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Should I build my own supply chain system for my start-up's consumer product or use a service?

I invented a new high-tech fashion jewelry product and we sold about 500 of them at $99 each over the last 4 months. We will launch a lower priced $49 product in June. It tested very well. I am anticipating sales of 500 to 2000 units per month. I built my own assembly and supply chain system using a family member and tech shop in Bellingham, Washington and we ship using US Postal Service to mostly North American customers. Seems like its time to grow up and use a professional assembly and shipping service. I bootstrapped this business with my own money. In the long term, this business will design and license product, not manufacture. Should I keep growing our inside assembly and shipping team?

15 Replies

Anu Gardiner
2
0
Anu Gardiner Advisor
Global Head of Procurement at DocuSign | Business Leader
I would advise against growing inside assembly/shipping given your ultimate goal. OK to do until proof of concept. Check out Elementum.Not sure if they have scale requirements ... Good luck
Joe Emison
1
0
Joe Emison Advisor
Chief Information Officer at Xceligent
If your long-term goal is licensing product and not manufacturing, you should start moving toward that sooner rather than later. Having focus and limiting distractions is going to be your friend.

That said, it's not clear from your description how much of your assembly and supply chain is actually your company vs. the "tech shop"? If the "tech shop" is a vendor you're contracting with, then you might just consider renegotiating your contract with them to handle more and more of the distracting/commodity services that you're having to handle right now?
Anuj Saxena
1
0
Anuj Saxena Entrepreneur
CEO at Satyam Sri Services
As you are planning to licence your product, would suggest to concentrate on your logistics, may be third party owned or in side, as would be key to customer satisfaction in long run.
You can test various services region wise while launching new product(as you mentioned ) and take a call on this based on results.
Lane Campbell
2
0
Lane Campbell Advisor
Lifelong Entrepreneur
You answered yourself. Why would you invest in a team if you don't want to do it long term? Find a partner.
Andrew Berschauer
1
0
Client Partner at Cognizant
Are your supply chain needs highly specific to your business? If yes, consider building. I suspect, though, the answer is 'no', so don't spend considerable effort reinventing the wheel.
VIKRAM V
2
0
VIKRAM V Entrepreneur
New Product Introduction Operations Program Manager
Hi Frank, First of all, Congratulations on your start-up. To decide on whether to have your own assembly and shipping service, first you have to study capability, budget, costing and the risk. Generally speaking, If you can build or expand your own assembly and shipping facilities, then, 1) You can save some cost to the company. There by you can increase your profit or reduce the product cost which is increasing value of your product. 2) Reduce turn-around time. Since it is assembly in-house, you can avoid time consumed for material movement from one place to other. So the overall assembly turn-around time is reduced. 3) Reduce time-to-Market. You can bring your product to the market early. 4) You will have to take the risk of raw material procurement and inventory. If you out source assembly and shipping, 1) You may have to manage the supplier and the product cost will be slightly higher. 2) You will not have the risk of procuring, assembling, and maintaining the inventory of raw material and finished goods 3)You can just own the design and rest you can outsource to a contract manufacturer. Please reach me at [removed to protect privacy] . Thank you, Vikram
Edson Carillo
1
0
Edson Carillo Entrepreneur
President & CEO at Connexxion Brasil
Franck, if you're searching for efficient and cost effective operation, I'd like to recommend you to expand your own manufacturing and logistics activities. However as many businesses these operations are not related to the core competency, so to release your capital for further investments outsource them. All the best, Edson!
Frank Cohen
0
0
Frank Cohen Entrepreneur
CTO and Founder at Appvance
Thanks Anu for the pointer to Elementum. I've also seenShipStation.com for apps to manage the supply chain. -Frank
Moshe Stern
0
0
Moshe Stern Entrepreneur
Supply Chain Consultant and Co Founder at MJ Star Consulting
Frank,
The simple advise to you is to concentrate on the most important part of your business and try to outsource the less important ones.
If the main advantage of your product line is it's design do more of that and less of the shipping. If your products are special and appealing because of your manufacturing process, by all means use your resources primarily for that.
If it's sales and marketing that will drive the business,forget the manufacturing.
See where I am going?
Glynn Bedford
0
0
Glynn Bedford Entrepreneur
1 to 1 Amazon, Ebay Mentoring
You should definitely focus on want you can do well. If you want an expert on internet sales contact me on skype, beddyno1.
I can give you advice guidance on everything from marketing, promoting, shipping, customer care, optimization and admin.
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