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March 30, 2004 — Put yourself in Polychromix’s shoes. You endured the telecom shakeout. You raised some venture money. You recently rolled out a product and have some orders. It would appear to be time to set up offshore manufacturing.
Instead, the 25-person optical equipment startup is expected to unveil a new manufacturing facility in Wilmington, Mass., today to make its P-DCO, or dynamic channel orchestrator. And to staff the 24,000-square-foot space, the company intends to hire about 15 new people this year, mostly engineers and technicians.
So much for outsourcing.
Polychromix executives say the choice was motivated by concerns over cost and quality. Outsourcing manufacturing introduces complexities and risks — not the least of which include overcoming language barriers and reconstituting production lines using specialized equipment — which they did not want to undertake.
“It’s a less risky activity for us to build them locally,” said Mouli Ramani, vice president of business development and marketing.
But they say biggest hurdle is actually transferring a production process to another manufacturer. “There is an amount of inherited knowledge that is very difficult to transfer,” Ramani said. “No matter where we would transfer it to, there would be risks in the transfer itself.”
In short, the executives say, they have confidence in their product process but not in their ability to transfer it to another manufacturer. Process transfer is especially important given the complexity of the dynamic channel orchestrator. The device separates and recombines the wavelengths of light and is used to reconfigure optical networks “on the fly” for both long haul and metro networks.
MEMS consultant Bill Trimmer said Polychromix’s technology is, to some extent, an expression of the design philosophy of its founder, chairman and chief technology officer — MIT professor Stephen Senturia.
“He pushed the entire industry to be able to flexibly measure stuff,” Trimmer said. “And that’s what his product is. In a lot of ways it’s the evolution of what he’s been talking about. It’s a metrology tool (for measuring light.)”
It is also time-intensive to manufacture. The orchestrators require painstaking alignment and intermittent wait times for various components to set. Polychromix expects to initially crank out one device per week from its four production lines and to ramp up to two devices per week later in the year. “We could build them faster if we wanted,” Ramani said, “We’ve chosen to be very deliberative about how we do each cycle.”
Company executives also said that doing early manufacturing at home gives them the ability to try new things. For example, when customers request tweaks, “You can have the same people on the manufacturing line doing the ‘what-if’ scenarios.”
As costs come down and volumes go up, executives say, the company is likely to revisit the question of outsourcing production. But that probably wouldn’t happen before 2006.