WrightGrid, a company that is part of local Somerville incubator Greentown Labs, is attempting to grow their operations as a startup company. Their core market is providing solar powered cellphone charging stations that can be deployed in remote areas without a well-developed electric infrastructure (You can see a couple photos of their charging stations in this segment on Greentown Labs).
One of the key challenges they are currently facing is thinking about the type of investment they want to make in production capabilities as they consider graduating. This raising an interesting question from an Operations Strategy standpoint for startups. Does it make sense to keep your operations small so you can do small batches or do you invest in larger production capabilities to increase batch size? While small batches have traditionally been viewed as “inefficient,” this could also give WrightGrid the opportunity to iterate multiple times on an order to improve the process. For example, if a company asked for 1,000 units and WrightGrid had to make them in batches of 100, it would give them 10 iterations to improve their process. On the other hand, in today’s market place with supply chains having to respond faster than ever, it could diminish their ability to meet the needs of clients and therefore keep them out of growing their client base.
This is especially challenging for a startup as they must rely on scarce resources to make an investment like this. One other consideration is to consider whether those resources would be better spent on some other aspect of the company. Making the Wright (or right) decision will certainly be important to getting them on the national Grid (or stage.)
As a designer for Doomtown Reloaded, an expandable card game, I constantly think about how the environment for players will change with the addition of new cards. Since releasing the core set (picture to the right) of cards back in September of 2014, we have released expansion packs (an example is to the left) that give players new options to construct decks and play with each other. For a designer, maximizing the diversity of decks is key to keeping the environment fresh and fun. However, there is a trade-off to consider regarding the pace of adding new cards. If we release cards too slowly, the dominate decks can kill off weaker decks and cause the environment to go stale. If we release cards too quickly though, players get frustrated due to the difficulty of keeping up with a rapid rate of change. Thus, we seek to release expansions at a measured pace which makes supplier selection key.
Nearly all card games that are sold in America, are manufactured in China. (Here is a link if you want to see the process in action! https://youtu.be/bug0LTUEN9Y.) Printing literally 10,000’s of cards per set is a time consuming affair and trans-Pacific delivery only increases the amount of time it takes to bring a set to market. On average, we need to give suppliers a minimum of 6 months before the intended release date. This can mean that we may have 3 or 4 sets that are finalized (and cannot be altered) that are not in the hands of the players. However, this causes a conundrum for me as a designer in regards to the environment.
It is a common occurrence that the environment does not evolve as designers intend. While we do internal testing to mitigate this, the fact is that we will at best, have ~0.1% of the active population testing any given set before its world wide release. It’s nearly guaranteed that “surprises” will occur. However our ability to address those surprises is hampered by lead times, as we need to design cards 6 months in advance. Another way to think about it is that we have a 6 month lag of implementation to address problems we can barely predict. This means that your supplier, a printer, plays a pivotal role in your operational ability to control the card game environment. This also raises some questions to be explored by operations.
For example, what is the price you should be willing to pay to accelerate service and reduce lead time? Should we still continue to outsource from China, and/or perhaps develop some local capacity that can reduce lead time in certain situations? Are there better methods of testing the current cycle of cards that can help minimize surprises? What are the risks of reducing lead times (such as a higher probability of delays) and are they worth it?
Colleague Justin Ren and his co-authors argue that growing Tesla’s distribution network in China not only involves lack of an efficient and responsive network of charging facilities, but also: (i) the choice of the right e-commerce platform, (ii) longer lead time involving cross-Pacific transit times, (iii) China’s cumbersome customs clearing processes, and (iv) longer decision cycles compared to Tesla’s US operations. Link: http://asia.nikkei.com/Business/Companies/In-China-Tesla-was-a-too-early-bird
Shyp is s a Uber-like shipping platform, with which anyone can ship items without hassling procedures at a post office. How would it disrupt the typical shipping process?
A startup often challenges even when it makes a decision on its supplier selection. Having an established and experienced supplier like Samsung would be the best scenario, but often that’s not the case for most due to the huge market uncertainty.
Healcerion, which develops a portable ultrasound device (picture above), has faced similar problems. Its main concern is the quality level for both ultrasound and wireless imaging in order to get approved as a medical device. Of course, it tried a big and experienced supplier (A). Unfortunately, those (A) suppliers, who work with the big players like GE or Phillips, were not interested in Healcerion because of the small order quantity. As an alternative, Heacerion decided to work with a supplier (B) that is less experienced but willing to help on its technological performance. Although the supplier (B) doesn’t have as much reputation or experience as the (A) suppliers, it provides the performance experimentation that allows the device to improve to get FDA approval and eventually realizes the market. Healcerion and the supplier (B) currently are collaborating for a win-win game. Now the question is, what should the supplier (B) do to insure this relationship even after Heacerion grows?