which both parties must invest,” says Oleg Lysak.
The TechnoSpark Group of Companies, a part of the investment network of the Fund for Infrastructure and Educational Programs, is involved in all aspects of venture creation: from establishing a start-up to its sale. The TechnoSpark Group of Companies is in the hardware industry, working in areas, such as robotics in logistics, energy storage systems, hi-tech medical equipment, diamond optics, braided composites, optical and industrial surfaces, genomics, industrial microbiology, thin-film integrated photovoltaics, additive technologies and flexible electronics. The Group of Companies is in first place according to the National rating of Russia’s most effective technology parks and was included in the National Rating of Russian Fast-growing Technology Companies, TechUp 2019. It is also a part of the community of startup studios, the Global Startup Studio Network (GSSN).
For more information about the company, visit technospark.ru
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TEN Group incorporates production and technology companies of the TechnoSpark Group of Companies that operate according to the open contract service model. TEN Group includes companies specializing in engineering, instrumentation, electronics, composites, new materials, machining, industrial design, biotechnology, genetics, and additive technologies.