The game of taking products to market is rapidly changing for the better. Companies, organizations, and individuals, are reaching out to partners across the world to develop, manufacture, and market their products.
This blog is about building your products, building your business, and building the Global Economy.
Global Sourcing Specialists
Ashton Udall is a partner with the firm Global Sourcing Specialists (GSS). GSS is a product development and sourcing (manufacturing) firm dedicated to helping businesses, inventors, and startups, tap overseas resources to succeed in the Global Economy.
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:
Not so cool this Year:
Sorry Miley. You may want to buy a Snuggie and stay at home this year. You're not old enough to party yet anyways...
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.
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.
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:
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.
