Stanford “Bring Your Product to Life” 2010 Workshop Roundup

By on March 5, 2010 | Category: Buildling a Business | Comments Off on Stanford “Bring Your Product to Life” 2010 Workshop Roundup

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: 

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 on January 21, 2010 | Category: News | Comments Off on Speaking Event: Ashton Udall, of GSS, speaking at Stanford University’s Annual Entrepreneurship Week, Saturday, February 27 at 12:30pm

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 on December 15, 2009 | Category: Product Sourcing and Strategy | Tags: , , , , , | Comments Off on Sourcing Manufacturers Through Online Supplier Directory Websites: Business as Usual

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 on December 2, 2009 | Category: Product Innovation | Comments Off on 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

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

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 on November 18, 2009 | Category: Product Design,Product Development,Product Innovation | Comments Off on Prototyping for Success (and Failure): The Value of the Prototype in Design, Development, and Sourcing

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 on November 12, 2009 | Category: News | Comments Off on Collaborative Innovation: Drive Profitability by Playing Well with Others in the Supply Chain

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.    

Product Launch and Manufacturing Insights: Cost Reduction Strategies for Injection Molds and Tooling

By on November 5, 2009 | Category: News | Comments Off on Product Launch and Manufacturing Insights: Cost Reduction Strategies for Injection Molds and Tooling

We're currently in the midst of several projects moving through the final design to tooling stages–a very iterative process in which companies are finalizing their product designs based on playing with prototypes, buyer/market feedback, and getting cost feedback from suppliers to make decisions on feature/cost trade-offs.  I thought I would write a post regarding some of the issues that have come up and offering a few insights into addressing the sizable up-front financial investment that building injection molds and tooling can pose to companies launching new products.

Companies can look at several different options to bring mold costs down: from design to financing. 

  • Product Design: A good product designer will design parts for cost-effective tooling, bearing in mind the part will be ejected from the mold, shrinkage rates, and dimensional tolerances.  If you have a source, or sources, that are great with customer service and will work with you to re-quote injection molds based on several design iterations, this can be very helpful in leading the industrial design to the optimal design/cost balance.
  • Mold Material:  Another consideration companies may wish to entertain with respect to lowering injection mold cost, is deciding whether to build the mold out of steel or aluminum.  Aluminum has been considered a low price way to get a production run in the thousands of units completed at 1/3 the cost of steel molds.  This article, Why Offer Aluminum Molds for Production, at MoldMakingTechnology, claims that, with proper creation and care,  aluminum molds can deliver production runs into the hundreds of thousands of units and beyond.  I'll let the engineers haggle it out over the feasibility of accomplishing this.  I can tell you that I've received quotations for aluminum molds from several vendors recently and they all cautioned against the potential corrosion that can occur with aluminum molds and the susceptibility of the material to damage given it's softness.  It's worth noting that fluctuations in the price of steel and aluminum material will obviously impact the mold cost.  Currently, in China, aluminum prices rival steel, and the savings previously found in aluminum molds has essentially been wiped out due to this. 
  • Mold Plan: In addition to material, one could consider different ways to layout a family of injection molds (assuming your plastic product might be composed of an assembly of parts).  Generally, each part cavity has its own mold base.  However, to reduce cost, one can consider a MUD base (sounds like a spa treatment, but MUD means "Master Unit Die"), in which the part cavity is an insert that can be dropped into the common MUD base.  Thus, only one mold base is created for all of the inserts, instead of bases being created for each insert.  This does increase the run-rate and part cost incrementally, but it can offer a notable cost reduction to reduce the up-front financial investment for new products.  Below are some pictures of a MUD base mold with two inserts:

SDC14435

SDC14436

  • Mold Financing: A company should never pay an entire mold fee up-front, and should instead break out the fee according to milestones in the mold building and tweaking process itself.  An up-front payment to begin work, a payment at first shots (the first parts they make off of the tools), and a final payment upon final shots approval (meaning you've approved the parts coming from the molds), is a typical structure.  Occasionally, vendors will be willing to amortize some or all of the mold costs into one or several orders.  The ability to do this will often vary from vendor to vendor, their financial situation, and hunger to obtain the business.  Bear in mind, that until a company has paid all of the cost of the mold, they do not yet own it.

Cutting Costs in Your Company by Spending More to Achieve Operational Efficiency in your Supply Chain

By on September 10, 2009 | Category: Product Sourcing and Strategy | Comments Off on Cutting Costs in Your Company by Spending More to Achieve Operational Efficiency in your Supply Chain

I saw an article in Business Week last week about Sony bringing in Executive Deputy President Yutaka Nakagawa, a proven cost-cutter, to reduce Sony's supply chain costs.  Over the next two years, the company is aiming to halve the number of its parts and materials manufacturers and reduce purchasing costs by 20% this fiscal year.  Sony is hoping to achieve lower costs by buying larger volumes from fewer suppliers.  If the cuts can return the company from what is expected to be its second consecutive year of losses, newly created working capital can be dedicated towards new innovation and product launches.  However, as the Businessweek article points out, if the cuts result in being single sourced when/if demand spikes or quality defects arise, Sony could find itself in a precarious position.  

This reminds me of an article in Purchasing.com, found via Sourcing Innovation, explaining that Cost Reduction Efforts Require More Focus than Sacrifice.  The article's gist harks back to some of my rantings on the importance of strategy in sourcing and long term success.  The article cites a recent survey of private companies by PricewaterhouseCoopers which notes that companies are focusing on reducing costs in discretionary spending such as travel and entertainment, as well as streamlining operations, workforce reductions, and employee compensation.  In many ways, these might be regarded as short-term cost reductions that help financial statements quickly, and in the sphere of public companies, make Wall Street step back from the ledge and decide to live.  The article goes on to point out:

Another piece of research from the Corporate Executive Board, supports this thinking, saying companies need to focus more on reducing cost of goods sold and less on SG&A. "While most CFOs are quick to cut overhead (SG&A) to achieve cost-reduction goals, the companies that are able to maintain cost reductions over the long term spend more on SG&A as a leveraged way to help the business drive operational efficiency and reduce cost of goods sold," the CEB report says. In fact, it says on average, the better cost-cutting companies report cost of goods sold being about 49% of sales vs. 62.8% for average companies. However, the best cost-cutters have slightly higher SG&A.

Let's review that again: "the companies that are able to maintain cost reductions over the long term spend more on SG&A (Selling, General, and Admin expenses) as a leveraged way to help drive operational efficiency and reduce cost of goods sold".  

Michael Lamoureux, of SourcingInnovation, puts it best in his explanation:


You see, when you cut travel, you cut the ability for your people to make, and maintain, relationships. When you cut entertainment, which is typically a very small budget to begin with, you increase stress, which decreases productivity. When you streamline operations, things start to slip through the cracks. Then when you cut workforce, you cut capability, key processes get skipped entirely, critical sourcing events just don't happen, and you keep sourcing off of expensive ever-green contracts and spot-buying at high prices. When you cut training, your staff's skills get even more outdated and your cost reduction efforts miss the mark. And when you cut compensation, your best employees feel unappreciated and trampled on, stop giving 100%, and start looking for their next job.

As the article says, you have much better opportunities, including:

    * transaction processing
    * supplier management
    * health care benefits
    * IT assets (hardware and software)
    * logistics 

Investing in your people to implement good cost controls and look for ways to achieve operational efficiencies, rather than simply going after the quick and easy slashing of fixed costs, results in your people finding ways to lower the cost of goods for the long term.  This is one major method that smart companies use to destroy the competition over the long haul.

Related blog posts:

Developing Mass Market Products: The “Good Enough” Revolution

By on September 2, 2009 | Category: Product Innovation | Comments Off on Developing Mass Market Products: The “Good Enough” Revolution

Flip-cam

The FlipCam, by Pure Digital Technologies.  1 million units sold in the first year.  17% of the camcorder market in approximately 3 years.  Acquired by Cisco for $590mm.  Started by entrepreneurs Jonathan Kaplan and Ariel Braunstein after a failed start-up attempt in the digital camera market.  A consumer product start-up's dream, no?  For such a simple product, what made FlipCam such a wild success?

Wired Magazine has written a fascinating article, The Good Enough Revolution: When Cheap and Simple is Just Fine, on the concept of the "good enough" revolution.  The idea that industries as diverse as camcorders, law, music, the military, and healthcare to name a few, are experiencing a wave of change in the concept of user value.  It might be considered a return to a greater focus on user value, in the ongoing battle between features/quality for the sake of features/quality vs. features/quality for the sake of…the people who actually use the product.  Companies and products which have long built their competitive leads on continually outrunning the competition with the latest high-quality features and technological advances, are continually having their markets disrupted by low-cost, widely accessible, flexible, "good enough" products. 

The article is a great read for many reasons.  Start-ups developing user-centric, disruptive consumer products should be inspired by the success of products like FlipCam.  Being close to the customer and understanding holes in the market are areas start-ups can often outrun large companies.  Large company engineers developing cutting-edge, technologically based features for new products spend more time in the lab and at their desk than interacting with customers.  Not that the cutting edge technologies aren't important, they just generally aren't important to the mass market.  In the words of Wired magazine author, Robert Capps:

Brisk sales combined with a lack of speedy returns destroyed the
company's thin margins, and the camera failed. But the experience
taught Kaplan and Braunstein a lesson: Customers would sacrifice lots
of quality for a cheap, convenient device. To keep the price down, Pure
Digital had made significant trade-offs. It used inexpensive lenses and
other components and limited the number of image-processing chips. The
pictures were OK but not great. Yet Pure Digital sold 3 million cameras
anyway.

Kaplan and Braunstein also learned something important about camera
retailing in general. The market had long been split into two main
segments: point-and-shoots (including disposables) and single-lens
reflex cameras, which use interchangeable lenses and other high-end
accessories. Not surprisingly, the vast majority of cameras sold
then—as now—were the handy point-and-shoots; SLRs tended to attract
only serious hobbyists and professionals.

Oddly, though, there was no point-and-shoot analogue in video
cameras—and that's where the pair saw their next opportunity. Home
videocams were almost without exception expensive, complicated devices
loaded with features like image stabilization, night-vision mode, and
onboard color correction. And even with tools like Apple's iMovie, it
was a hassle to get footage off the cameras and onto a computer for
editing and sharing. In terms of complexity and price, the camcorder
market resembled the SLR market, but with no low-end alternative.
Kaplan and Braunstein suspected that there might be a place for a much
cheaper, simpler video camera. So they decided to make one.

There are ample development opportunities for consumer product start-ups like Pure Digital.  In categories where companies must justify massive R&D budgets that result in over-invented, featured-to-death, costly products that the average person doesn't find value in, there are opportunities for the consumer product start-up to tune into user needs and develop low-cost alternatives that offer users 80% of the value, with 20% of the features and cost. 

Developing and sourcing products like this is also easier, as a development team can often find existing components in the market, and working with a manufacturer in a country like China or India does not involve pushing them to source and manufacture technologies that are far beyond them.  The magic lies in learning from users the combination of features and costs that are good enough to meet their needs.  And that magic only requires eyes and ears.

What we do

©2023 Global Sourcing Specialists LLC Contact

Go up Top