Folks,
It was quite a year… Again. Twelve months ago, we were all looking forward to a return to some form of normalcy. At the start of the new year, normalcy appears to be whatever we’re all doing to keep pushing forward.
Several trends in new product sourcing and manufacturing emerged or were reinforced last year. A short summary below:
Requests for One-Off Feasibility Production Runs
No one wants to build your 200 “Design Forward” lamps. Or your 100 specialized washing machines, twenty of your drop shot tennis ball training machines or 96 of your novel organic dog chew toys. Supplier resistance to “test-the-water” orders applies to well established multinational companies as well as early stage start-ups.
We all understand that there’s a normal production scaling path: looks-like models; looks-like
/works-like models; engineer’s prototypes; pre-production units; and first volume order. Having said that, no manufacturer wants to tie up their factory with a one-time proof-of-concept model build. Unless you have a compelling story about how the volume will grow and you’re willing to pay NRE and a much higher per unit cost to reduce their risk, don’t start. More on this trend below…
The Emergence of the Tinfoil Hatted
I don’t know if it’s because people had more time of their hands, they realized that life is short and needed to role the dice or there was a tidal wave of isolation induced invention psychosis, but we witnessed a steady stream of nutty product concepts supported (or unsupported) by cuckoo pants business models. We saw this same phenomenon after the 2008 crash.
Independent of how dumb that we might feel those products are, if there’s no understanding of who might buy the product, the number of units that might be sold and how much it costs to manufacture, those people shouldn’t start.
Factory Production Rotation
Because of Covid restrictions, short staffing and regional logistics jams, we expanded our dual sourcing and logistics business model. Electroplating subcontractor shutdown in Vietnam, bestmixer’s options shift the order to China. Port of Long Beach slammed, bring the containers in through Houston. Plastic resin shortage in Taiwan, mold the parts in Serbia.
Our strategy of redundant production was enormously helpful to our customers.
Risk Buys of Components and Materials
The lead time for electronic components, metal alloys, textiles, composite materials, extrusions, etc. were and are highly variable. Unpredictable lead times make for grumpy customers and frantic investors.
To shorten production cycles and time to market, we “went long” and risk bought millions of dollars in components and materials. We staged the inventory in our warehouses and will drop ship to the CMs in advance of production launch. Expensive and inconvenient – yes, but better than 82 week lead times.
You Can’t Phone in Manufacturing Launches
Alternatively titled “You Can’t Just Believe the PowerPoint”. The website and PowerPoint presentation look great, the teleconference goes well and the supplier promises you this and that… And then you turn around and find that it isn’t exactly true. Or even close.
Selecting the right partner for NPI (New Product Industrialization in our world) is no easy task. It’s always been a critical, success defining step in building new products. Partner up with the right manufacturer and you march forward with a clear plan. You may stumble (OK, it’s likely that you will get tripped up at some point) but with an ethical, solid and experienced partner, you’ll recover quickly. Picking the wrong supplier is often a project killing mistake.
And while teleconference platforms are wonderful tools that increase productivity, they’re no substitute for being there. Too much is lost in translation.
Getting to the goal line with your new product requires careful qualification and selection of the right supply partner, understanding their capabilities and constraints and working with a local team of experienced manufacturing and quality engineers. Hopefully EastBridge… 🙂
Cheers,
Jack Daniels
+1.617.285.2486
