The whole journey in one picture
Hardware is built in phases. Each phase answers a bigger question and commits more money than the one before, so the same mistake costs more the later you find it. The multipliers below come from the Chapter 1 game; the book's short version is the 100× rule.
Click a phase to jump to its definition. At the end of each phase is a gate: a go / no-go decision. The hardest lesson is holding the gate when the evidence says not yet.
Terms
AOI · Automated optical inspection
A machine that photographs boards after soldering and checks them against a program. Its silence can mean good quality or just loose tuning, which is why you ask for the escape audit.
Appears in: The Audit (factory book)
BOM · Bill of materials
The full list of parts in a product, with quantities and suppliers. A BOM that works for 10 prototypes can still be impossible to buy at 10,000 units.
Burn rate
How fast the team spends cash, per week or month, even when nothing is being built. Slow progress is expensive because the burn continues.
Appears in: Chapter 1 game · Chapter 2 game
CAPA / 8D · Corrective and preventive action
A structured way to fix a problem and stop it recurring. An 8D is the report: contain it, find the root cause, fix it, prevent it. A good 8D names a root cause. A weak one says "operator retrained" every time.
Appears in: The Audit (factory book)
Certification
Mandatory lab testing for selling in a market (for example CE in Europe, FCC in the US). A design change after certification can mean a cert re-test, with new fees and delays.
Appears in: Chapter 5 game
Clear-to-build report
A document produced against a specific work order shortly before its start, listing every BOM line with required quantity, physically kitted or on-shelf quantity, and the gap. The operative word is physically: a report that restates the ERP is worthless. Demand it 72 hours before every build.
Appears in: Clear to Build (factory book)
CM · Contract manufacturer
The factory that builds your product for you, often through a web of subcontractors for molding, painting or battery packs. You audit the CM and, through it, the web.
Appears in: The Audit (factory book)
Contingency
Time or money deliberately held back for the problems you cannot predict yet. A plan with none is a plan that is already late.
Appears in: Chapter 3 game
Cost-of-change curve
The same mistake costs more the later you fix it. In the Chapter 1 game each phase multiplies the price (roughly ×1 in prototyping, ×5–10 in EVT, ×20–50 in DVT, ×50–100 in PVT, ×100–500 in mass production). The book's short version is the 100× rule: a mistake that costs €1,000s in prototyping can cost €100k to €1M+ in production.
Appears in: Chapter 1 game
Counterfeit
A part sold as something it is not: remarked date codes or speed grades, refurbished parts sold as new, or fakes. Counterfeit risk is channel risk: authorised distribution carries almost none, brokers carry real exposure that peaks where the shortage is.
Appears in: The Dock (factory book)
Critical path
The chain of dependent tasks that decides the earliest possible finish. Delay anything on it and the whole project slips. Work off the path can slip a little without moving the date.
Appears in: Chapter 3 game
Cycle count
Counting a rotating sample of locations continuously, weighted so fast-moving and high-value parts are counted most, with every discrepancy investigated to its root cause. The annual count is the least informative count in the industry.
Appears in: Clear to Build (factory book)
DFM · Design for Manufacturability
Designing the product so a factory can build it reliably and cheaply: tolerances a real process can hold, parts that can be sourced at volume, an assembly sequence that works on a line. The book treats it as a discipline from the first sketch, not a review at the end.
Appears in: Chapter 2 game · Chapter 3 game
DVT · Design Validation Test
The design is now frozen close to final. Hard tooling is cut, accredited labs run certification and reliability tests, and the first sample run is built. The question is does the finished design pass? Changes now are expensive because steel is involved.
Appears in: Chapter 5 game
E&O · Excess and obsolete
The bill for parts the factory bought on your forecast that you never used. Fixed by buy-against rules, liability bands and substantiation, written at signature.
Appears in: Clear to Build (factory book) · The Deal (factory book)
ECO / ECN · Engineering change order / notice
The formal record of a design change: what changed, why, what it affects and who approved it. Late in a project, every ECO has a price tag and often a certification consequence.
EMC · Electromagnetic compatibility
Whether the product avoids disturbing other equipment with radio noise and keeps working when others disturb it. Tested in a lab for certification. A layout decision made months earlier can make a product fail.
Epidemic-failure clause
A contract term that, above a defined field-failure rate traceable to workmanship, extends the factory's liability beyond replacing units to the event costs: retrieval, screening and rework. Capped, but non-zero.
Appears in: The Deal (factory book)
Evidence standard
Every claim is tested against a document or an observation. A claim that can be tested against neither is recorded as a claim. "We do SPC" becomes "show me this week's chart".
Appears in: The Audit (factory book)
EVT · Engineering Validation Test
The first build with a near-final design on real parts. The question is does the design work? Expect many problems: this phase exists to find them. Teams triage each issue to an owner and fix the serious ones before the EVT gate.
Appears in: Chapter 4 game
Factory audit
Two days at a candidate factory, run by someone who knows what good looks like in every area, before you commit. It is the highest-leverage exercise in the factory relationship because everything the partnership will later struggle to change (the partner, the terms, the walk-away) is still free. From The Hardest Factory Lessons →
Appears in: The Audit (factory book)
Field failure
A fault that shows up with customers. It is the most expensive place to find a problem: returns, a possible recall, and lost trust.
FIFO · First in, first out
Using the oldest stock first, so reels do not age on the shelf. In a warehouse it is only real if the layout and the scanning enforce it.
Appears in: Clear to Build (factory book)
Gate
A formal go / no-go checkpoint at the end of a phase. You pass it when the evidence says the product is ready, not when the schedule says it is time. The title of the Chapter 1 game, Hold the Gate, is the central lesson of the book.
Appears in: Chapter 1 game · Chapter 4 game · Chapter 5 game · Chapter 6 game
HALT · Highly accelerated life test
Deliberately stressing units (extreme temperature, vibration, combined) beyond their spec until they fail, to learn where the weak points are. In the Chapter 6 game you push units in the HALT chamber: too little teaches nothing, too far destroys scarce units.
Appears in: Chapter 6 game
Interface issue
A problem at the boundary between two teams or subsystems, such as firmware and power, or enclosure and board. It looks like one team's business but needs both. Nobody owns it until someone says so.
Appears in: Chapter 4 game
IQC / OQC · Incoming / outgoing quality control
The inspection of parts arriving at the dock (IQC) and of finished goods before shipping (OQC). The dock is the cheapest place in the system to find that a component is wrong.
Appears in: The Dock (factory book) · The Audit (factory book)
Lab slot
A booked time at a test lab. Labs have queues. Miss your slot and the gate moves, which is why the Chapter 5 game makes you book them in time.
Appears in: Chapter 5 game
Last buy
Your right to place a final order at prevailing prices with defined lead times when the relationship ends, so your market continuity does not depend on its mood.
Appears in: The Deal (factory book)
Latency profile
How long each request for evidence takes. Seconds: a real, lived system. An hour: records exist but are not used. A meeting: records are being created for you, possibly right now.
Appears in: The Audit (factory book)
Lien (on tooling)
The factory's claim that it may hold your tooling against unpaid invoices. It bites exactly when you most need the tooling back, so carve it out at signature.
Appears in: The Deal (factory book)
Mould
The steel (or aluminium) block with a cavity that gives injection-moulded plastic parts their shape. You can cut more steel away later; you cannot add it back, so changes are costly. That is what the Chapter 5 game is about.
Appears in: Chapter 5 game
MP · Mass production
Regular production at volume. Problems missed upstream now cost line halts, re-tests and possibly field recalls. The book puts the cost of a mistake here at €100k to €1M or more.
Appears in: Chapter 1 game
MRB · Material review board
The group that decides what happens to rejected material: scrap, return, rework or use as is. Under schedule pressure it is where good parts policy bends.
Appears in: The Dock (factory book)
MSD · Moisture-sensitive device
A component that absorbs moisture from the air and can be damaged during soldering if it has been exposed too long (its floor life). Dry cabinets, stickers and logs control it.
Appears in: The Dock (factory book) · The Audit (factory book)
NRE · Non-recurring engineering
One-time charges for fixtures, test development and line set-up (and often tooling). Small numbers with long-lived consequences, because they decide who owns what.
Appears in: The Deal (factory book)
Open issue
A known problem that is not yet closed. At a gate, each open issue needs an owner, a plan, a date, and an honest estimate of what it costs if you defer it.
Appears in: Chapter 1 game · Chapter 4 game · Chapter 5 game
P1 (and P2, P3)
The first prototype that brings the separate streams together into one working unit. P2 and P3 are the follow-up rounds that fix what P1 showed. Each round is a chance to retire risks before money gets committed to tooling.
Appears in: Chapter 2 game
Phantom stock
Inventory the system says exists but the shelf does not hold (system 3,000, shelf 1,200). It is the mid-build shortage, incubating: the planning run saw 3,000 and promised your build against it.
Appears in: Clear to Build (factory book)
Pilot units
The batch built in PVT to prove the line works. The Chapter 6 game uses 200. What you measure on them (yield, defects, rework) is what you can expect at volume.
Appears in: Chapter 6 game
PRD · Product Requirements Document
Says what the product must do and for whom, in terms you can test. If a requirement cannot be tested, it is a wish, not a requirement.
Appears in: Chapter 3 game
Prototype
An early build made to test an idea cheaply. The book (and Chapter 2 game) splits prototypes by the question they answer: Looks like (shape, size, feel in the hand), Works like (the electronics and function, on a bench) and Feels like (materials and user experience). Mistakes found here cost the least you will ever pay.
Appears in: Chapter 2 game
PVT · Production Validation Test
A pilot build on the real production line, with production tooling, fixtures and operators. The question is can the factory build this, repeatedly, at the yield and quality we need? Whatever is wrong here gets found with no schedule buffer left.
Appears in: Chapter 6 game
Quarantine
A physically or systemically segregated state where rejected material cannot be issued to production while the material review board decides: return, scrap, sort or use as is.
Appears in: The Dock (factory book)
Re-spin
Making a new revision of a circuit board to fix a problem. In prototyping it costs days and a few thousand euros. After tooling and certification, the same fix can cost far more.
Readiness gate
The check before a pilot run starts: is the line set up, are parts and fixtures in place, are the operators trained? Starting a pilot on an unready line wastes the units and the schedule.
Appears in: Chapter 6 game
Red line
A finding that ends an evaluation regardless of score: falsified records, quality without power, refusing subcontractor disclosure, refusing reference checks, safety disqualifiers, labour or EHS violations. It is a character bar, not a quality bar: quality improves with investment, character does not.
Appears in: The Audit (factory book)
Reluctance map
A running chart of what the factory would prefer you not see: the areas where the escort speeds up, the doors that stay closed, the questions that produce a translation delay longer than the sentence. It is also the chart of where to spend your time.
Appears in: The Audit (factory book)
Risk register
A list of the things that could go wrong, each with an owner, how likely and how damaging it is, and the cheapest test that would reveal it. Chapter 2's risks pop up from it. Get a template →
Appears in: Chapter 2 game
Single-source
A part that only one supplier can provide. If that supplier runs short, raises prices or stops, production stops with it. Often locked in unnoticed because the part was easy to get for prototypes.
Sponsor confidence
How much the person funding the programme still believes in it. In the Chapter 3 game, repeated mistakes drain it, and at zero the programme is put on hold.
Appears in: Chapter 3 game
Testable requirement
A requirement with a number, a unit, a test method and a pass/fail line. "Battery lasts long" is not testable. "At least 8 hours of the standard use profile at 25 °C" is.
Appears in: Chapter 3 game
Thin quote
A quote visibly below the competitive band. It is not a bargain, it is a strategy: the discount gets recovered through change orders, requotes, mid-life price rises and a switching cost. Interrogate it, and if you take it, arm the contract at full strength.
Appears in: The Deal (factory book)
Thread pull
Pick one serial number from last month's shipments and walk it backwards at the factory's own terminals: test history, rework, work order, kit, component lots, shipment. It audits the connections that binders cannot fake and a tour cannot show.
Appears in: The Audit (factory book)
Tooling
The moulds, dies and fixtures used to make parts and units at volume. Hard tooling is cut in steel: it can run very large production volumes and is very expensive to change.
Appears in: Chapter 5 game
Tooling release
The decision to start cutting production tooling. After this, changes cost real money and weeks. Release it on evidence (thermal, fit, tolerances, assembly checked), not because the schedule says so. Get a checklist →
Appears in: Chapter 5 game
Traceability
The recorded chain linking supplier lots to your serialised units. It is built at the dock, when material enters, and cannot be reconstructed later. Lot-level traceability scopes a recall to the affected builds; unit-level (for critical parts such as cells) scopes it to the affected units.
Appears in: The Dock (factory book)
TRD · Technical Requirements Document
Turns the PRD into technical limits and interfaces: power budget, size, temperature range, connectors, who owns which interface. It says how well and within what limits.
Appears in: Chapter 3 game
Yield
The share of units that pass every test the first time, without rework. A yield that looks fine at 50 units can be a crisis at 5,000.
Appears in: Chapter 6 game
One hardware lesson a week, free
Short, blunt lessons from the book: the mistake, what it costs, what to do instead. No spam, unsubscribe any time.
Learn it by playing, keep it with a checklist.
Six short games, one per chapter. Free printable checklists for each gate.
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