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Event Recap! Stanford’s Responsible Supply Chain Conference: Social and Environmental Responsibility in the Global Supply Chain

By GSS on May 4, 2010 | Category: Sustainability & Transparency | 1 Comment

This is the second year I have attended Stanford University’s conference on Responsible Supply Chains.  This year focused on the theme of collaboration in the supply chain, and  consisted of speakers and panels of top industry executives from Levi-Strauss, Nike, Johnson Controls, Business for Social Responsibility, Dow Chemical, Bon Appetit, and many others.  The conference’s growth in attendance and complexity of topics covered were representative of the continuing significance many companies are placing upon sustainability in the supply chain. Despite some of the presentations having more of an advertising slant, most of the presenters did a good job of highlighting lessons learned and best practices.  In addition, I thought the size and format of the conference helped foster candid and challenging audience questions which generally earned insightful responses from the speakers.   Here are the highlights and conversation topics of the conference which I thought were most noteworthy:

  • The conference–presenters, panel speakers, and attendees were much more international this year than last year.  In addition, it seemed several large corporations who were looking to international emerging markets for growth were taking sustainability very seriously in the development of their business models in these markets.

  • To try to implement sustainability initiatives in the supply chain from a boardroom that is an ocean or continent away from production is not realistic.To identify problems and develop practical solutions, one has to get on the ground and visit the factory, visit the field, talk to personnel and partners involved, and get your hands dirty.  Determine the unit of analysis that will be essential to spurring widespread adoption and change, and understand it deeply.  Everyone must agree on the objectives, and someone must take the reins and push action.

  • CXO leadership and support is critical.  Presenters unanimously cited that support from the top echelons of management was essential to being able to push change and achieve sustainability objectives in the organization and supply chain.

  • It is clearly not just about reputation management anymore.  Many feel regulatory risks are on the horizon and its best to begin addressing high profile issues now. Furthermore, at a more fundamental level, a few executives cited the inevitable increase in scarcity of resources and the rise in input costs as a growing, long-term risk to their competitiveness.  Whether the company relied heavily on cotton, oil, plastics, chemicals, food, etc., the cost and scarcity of future resources were prime motivations to address sustainability in the supply chain and make the long term business case in light of short-term financial pressures.  Sustainability in the supply chain will be a competitive driver of the next decade and will eventually become a price of market entry.

  • The challenges of reliably monitoring, or “policing”, the supply chain, have caused companies to adopt approaches centered on capacity building.  Supplier managers are engaged and asked to monitor themselves and demonstrate not only their effectiveness, but their continual improvement as well.  Because of the investment required to build the capacity of a given supplier, advancing these programs is more challenging in industries where switching suppliers is common.

  • The food industry is an excellent example of just how fast an industry can change and sustainability can become a major consumer concern.  In the last decade, the market progressed from consumers not caring where their food came from, to explosive growth in demand and supply of organics, locally sourced and fair trade food categories, adoption by major grocery retailers, and TV shows and documentaries stirring consumer awareness.  Apparel is another industry that is experiencing rapid change.  Executives cannot take these issues lightly with respect to how quickly they can alter the competitive landscape.

  • One presenter felt that to truly move a company towards sustainability, metrics and incentives in this area must be embedded into company management systems.  Also, some companies, which are taking sustainability very seriously, are reorganizing their structures to allow for greater innovation and information sharing in these areas.

IBM and Walmart Make Big Pushes for Supply Chain Sustainability: 5 Key Points to Consider

By GSS on April 16, 2010 | Category: News | 3 Comments

IBM announced on Wednesday that they will require their suppliers, numbering almost 30,000 worldwide, to initiate data management systems in the areas of energy use, greenhouse gas emissions, and waste and recycling.  This announcement is on the heels of Walmart's press release in February regarding the company's goal to cut 20 million metric tons of greenhouse gas (GHG) emissions from its global supply chain by the end of 2015.  

Last September, I collaborated with Michael Lamereoux of Sourcing Innovation to publish a guest post on Supply Chain Sustainability and Transparency.  In it, I said: 

(Supply Chain Sustainability and Transparency)…a trend that requires many sourcing and procurement organizations to stretch outside their traditional bounds because of its interdisciplinary and cross-functional nature. Whether one likes it or not, for reasons of consumer demand, cost reduction and risk, and good ol' conservationism, environmental sustainability will grow in importance and the supply chain will increasingly be dragged into the limelight on this topic.

It's happening now and smart companies are getting out in front.  A few points to note:

When companies set goals and standards for their suppliers like this, they generally aren't mandates.  In most cases, they aren't saying "do this or we won't do business with you".  Watchdogs may see this as a loophole, but the reality is that the mandate approach doesn't work as well for two reasons:

1) Suppliers deal with multiple customers and cannot effectively serve mandates developed independently by each customer.  Originally, when companies began demanding adherence to social and environmental codes, each company had different requirements.  Thus, suppliers would be forced to modify their practices to comply with many different types of standards–hardly efficient and when I would meet with factory managers and this topic came up, it wasn't unusual for them to voice their complaints about how difficult it was trying to modify one factory to comply with the variety of standards. Allowing factories to develop their own systems not only builds their management capacity, but allows them to address key issues for everyone in their own creative ways. 

2) Companies are finding that best practices in driving sustainability make collaboration a priority.  Why?  Because suppliers buy-in when they have a say.  The "Beyond Monitoring" Group of San Franicsco based NGO, Business for Social Responsibility (BSR), advise that focusing on suppliers' management capacity is a key indicator of how effective a supplier will be at implementing their own monitoring and reporting systems.  In case studies, both Global Reporting Initiative (GRI) and BSR have noted that suppliers' managers typically express difficulty in designing, managing, and reporting on their environmental issues because they have a hard time pulling resources and time away from other operations to accommodate this.  In successful cases, brands compel and guide suppliers to do the tough work of increasing the sophistication of their management systems to be able to handle these issues. Thus, they've stretched themselves and enhanced their own capabilities.  They own the changes.  And, they can use it for competitive differentiation.  This is better than a mandate.

Because of the number of changes that must occur for these goals to be reached, both internally and externally, the companies that are most successful at this will generate wins on multiple levels that will help them gain competitive advantage.  

3) Implementing the internal changes required to drive sustainability up the supply chain is not easy. At Stanford University's Responsible Supply Chain Conference last Spring (coming up again soon), I listened to execs from several large companies describe the challenges they faced in making small changes to reduce carbon footprint.  A simple example which alludes to the potential complexity: modifying shipping pallet size by less than a foot to accommodate tighter packing of cartons, required workers in the factory, trucks, warehouse, and retail to change from practices that have worked for years, as well as, allocate budget to change out old infrastructure. This is change management at its core and finding ways to appeal to everyone proved key to getting the bigger, systemwide win.  It all adds up, and the companies improving their skills in change management like this will continue to push their lead on competitors.

4) Much of advancing sustainable initiatives involves the "reduction" of things–energy, material, scrap, distance, and so forth.   Anyone with P&L responsibility will perk up when they hear something that sounds like inspirational cost cutting.  The economic conditions of the last few years have shown companies just how important it is to remain lean in good times.  Companies looking for the sustainability/cost-cutting win-win will be able to fatten margins or pass savings onto customers.  

5) Conveying "sustainability" to consumers is an area that is still very new and experimental.  Companies have been experimenting with different approaches and had varying amounts of success.  A few things are clear: 

A) Consumers and watchdogs catch on quickly and greenwashers are punished.

B) As major players continue to push sustainability, sustainability will continue its transition in more and more product categories from nice-to-have selling point, to "must-have" feature–similar to quality, price, and service.

C) Despite the economic turn, a growing swath of consumers are considering sustainability in their purchasing decisions and many report being willing to pay a price premium.  As sustainability continues its push to the mainstream, the price premium will likely erode–meaning you better have cost-cutting as a priority for your sustainability to be…sustainable.  

D) Sustainability works well with transparency. Some of the best approaches to conveying sustainability to consumers seems to involve simply showing them what you're doing.  Method, Patagonia, and Timberland, are three companies that seem to blend authenticity, transparency, and sustainability in an exceptional way that drives brand value. Integrating sustainability into the company and/or product brand may be the most effective method of increasing brand value and maintaining price premiums as sustainability becomes more commonplace.

Product Packaging Design and Messaging: Don’t be a Pansy

By GSS on April 11, 2010 | Category: Product Marketing | Comments Off

It's tempting to answer the question: "what would it take for my product to appeal to a little bit wider audience or market?"  If you answer that question, repeatedly, and continue to make packaging changes based on the answers, you'll end up with something that speaks to a lot of people, but doesn't really say much.  Great for politics, not so great when trying to create perceived value.  

Seth Godin, in his post Telling a Story on the Label, brakes down how packaging adds $17 in value to a soap product.  It takes thought, and guts, to speak directly to who your market is, and turn away everyone who isn't.  Take it away Seth:

Seth godin packaging
 

Here's a $20 bottle of soap. Functionally identical to a $3 bottle, so what's the $17 for?

Let's assume the people buying it aren't stupid. What are they paying $17 for? A story. A feeling. A souvenir of a shopping expedition or perhaps just a little bit of joy in the shower every morning. Let's dissect:

1. The hang tag. It's special because most soap doesn't have a hang tag. Hang tags come on things that are a little more special than soap. And hang tags beg to be read. This one says a lot (and nothing, at the same time.) It reminds us that it doesn't contain SLS. What's SLS? Is it as bad as SLES?

2. This isn't soap. It's mineral botanic. Both words are meaningless, which means the purchaser can attach whatever feelings they choose to them. In this case, the marketer is hoping for old-time, genuine, down-to-earth and real.

3. It's not made by a soap company. It's made in a Dead Sea Laboratory. Laboratories, of course, are where scientists work, and the Dead Sea is biblical, spiritual and really salty. The company has a name (Ahava) that is onomatopoeic and reminds you of breathing. Breathe deep and find calm. [Even better, I'm told it means 'love' in Hebrew].

4. My favorite part is that it's made from bamboo and pansy. At least a little. Bamboo because it's fast growing and Asian and gentle and wood and grass at the same time. And pansy… well… pansy is for girls.

5. Two really good things here. First, it's for very dry skin. This is brilliant. If your skin is dry, you don't want to hear that it's sort of dry, kind of dry, not as dry as that guy over there… No, you want to hear that it's extremely dry, really dry, so dry it's like sand. That kind of dry. This bottle understands how very dry your skin is, and it's here to help.

Also, it's in French! I love that there's the language of love and sophistication and diplomacy right here on the bottle. I can imagine that models for Chanel are using it on the Rive Gauche as we speak.

6. Did I mention the part about velvet?

It took guts to take this packaging so over the top. It doesn't match my worldview, but it might match yours. There's not a lot of room for slightly-out-of-the-ordinary.

Stanford “Bring Your Product to Life” 2010 Workshop Roundup

By GSS on March 5, 2010 | Category: Buildling a Business | Comments Off

I wanted to post a review of some of the topics covered at last weekend's Bring Your Product to Life Workshop at Stanford University's Annual E-Week.  The event was a lot of fun and really interactive.  The audience had a lot of good questions, I assume which were formed from their own entrepreneurial plans or experiences.  The nice thing about events like this is they cover several topics and integrate them all under the framework of a real world goal, such as getting a product out in the market.  The panelists put together an article that summarized their main points from each area of expertise.  The article is posted below.  

Bringing products to life is one of the most exciting things early stage companies focus on.  It involves customer need assessment, concept creation, design, and production.  However, early stage entrepreneurial designers can often feel paralyzed by the gap that lies ahead.  Challenges range from concept creation to getting a product into the market.  “There are a number critical steps in this gap that must be carefully navigated in order to launch a product at the right price, volume, and timeframe,” say Marc Theeuwes, Consulting Associate Professor, Stanford University Mechanical Engineering Design Group. “Crossing this entrepreneur’s gap involves careful attention to design lockdown, intellectual property, prototyping, navigating overseas, sustainability, and strong team management.”  This article explores a number of these critical elements and provides some guidance for entrepreneurs crossing the gap.  Some of the critical steps for crossing this entrepreneur’s gap include: 

1.     Design to Manufacturing planning and execution

2.     Protecting Intellectual Property

3.     Rapid Iteration

4.     Going / Working Overseas

5.     Contract Manufacturing

6.     Managing Teams

7.     Sustainability

 

 

1. Design to Manufacturing

The planning and execution required to launch a product is a highly iterative process.  The final design of the product is often very different from the initial design as a result of this process.  Once a design is conceptualized, prototypes are often made which allow potential customers to interact with the product concept and provide feedback.  Customer feedback influences the design and the process is repeated until the product is ready for the initial launch.  From there, products often follow a New Product Introduction process that provides a structured framework for moving a concept through the critical engineering and marketing phases in preparation for launch.  “New Product Introduction has been around for a long time but it’s really in the way it’s implemented that provides the right framework for success,” saysAllen Adolph, President, Adolph Consulting Services.  “Planning from concept to launch provides a framework to implement against.”  Mapping out the design to launch process enables entrepreneurial teams to back into the likely launch date and highlight critical areas that may slow down getting a product into the market.  The longer the development cycle, the longer the time to revenue, so getting the right process together is essential to maximizing the business opportunity.  Key new product steps include locking down the design, developing a bill of materials (BOM), identifying manufacturing processes, identifying and evaluating vendors, mapping out the assembly process, and creating a comprehensive quality plan that details component testing, product testing, and process validation. 

2. Protecting Intellectual Property

Protecting intellectual property is critical to maximizing the full commercial potential of a new product. There are a number of things that can be protected around the product and its surrounding brand.  The appropriate use of patents, trademarks and copyright can help entrepreneurial designers develop a comprehensive intellectual property strategy.  It is important to formalize this framework early in the process and prior to any public disclosures.  “Making public disclosures of product ideas will have significant impact on the ability to protect intellectual property,” says Jeffrey Schox, of Schox Patent Group, “We work with and advise early stage companies on the right strategy and also help craft patents that maximize commercial potential.”  Patents can be filled in the US and in foreign jurisdictions.  Prioritizing these steps in parallel with the launch to market is critical.  Provisional patents can offer some basic protection while the market potential is assessed and this is often done at a fraction of the cost of a full utility patent.  However, the proper crafting of a provisional patent is critical to ensure a smooth transition to a full utility patent and broad protection of the invention.  Provisional patents allow the entrepreneurial designer to make public disclosures and protect the concept in the US market.  It is important to realize, however, that any public disclosure in the US constitutes public disclosure worldwide. If this disclosure is made prior to filing overseas patents, then protection may be forfeited overseas – where the potential market for the product may be even bigger. 

3. Rapid Iteration

One of the most valuable tools to entrepreneurial designers is rapid prototyping and small lot manufacturing.  These tools allow designer to rapidly iterate on concepts as they move through the new product development process.  Rapid prototyping enables designers to experiment with different design tradeoffs and rapid manufacturing enables designers to produce small lots of products that can be used for showcasing, extended consumer testing, investor presentations, and even regional product launches. These techniques enable the designer to iterate the design while pushing off commitments to high cost tooling.  Once designs have been optimized, commitments can be made to high volume tooling that will drive down the costs of manufacturing.  Avoid the common mistake of committing to a tooling contract when the design is still in flux. 

“During my career in engineering I experienced a gap in the toolsets available,” says Phillip Trinidad, President and founder of ProtoPulsion. “There is a constant struggle with getting higher quality products to market faster.”  ProtoPulsion started out selling and supporting rapid prototyping equipment to Bay Area companies over 7 years ago.  Their engineering, design, and rapid manufacturing expertise helps customers solve their complex de
sign challenges in ways that save weeks of design time and thousands of dollars in prototyping.

The company works with designers to provide end-to-end solutions by taking an idea from concept to prototype, through design iterations, to low and mid volume production, to final high volume production and market delivery.  Cutting edge equipment used in non-conventional ways allows ProtoPulsion to help their customers take products to market faster and cheaper.

Good rapid manufacturing services have cutting edge equipment and offer industry experts who can advise entrepreneurial designers regarding concept, low volume production, and getting to market.  ProtoPulsion offers these services and others including: Urethane casting, model finishing, laser marking and cutting, fuse deposition modeling, high resolution prototyping such as Polyjet, SLA, 3D CAD Design Services, as well as 3D Scanning Services for reverse engineering and inspection. 

4. Going / Working Overseas

At some point, when the volume and product are right, consumer electronics companies inevitably look to overseas production in an effort to tap into expertise and lower cost.  “We’ve worked with a number of businesses to help them evaluate and move overseas,” says Ashton Udall, Founder of Global Sourcing Specialists. “Some critical elements to successfully moving in this direction include communications, vendor assessment, and building and nurturing a lasting network.”

Working overseas – especially manufacturing overseas – requires excellent communication.  There might be no clearer indication of communication gone wrong, than receiving a whole shipping container full of defects.  Good communication applies to more than just phone calls, emails, and in person conversations.  It demands soft skills, meticulousness, and an ability to build relationships in an environment where things get done differently.  Anywhere you go, people usually respond well to general displays of respect and courtesy, so don't check your manners at the door just because you're treated as an important customer.  Documentation and communication aids should be used thoroughly to ensure that both parties are on the same page because even the simplest projects present ample opportunity for costly errors and confusion.

Remember the old line “Low cost, high quality, fast delivery: you can have 2 of the 3?”  This captures quite a bit about buyers' expectations and some of the realities of operating overseas.  You will not likely find the magic supplier that can produce a product at the lowest price available, at high quality standards, and have it on the market in 3 months.  Many people underestimate the amount of time that will be needed to successfully develop their product, source a manufacturer, and receive finished goods. Constrained time lines lead to skipping steps, and skipping steps leads to quality problems.  It's important to understand what your needs are and to prepare accordingly.

Build a network of great people and nurture it.  In any working environment, good people and workers can be a challenge to find.  When you do cross paths with people that offer consistently strong results, it's important to develop and maintain a relationship with them.  This is even more critical when operating overseas because you'll likely be operating in an environment that is foreign to you in terms of how things work.   Thus, the positive benefits of working with exceptional people are even more pronounced.  This applies to anyone who can bring something to the party – be it a translator who forces you to repeat yourself a few extra times to make sure they communicate the correct message, an engineer who methodically goes through the bill of materials a third time to check for mistakes, a packaging vendor that will fix the colors on the packaging without trying to convince you that the wrong colors are the right colors, or a factory contact that is responsive and proactive.  These people are invaluable.  Keep your eyes peeled for them.  Reward them well when they do a good job.  Refer them to others when the opportunity arises.

5. Contract Manufacturing

When the decision has been made to move overseas, finding the right contract-manufacturing partner is one of the most critical evaluations an entrepreneurial designer has to make.  The process involves vendor introduction, requirements communications, bids and request for proposal evaluations, vendor auditing, facility inspection, and ultimately contract negotiation and product design transfer. 

Flextronics is a leading contract manufacturing organization and offers the broadest worldwide electronic manufacturing service (EMS) capabilities, from design resources to end-to-end vertically integrated global supply chain services.  Flextronics designs, builds and ships complete packaged products for its OEM customers and provides after-market and field services to support customer end-to-end supply chain requirements.  “We provide value and innovation to customers by leveraging our technical breadth and global scale in manufacturing, logistics, procurement, design, and engineering,” says Dr. Dongkai Shangguan, Vice President of Technology and Engineering and Senior Fellow at Flextronics.   

Flextronics operates in 30 countries and supports customers in diversified customer market segments. The firm provides design and engineering solutions that are vertically integrated with manufacturing, logistics, and component technologies to enable customer operations by optimizing costs and reducing time to market.  With a contract-manufacturing partner like Flextronics, an entrepreneurial firm can develop a successful market strategy.  Several key competitive differentiators of Flextronics include:

·  Complete range of value-added design services for OEM customers, ranging from contract design to original product design and design manufacturing. 

·  Complete electrical design for products ranging in size from small handheld consumer devices to large high-speed, carrier-grade, telecommunications equipment.

·  Complete mechanical engineering and tooling expertise for case design in plastic and metal media for low-volume and high-volume applications.

·  Printed circuit board design services, incorporating high-layer counts, advanced materials, component miniaturization technologies, and signal integrity.

·  Components solutions for specialty modules such as cameras, power converters, and displays.

·  Test solutions and system integration.

·  Seamless manufacturing pipeline from new product introduction (NPI centers & pilot lines) to full-scale global deployment (industrial parks) to enable product life cycles.

Building cost-effective, high-volume
manufacturing and distribution solutions requires partners with the right regional or global expertise.  Some contract manufacturers are regional in nature and only operate in North America, for example.  Flextronics covers the world with operations in the Americas, Europe, and Asia.

Contract manufacturers also have tremendous logistic capabilities with worldwide expertise in just-in-time, ship-to-stock, and ship-to-line programs, continuous flow manufacturing, demand flow processes, and statistical process controls. 

Products that require greater functionality in a compact device, like consumer electronics, demand more sophisticated manufacturing technologies and processes.  Good contract manufacturers are up to speed on these processes, and by working with them, entrepreneurial firms can tap into this expertise.

Finally, large global contract manufacturers have invested heavily in the creation of strong supply chains and deep vendor networks.  The industrial park strategy, which Flextronics employs, minimizes logistics costs throughout the supply chain and production cycle time by co-locating a number of suppliers in one low-cost location.  Each Flextronics park incorporates the manufacture of printed circuit boards, components, cables, plastics and metal parts needed for product assembly.  This approach to production and logistics is designed to benefit customers by reducing distribution barriers and costs, improving communications, increasing flexibility, lowering transportation costs and reducing turnaround times.  Industrial parks enhance the company’s total supply chain management, while providing a low-cost solution for customers.  Flextronics has strategically established large Industrial Parks in Brazil, China, Hungary, Mexico, and Poland.

6. Managing Teams

People make it happen and at the end of the day, no product gets launched without the effort and coordination of an entire entrepreneurial team.  “Success in entrepreneurial environments comes about by having a small number of people, with complementary skills that are committed to a common goal,” says Dr. Richard Toepfer, owner of INTJ Associates.  “The team exists to satisfy a customer need with a product or service.  If the customer is satisfied, the stakeholders will realize a return, a profit, and continuing return on investment.”

Entrepreneurial teams benefit from clearly identifying (1) the purpose (why the team exists), (2) performance goals (clear expectations), and (3) the approach (process) with mutual accountability. 

The top three concerns in team building and management usually involve poor communication, a lack of process, or a lack of commitment. 

A poorly defined product or service leads to conflicting responsibilities and confusion over the right customer/vendor relationships.  A lack of process stands in the way of the product life cycle.  Teams can’t move in the right direction without a clear plan.  Plans change frequently, but not having one at all will lead to communication issues.  Clearly identifying problems allows a team to rally around and jointly develop a solution methodology.  Clear milestones with “signoff” procedures should be created to signal when a product can move from one phase of development to the next.  Having a coordinated team also facilitates stronger commitment to the project.  When process needs are clearly identified, plans and schedules can be created enabling sufficient resources to be available at the right moment. 

Strong team building requires each member of a team to define his or her job in the following terms:

(1) Key objective of the position – How do you add value?  What is your scope? – Usually a product line or service

(2) Major responsibilities – The two or three areas on which people will be measured.  Each responsibility should contain activities and
each activity should have some measure that indicates when success has been achieved.

(3) A list of Customers and Vendors – These include your boss, your internal and external peers, and all of the people who you depend on for the resources you need to do your job. 

The process of team building includes clarifying the goal, building ownership across the team, overcoming obstacles, and creating a mechanism for timely feedback.  To improve its current performance, a team uses the feedback from team assessments in order to identify any gaps between the desired state and the actual state. 

Finally, teams need to stay flexible and adapt to changes.  Designing a gap-closure strategy allows the team to adapt to changes in customer requirements, available resources, and the external environment. 

7. Sustainability

Designing products for positive impact on the planet, people, and profit is a core tenant of sustainable product design and manufacturing.  This core is rapidly becoming a major element in all product development processes, globally.  Some countries have implemented stringent regulations to ensure that companies include sustainable elements in product design and comply with sustainability requirements.

Sustainable designs and manufacturing consume less non-renewable resources and have less impact on the environment than traditional products and processes with equivalent functional performance.  “A firm’s decision to develop a sustainable product might be in response to regulatory requirements in the served market, to the customers’ preference, or to the firm’s strategic concern for resource availability and outlook on social responsibility,” says Dr. Dariush Rafinejad, Consulting Associate Professor of Sustainable Product Development and Manufacturing. “For an entrepreneurial designer, not addressing sustainability can significantly limit market potential and even block a product from making it to the market. “

Traditional product development strategies are often driven by mutual satisfaction of the customer needs and the supplier’s return-on-investment (ROI) target.  The customer needs are primarily met with functional benefits that the product has to offer at a competitive price.  These cost/benefit requirements establish the basis for tradeoff analysis and managerial decisions in development of a product design and manufacturing process. 

Sustainability considerations often manifest as compliance to regulatory mandates that impose certain constraints on the product design and on manufacturing practices.  Several of these have become particularly important in the electronics market such as WEEE and RoHS. 

Entrepreneurial designers should address sustainability throughout the entire product development process and not as an afterthought. Good designs and processes close waste loops, maximize recyclability, and minimize the use of energy and raw materials.

Conclusion

As we’ve highlighted in this article, bringing products to life is one of the most exciting things early stage companies focus on.  The careful coordination of design to manufacturing planning, intellectual property protection, rapid iteration, overseas considerations, contract manufacturing, team management, and sustainability planning is necessary to achieve success.   By understating some of the dimensions of these stages, entrepreneurial designers can cross the entrepreneur’s gap and ultimately “Make it Big.” n


Speakers & Article Contributors:  p>

The Product Realization Network thanks the following speakers for their contribution to this article and the “Bring Your Product to Life” workshop session at Stanford’s Entrepreneurship Week. 

Allen Adolph, Adolph Consulting

Jeffrey Schox, Schox Patent Group

Dr. Dongkai Shangguan, Flextronics

Dr. Dariush Rafinejad, Blue Dome Consulting

Marc Theeuwes, Nokia Growth Partners

Dr. Richard Toepfer, INTJ Associates

Phillip Trinidad, Protopulsion

Ashton Udall, Global Sourcing Specialists

Speaking Event: Ashton Udall, of GSS, speaking at Stanford University’s Annual Entrepreneurship Week, Saturday, February 27 at 12:30pm

By GSS on January 21, 2010 | Category: News | Comments Off

Once again, Stanford University is hosting their annual Entrepreneurship Week from February 22-February 28.  The event agenda promises great opportunities to gain insights about entrepreneurship and hear stories from scholars, consultants, and entrepreneurs from perhaps what is the most active entrepreneurial area of the world

I participated on the speaking panel last year at Stanford's "Bring Your Product to Life" Workshop, and it was a  fun event and fantastic turnout.  Here is a link to some of the highlights of last year's session.  The panel features an array of speakers with varying backgrounds that have been asked to cover topics relevant to getting your product from idea or design, through manufacturing, and on the market.  Yours truly will be there to discuss my take on working and getting things done in foreign countries.  Other topics covered will include product development, sustainability, contract manufacturing, IP, and more.  

Hosted by Stanford's Product Realization Network, the workshop will take place on February 27th, from 12:30-2:30.  Further event details to come soon.  There was standing room only last year–so get there early!

Sourcing Manufacturers Through Online Supplier Directory Websites: Business as Usual

By GSS on December 15, 2009 | Category: Product Sourcing and Strategy | Tags: , , , , , | 1 Comment

There is no doubt that methods of finding suppliers are shifting.  Thomas Global Register (online), recently closed its doors and will discontinue publishing IEN, a magazine it has published since the Great Depression Era.  While the company cites the global economic downturn as the primary driving force behind this, Jason Busch, of Spendmatters, reports a different potential cause: declining revenues over the last few years.  If this is the case, and Thomas Global's value offering has not kept pace with the shifting supplier directory market, then where is the supplier directory market going?  

In another Spendmatters post, Jason, segmented the supplier directory market into 4 categories, based on the value offering and business models of the supplier directory firms that offer different approaches to the market of small and mid-size companies who tend to source manufacturers (as opposed to large companies which rely on sourcing offices and large sourcing companies abroad).  According to the Spendmatters' segmentation:

1) Group 1 features companies which have applied offline paradigms to the internet.  Examples include ThomasNet, and smaller, niche focused sites like Surplus Record.  These sites brought their supplier listings online and provided support to help their listed manufacturers and service providers improve visibility and accessibility.  

2) Group 2 includes companies like Alibaba.com and Global Sources, supplier directory providers who seek to bring the world's manufacturers to your computer screen–a more global or worldly approach.  They have a similar model to the first group, and tend to offer value in the breadth of their directory with respect to manufacturing listings by category and country.  As Jason points out, these tend to be the sites frequented by small and mid-size companies, product inventors and entrepreneurs in the early stages. 

3) Group 3 includes companies that are repositioning their supplier networks, which were geared more towards facilitating transactions, into supplier networks which will facilitate sourcing new suppliers and issuing RFQs.  These companies include Ariba and Ketera.

4) The 4th group of companies include commerce driven models, like MFG.com.  Where companies like Alibaba and Global Sources present a wider, more global listing, MFG.com seeks to supply a service focusing more on depth.  MFG.com allows industrial buyers and engineers to source potential suppliers, transfer relevant, and IP sensitive product documentation in a secure format, and proceed through the RFQ and negotiation process.  

Because of our work with new product development, start-ups, and entrepreneurs, we often get addressed with questions regarding the 2nd group segmented out by Jason, or the alibaba.com's, and Global Sources, of the internet.  I probably caution those new to working with manufacturers overseas that there is A LOT more to seeing a nice website and emailing a potential factory overseas, just as much as Dan Harris, of ChinaLawBlog, gets X phone calls a week from some poor sap who wired money to a supposed factory overseas and hasn't heard a peep from them since.  

It's also not uncommon I hear someone with reasonable business experience and intelligence regale folks with a story about some horrific China-related quality incident or fraudulence that happened to someone else, but when it really comes down to vetting who they're working with and what's going on at the factory they are depending on, no one at their organization has visited the factory in a looooonng time.  If you think this sounds absurd, see the end of Dan's post on How Not to Get (China) Internet Scammed here, and note that the same sort of cognitive dissonance, or believing that there is no way they could be involved with the same sort of low-level quality or fraudulent factory over the internet as the scam tale which they laughed about, can also be seen in 60 year-old midwesterners paying lots of money to order 22 year old, mail-order brides from Russia, only to find out that Olga isn't really coming to Illinois.   

As I've mentioned several times in other posts, companies like Panjiva are working to provide greater transparency into the suppliers you may be working with overseas and what they may be up to. Information is power and when considering the ever-important topic of risk management, it is useful to know which suppliers are getting busier and which are on their way out of business all together. This is certainly not a substitute to having eyes and ears on the ground at the factory you're working with, but with respect to ferreting out potentially bad suppliers found via the internet, a 3rd party source of information like Panjiva can be useful.  While the internet has opened up quite a bit in the way of locating and communicating with manufacturing sources over the last decade, I would wager that the number of scams is probably still on its way up.  I think there is still quite an opportunity in helping online supplier directories provide better quality information, and help in managing the sourcing process, alongside the names and contact information of manufacturers.  The question is, when you can you really start substituting good information communicated online, for paying to have experienced personnel on site at the factory?  We're not there yet, by any means.  

How an African Boy Built a Windmill From Scratch to Generate Electricity to Read, and Why a Return to Hands-On Product Innovation and Development Might Lead to Recovery in the US

By GSS on December 2, 2009 | Category: Product Innovation | 1 Comment

The video above is the story of William Kamwamba, a young man born in Malawi, one of Africa's poorest nations, who pieced together a windmill from scrap parts at the age of 14 (from Wired Magazine's Teen's DIY Energy Hacking Gives African Village New Hope).  Despite being described as a local kid gone crazy, William used a picture of a windmill on a textbook cover, to successfully complete a windmill and power his house with electricity so he could read after dark.  This soon led to using the device to pump water for irrigation, and started William down a path that would not only change his life, but help lift those around him up to better living conditions.  

Stories like this are inspirational to say the least, but also allude to what we may find taking place in the United States right now.  Mr. Kamwamba's story is evidence of what can take place when resources which could be deemed extremely minimal, at best, are innovatively pieced together in ways previously unseen, to create products and technologies that solve the most basic of problems and usher in waves of new possibilities.  The Wall Street Journal recently ran an article "Tinkering Makes a Comeback Amid Crisis", which notes the recent surge in hands-on building, prototyping, crafting, and general making of things taking place in the United States over the last few years:

Engineering schools across the country report students are showing an enthusiasm for hands-on work that hasn't been seen in years. Workshops for people to share tools and ideas — called "hackerspaces" — are popping up all over the country; there are 124 hackerspaces in the U.S., according to a member-run group that keeps track, up from a handful at the start of last year. SparkFun Electronics Inc., which sells electronic parts to tinkerers, expects sales of about $10 million this year, up from $6 million in 2008. "Make" magazine, with articles on building items such as solar hot tubs and autopilots for robots, has grown from 22,000 subscribers in 2005 to more than 100,000 now. Its annual "Maker Faire" in San Mateo, Calif., attracted 75,000 people this year.

"We've had this merging of DIY [do it yourself] with technology," says Bre Pettis, co-founder of NYC Resistor, one of the first hackerspaces, in Brooklyn. "I'm calling it Industrial Revolution 2." 

The resources available for making things are becoming cheaper and increasingly more available to the common tinkerer (product developer?  Inventor?).  The WSJ article notes that university undergraduates are now gaining access to advanced machinery previously only available to senior researchers, and new businesses like Techshop:

TechShop in Menlo Park, Calif., for example, is a for-profit workshop and operates like a gym, except that the members who pay $100 a month are milling iron rather than pumping it.

Founder Jim Newton tallied a list of all the tools he could imagine needing. Now TechShop, opened in 2006, has $500,000 worth of lathes, laser cutters and other equipment.

There are 600 members at TechShop's original location, up from 300 a year ago, and it has opened workshops in Durham, N.C., and Beaverton, Ore. Projects under way include a liquid-cooling device for computer servers and an electric two-wheeled car.

Nobel Prize winning economists have demonstrated that approximately half of economic growth in the U.S. could be attributed to innovation–innovation born out of the kind of "tinkering" and product development that takes place at places like Techshop, or in the rural windmill fields of Malawi.  

 

The junk lying around you may actually be components for a future product or technology that will have a substantial impact.  All it takes is the imagination and drive of a guy like William.  I would wager that someone in the U.S. is tinkering right now with one of the next major innovations of the 21st century. That might be a dramatic, whimsical thought, but so is reading after dark because your hand-built windmill made of scrap is supplying you power.

It’s Good to be a Snuggie or a Robotic Hamster, but if Miley Cyrus is Throwing a Party, I Don’t Think it Will be in the USA: Product Import Hits and Misses this Holiday Season…

By GSS on November 20, 2009 | Category: International Trade and Political Economy | Comments Off

What do blankets with arm holes, robotic hamsters, and magnifying glasses have in common?  Imports of all of these products are WAY up for this holiday season.  Apparently, in America, it's important for people to stay cozy while maintaining mobility with their TV remote.  God Bless the Snuggie.  Kids want to play with intelligent robot hamsters.  Take a look at Zhu Zhu Pets.  And Sherlock Holmes International (a Sherlock Holmes Fan Club…I'm not kidding: website) may be planning a secret international conference for all of it's members because (it's elementary my dear Watson) magnifying glass importations are up almost 300% this season!

Holiday season imports are going full steam, and Panjiva's latest offering, Trade Trends, displays trade data for a given product over the last few years up until the most recent month.  One can also see which countries are shipping more of a given product and which are shipping less.  Talk about transparency!  It's a great way to get an idea of trade flow and which countries might be producing more of certain kinds of products over time (perhaps indicating a country's forming competitive advantage?), seasonality of products, and which products retailers are expecting to do well in the near future.  Check out the data below to see this holiday season's hits and misses:

Panjiva-Holiday-Hits-2009

Not so cool this Year:

Panjiva-Holiday-Losers-2009

Sorry Miley.  You may want to buy a Snuggie and stay at home this year.  You're not old enough to party yet anyways…

Prototyping for Success (and Failure): The Value of the Prototype in Design, Development, and Sourcing

By GSS on November 18, 2009 | Category: Product Design,Product Development,Product Innovation | Comments Off

I've recently been reading a bit from IDEO founder, Tim Brown, on design thinking and the importance of prototyping in IDEO's design culture.  IDEO is one of the leading product innovation and design companies in the world. I posted the above video because it quickly captures the reasoning behind why IDEO encourages utilizing prototypes extensively in the design process.  I love the question the video begins with: "How can somebody become great at failing cheaply and quickly?"  The concept of failing fast and failing cheaply is widely promoted by successful entrepreneurs and innovators as a way to reach a successful product or business model through innovation.  Devorah Klein (in the above video) and Eric Saperstein, of IDEO, gave a speech at the 2008 Nantucket Conference, Design Thinking for Entrepreneurs: Identifying New Markets and Developing the Winning Product or Service (h/t blogger Simeon Simneonov) which I thought gave a great snapshot of IDEO's process.  Some main points:

  • Focus on Desirability (As captured by Simeon: The core of the IDEO philosophy starts with a focus on desirability. Come up with something people want then figure out how to optimize the technical and business aspects of it.)
  • Get Inspiration:

    • Spent time with people, both current customers and people who you’d want to have as customers. Develop deep empathy. 
    • Imagine what the future could be. Do not constrain your thinking. 
    • Embrace failure. Failure is data. 
    • Build to think. The act of creation helps you see things in a different light. 
    • Build low-res prototypes. Paper is OK. Iterate quickly. Generate many options. Be passionate about your prototypes but evaluate them dispassionately. 
    • Build it yourself. It’s another way to get yourself to see things from a different perspective. 

In the successful product development projects and entrepreneurial ventures I've been involved with, executives and managers have always been extremely involved in the prototyping phases, often building the prototypes themselves.  If possible, build it on your kitchen table or in your workroom with whatever handy materials you can find.  By getting your hands dirty, you become fully acquainted with the ins-n-outs of your product.  Think of the early stages as play and allow your mind to roam freely.  

Understanding the emphasis on the iterative nature of this process is key.  Although it's fun to tell and hear stories of entrepreneurs having a dream one night about a product that went on to great sales success, the truth is that most successful product developers and entrepreneurs have a substantial amount of failure under their belt that we don't hear as much about.  Think: that old Michael Jordan commercial in which he talks about every game winning shot or free throw he missed, or Thomas Edison saying that he didn't mind failing over 100 times before he reached his successful lightbulb, because he knew that each failure brought him one step closer to success.  One is much more likely to develop a successful path to market by doing the hard, but fun, work of developing several iterations until something desirable and viable is reached.  

Referring back to my last post on developing empathy for those that might use your product, this goes for more than just listening to your users or potential users.  Involving your partners in the supply chain to foster collaborative innovation will help you develop a solution that accounts for the whole lifecycle of a product.  On the manufacturing side, through prototype iterations, one can discover and work to eliminate design elements that might cause snags in manufacturing and assembly.  

Thus, when it comes to the design and development of a product, although many see this as a linear process, it's important that valuable feedback later in the project–say, from a manufacturers point of view, can work it's way back into "earlier" points of the design process and change the design accordingly.  This is why it is important to fail cheaply in the beginning–because spending lots of money on something that is likely to change later in the process burns cash needlessly.  

Once the design begins to solidify somewhat, one might need to move towards more mechanical rapid prototyping processes to gain and share information more effectively.  This post on MindTribe's blog, a Silicon Valley engineering firm, does a great job of explaining some of the various forms of rapid prototyping, such as stereolithography (SLA), Selective Laser Sintering (SLS), Polyjet, and Machining processes.  

From a sourcing perspective, the prototype is immensely helpful.  Not only will it spur feedback regarding the design from a manufacturers perspective, it is often critical in communicating an enormous amount of information on the product's look, function, and construction.  If a picture speaks a thousand words, a prototype speaks a million.  One is much more likely to arrive at accurate projections and quotations of cost in the sourcing process, when manufacturing vendors can see, touch, feel, smell, and hear what they are to be producing.  

If your product or business is not enjoying the success you would like to see, perhaps you are still just in the prototyping stage and x number of iterations away from success.

Collaborative Innovation: Drive Profitability by Playing Well with Others in the Supply Chain

By GSS on November 12, 2009 | Category: News | 2 Comments

Hat tip to Michael Lamoureux of Sourcing Innovation for his post covering a recent article in Industry Week on Collaborative Innovation.  Let's start with the meat that gets everyone's mouth watering:

Increase profits 15% to 20%.

That's correct.  According to a survey of 30 global consumer packaged goods manufacturers in retailers, 95% of them cited collaborative innovation as very important to achieving business objectives and a driver of profitability.  A few of the main points, as highlighted by Michael at Sourcing Innovation:

  • Non-Adversarial Mindset
    Michael mentioned going one step further to say that you need to be able to trust the the party.  I completely agree.  When it comes to manufacturing sources, particularly in overseas places like China, building trust occurs out of 
    • working with people who are trustworthy in the first place (duh!  but often overlooked…)
    • putting in the time to meet your partners and understand their business
    • approaching your business dealings with them as a partnership and looking for win-win scenarios.  What's good for the goose is good for the gander and your partners will go the extra mile for you to meet your deadlines and meet your specifications when they know they will gain if you do.  

 

  • The Ability to Learn to Speak "Another Language"
    Michael's thoughts: "Every profession, and every group, has their own "language". You are going to need to learn it or you might as well only speak English while your collaborator only speaks Mandarin as the communication gap will be just as broad until you do."  IMHO, the success of learning another language is driven by speaking a lot.  I often say that you cannot communicate too much in product development and sourcing throughout your supply chain.  When you talk more, you catch things that were missed and raises the probability of discovering areas where your "language" is different from their "language".  Making the effort is 80% of the battle, and goes a long way to buttress the first point–building a trusted relationship.  It may take more effort in the beginning, but once you are in the swing of things with the other party, progress will occur at blinding speeds.


  • New Metrics
    Most companies will have a hard time transitioning from the metrics they have to measure supply chain performance now, and metrics that will help analyze and improve elements of the supply chain such as collaborative innovation.  One area that companies are increasingly tackling is corporate social and environmental responsibility, which requires collaborative innovation and work up-and-down the supply chain.  Metrics for the supply chain, or supply chain partners are developed, such as packaging reduction, eliminating energy intensive materials and processes from the supply chain.  Managing, measuring, and sharing in the successes and failures brings partners closer and can be an indirect method of getting a handle on the level of collaboration taking place.  More simple methods of looking at this might involve looking at what % of ideas came from where.  For example, how much did you product specification change from when you first handed it off for quotation compared to when you arrived at a final quotation based on approved samples?  Were materials changed?  Assembly processes changed?  Part dimensions changed for lower cost tooling?  If so, where did these ideas come from.  Your vendors may be bringing you more value than you think?  Also, one can look at the % of risk shared.  How is performance measured and payment structured?  Is one partner shouldering all of the risk?


  • Willingness to Share IP
    When thinking about offshore manufacturing destinations like China, hands start to tremble at the thought of this.  In the article, this point might be more directed towards conversations downstream in the supply chain–such as with distributors, retailers, and key customers.  It's important to make decisions about when and what and with whom you are willing to disclose IP related information.  However, while most focus on what can be risked and loss, there is also quite a bit to be gained.  Fresh and valuable perspectives on how to make the most of one of your most core assets, from a core partner, could be one of the most profitable benefits.  

I like this article because the global business environment is simply too competitive to not leverage the value of your best partners.  Talent and resources can be tapped that you don't need to directly pay for, and mutual wins can translate into strong relationships that drive competitive advantage.  While this may be a lot of MBA and corporate speak to say that putting in effort to play well with others means more change in the piggy bank, it's surprising how many companies and people forget this when playing in the sandbox.    

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