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Supply Chain
Riverwood Solutions Survey Identifies Wearables Technology Supply Chain Hurdles
By John Daker, Vice President, Business Development, Riverwood Solutions
more than 600 supply chain experts what was keeping them awake at night in the wearables technology supply chain arena. We’ve been working in the
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wearables sector for some time with some notable successes. One of our clients, Peter Li, CEO of Atlas Wear- able was speaking on stage during the event with our own COO Mark Medlen in a presentation entitled from “Maker to manufacturer” and we wanted to understand if Peter’s story was typical and if his chal- lenges were symptomatic of those of other founders and supply chain ex- ecutives in this area. More than half of recipients said
going from prototype to product is the biggest challenge in getting a product to market. It was interesting, though not surprising that more than half of the recipients found this a challenge, with less than 10 percent concerned about raising capital. This is indica- tive of the current market with wear- able technology hot among venture
s part of the buildup to our presence at IDTechEx in Santa Clara, California, we asked
capitalists and access to cash so read- ily available through channels like In- diegogo or Kickstarter. The real chal- lenge is using that money wisely, de- signing a product that can be manu- factured successfully and building a supply chain around it that is robust, efficient and economic. Good vendor selection and supply chain design is part of this process, alongside great product realization to ensure the product can, not only be made, but is reliable enough for the market, partic- ularly with wearables where the envi- ronment and treatment of the product can be harsh. Almost half said that business
culture is the hardest part of dealing with overseas vendors. Clearly many of these products will be made in the lower cost regions of the world and for that reason we asked what is the hardest part of that vendor liaison. Unsurprisingly, understanding busi- ness culture came out on top, with validating capabilities second with around a quarter of the votes cast. We’ve spent a lot of time build-
ing our footprint in the key manufac- turing regions, particularly with
large teams in China and Mexico. These teams are not just supply chain and technology experts, they’re locals who have operated in the re- gions for most of their careers. This means they understand the local cul- ture, how business is conducted, and how to get the best out of vendors for Riverwood Solutions’ customers. Almost 40 percent lack proper
communications and visibility with their vendors. Business culture in Guadalajara is somewhat different from that in Shenzhen and working in distant time zones and geographies is not easy or without cost. Having local support is essential, not just when se- lecting, but also throughout the vali- dation, audit and ongoing support process. Most companies don’t really need a full time quality engineer, a full time facility auditor or a full time tool- ing specialist. Having staff onsite is es- sential for success, so fractional staff is probably the best solution to get feet on the ground close to your vendors. Companies like ours offer the ability to have a particular skill when you need it and only when you need it. This means you can be closer to your ven- dors without the need to recruit local- ly and manage from a distance. Over 60 percent worry about
quality when selecting vendors. Again this tells me our model of having peo- ple on the ground that our customers can use when, and only when, they need them makes sense. When we asked what the biggest concerns are, quality was the biggest, but that was closely followed by worries over how seriously the vendor will take the business they are given. This is cer- tainly a big concern with start-ups who may not have the volume to get the right mind share from a vendor. This is just one of the many factors that needs to be considered when ven- dors are selected. You really do need to right size your vendor and make sure they understand that, while your product may not be made in iPhone volumes, it is still important. Sole sourced components and
lack of volume visibility creates risk in the supply chain. Risk is a key fac- tor in designing a supply chain and the survey confirmed that sole sourced components create additional risk, particularly in a market where the volumes are not as predictable as we’d like. Designing a product to have a bill of materials that has some re- dundancy is essential, not just for risk to the supply chain, but also for cost. A robust supply chain needs to take into account component trends while being ready for those environmental disruptions that impact on the entire electronics industry. There are plenty of surprises in
getting a product to market. Peter Li, CEO of Atlas Wearables talks about “not knowing what you don’t know” and the surprises that impact upon your ability to deliver product. These unknown unknowns can be a problem
for most start-ups and impact greatly on their time to market, which can be very costly in a competitive sector, where first to market advantage is so important. The biggest surprise stated in
our survey is the amount of time con- sumed to get a product to market and
February, 2016
John Daker, Vice President, Business Development, Riverwood Solutions
the second is the cost of that process. Brands and innovators regularly un- derestimate these, but experience tells us that getting from a working prototype to a mass-produced con- sumer electronics product takes time and costs money. Having said that, the simplest way to avoid surprises is to work with someone who has seen it all before, and someone who will help minimize the cost and time taken. Getting from prototype to prod-
uct, from maker to manufacturer, is a complex journey, but it is along a well-trodden path. The unknown un- knowns are hazardous, but most can be avoided or negotiated around with a guide who has been there, seen it and done it all before. r
John Daker is a career operations, engineering and supply chain profes- sional with more than 15 years of global operations experience that he brings to his role at Riverwood. He has held engineering, operations, and program management roles at several companies including NASA, Flextronics, NHT, PowerFile, and Tesla Motors. John has worked with products in consumer electronics, networking, photonics, and managed manufacturing facilities producing audio components and electric vehi- cle power trains.
Riverwood Solutions helps OEMs and Brand Owning Enterprises of all sizes with manufacturing strategy, supply chain operations optimization, sourcing, and supply relationships. The company provides consulting and managed services to the world’s lead- ing technology product companies and most innovative start-ups on a local and global basis.
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