Make & Logistics

[Philip Fierlinger]

One of the things I love doing is dirty hacks. You know, is what is the cheapest way, the least effort you can do to determine whether something is a good idea or not. You are trying to do the least amount of effort to get the biggest impact and so I'm constantly looking for how can I get- get away with the least effort, and that's shipping the least software. Your customers also want the least software, they you know- as I keep saying, they want one magic button that they just click and it does everything, and they don't have to think about it. Everything is in this pattern of the least effort for the biggest impact.

[Mark Pennington]

At the early stages, to create a deal with an American partner, and they came out to New Zealand to discuss it. We talked about the design and all the cost structure behind it because they needed to know. In the end, the final uh net cost was too high and they said 'you got to change, it you got to get 20% out of it', or something like that. It was such a difficult thing to get at any lower cost and still as good as it was, but by golly, you know, we searched high and low and redesigned things and went to different supplies around the world and looked at different technologies. And in the end we got it to that cost target and you realise that's how you make money. All these companies do that they could, they knew where you get the- how you get the volumes at what sort of price point in the market, and then knew that we could somehow find ways of getting to that and we did, and it was very successful. Over its life, it's generated over- well over one and a half billion. Billion, yeah so it's big money.

[Timothy Allan]

If you're in an international supply chain, you're fighting against, kind of you know, volume levels which are well outside our capability. So, you've just got a box of clever, and you know you've got to try and find suppliers that are capable of working to your quality standard, but at a volume which is appropriate for your age and stage. And each stage that volume increases which then might unlock another supplier, you know, in a perfect world a supplier can develop with you, but that's not always possible. Sometimes the volume breaks are too much. I mean we've got quite a complex product; I mean it's 154 parts of materials and that's before you break open things like a micro- microelectronic PCBA, which might have, you know, it could have 50 components on it that have to be bought 20 weeks in advance. So, there's a lot of supply chain work in organisation.

I mean I like drawings because I have to do them so. I like a beautiful set of manufacturing drawings that sounds a little perverse, but we've gotten the last year to a standard where if you look at a drawing, it's a work of art, which is, you know, that's a- shows you how much care has been taken to describe to somebody what you want and what you need. Because that's our, I mean if you think around a contract to buy something, you know, your drawings are your contract with a manufacturer to say this is what I'd like you to make and this is how I want you to do it. So, they have to be very descriptive.

Because we're global, I mean, you've got a lot of geopolitical stuff that's occurred in the last few years and so, you again do have to break apart your supply chain. So, we do final stage assembly in the US to essentially remove the tariff on vehicle classes going into the US market, and that also gives us the ability to qualify for GSA and government contracts in the State. So, that's an advantage. The usage and applications within each market differ. I mean if in Europe, for instance, in your farming environment it's not like New Zealand, Australia and the States where we have the land. So, a product may never leave a farm gate whereas in Europe it is very common to have to use roads, much higher density. So, they're unlikely, for instance, to use our work bike which is probably the mainline vehicle that'll go into farming environment in New Zealand. And so, you do have to be, you know, how you architect the product should consider, you know, those variations but we try and do it in a way that is production-oriented so, you know there's a limited number of SKUs and variations. I mean for me it's- it is the Henry Ford thing, for us I mean we're black and white. So, you can have every color as long as it's black and white. And we might do something different for a very big customer if, you know, for instance like for the New Zealand Defense Force, you know, we've essentially made a specific set of products that have gone into a longitudinal trial environment within the Defense Force in New Zealand. And those are all geared toward their color schemes. So, that's natural but then again, once you're approved by NZDF, you get approved and put onto the NATO purchasing database so that's the global allies, you know, you're available for purchase proven by one of the allies so that, you know, strategically you can make those decisions. But I think, as with all things in production, I mean you've got to be ruthlessly efficient about most things.

I mean one of the most compelling stories I ever heard was probably Steve Jobs coming back into Apple and they had something what 230 SKUs or something and he cut it to three. And the company was like 6 months away from, you know, receivership. So, it's you know you, you've got to be really disciplined to get your production up to then, you know- you can then diversify once your volume is at a level where it can be justified.

[Arian Packer]

Just as in supply chain, there's a bull whip effect right, which is when we have a small little change at the beginning, it becomes quite a big issue at the end. The same with product development, small changes in product specifications can make it very very difficult to manufacture that product actually, physically in the in the physical environment. The sugar content in a in a nut bar for example right, might make the syrup much more sticky and it won't go through the manufacturing equipment, as a reasonable example. So, if we divide, if we separate the product development team from the manufacturing capability, we'll develop products that customers want, but the products that we can't actually make right. And so, we need to be considering all of these things that are right up front in the process if we can. The same is true of logistics, of supply chain as you were talking about. If we can't actually ship these items in the quantity that we want, if we can't get the items, the raw materials that we're requiring, all of these can be constraints. That ultimately makes us question the product development process, and it's not our innovation muscle that's really to blame here, it's our delivery muscle at the end of the process. So, we need to make sure we strengthen our core if we're going to bring new things through our existing processes.

Industry 4 is a term where we're trying to bring exponential technologies into the manufacturing process. So, it's a combination of the people, processes, data and technology that's going to accelerate our manufacturing processes. The starting point of an Industry 4 journey is going to be getting your data sets clear and straight right. And so, when we have better data sets we have better management information, this is really one of the starting benefits- one of the first benefits of getting on into an Industry 4 journey. As we develop our capability, not only do we have a more productive environment, into which we're working, we can start to get interactivity between the product and the actual factory itself right. So as an example, by having a digital twin in your manufacturing plant, you can start to have, say, a sensor on some equipment- on some raw material coming into the plant, which will tell you some conditions of that raw material, which will be related to how much processing is required to make that into its final product. So, if it's very cold, it needs to be warmed more, for example. So, we can get our factories to become more intelligent and more interactive with the products ultimately. But the starting point I think is getting better data.

[Angie Judge]

I think for us, the most important parts of our strategy have been, first of all, in knowing our industry inside and out. By picking a vertical in some ways it feels like you're making your pie smaller, for us that means visitor attractions rather than any organisation in the world. But what that does is it concentrates your focus, and it concentrates your investment, and that really shines through in your product and also how you take it to market. You can go, for example, to an industry specific conference, and make a really big splash in that pond. Or you can go to a generic conference and be one of thousands of vendors there which will make a difference to no one, so I think we've already- we've always really held tight to the belief that it is more meaningful to be everything to someone, rather than meaningless to the masses.

[Sam Burton]

With manufacturing in Indonesia, generally it has been quite smooth because we have developed such a strong relationship with those factories. We have five factories in Indonesia and the guys are like family. Culturally, in Indonesia there's a much higher, much stronger hierarchy level as well, which is something that's really important when you're working on development, because you got to give those guys the confidence to be able to speak up. What we found the biggest problems- with the biggest problems that have come up, is that when problem- if someone's too scared to raise an issue and sweep it under the carpet that's when the million-dollar problem happens.

When we came across our big challenge, where we had to withdraw all of our product, we flew over to Indonesia and spent about a week there with the team at the particular factory where this happened. We've tried to take an approach of seeking to understand as much as we can. The last thing we want to do is force ourselves into a different culture that we don't understand fully, and force a whole lot of change. So, by understanding the way that they work and how they interact and then weaving in certain practices into their day-to-day, then what we've seen is some really nice positive results coming through at the into the production line. One of the biggest challenges we've had over the last year has actually been that, with the Covid outbreak in Italy, our leather tanneries in Indonesia haven't been able to get all of the leather tannery supplies from Italy into Indo. So, we've had to consolidate a lot of our supply chain in Indonesia as well.

We've got our own quality assurance team set up in Indonesia that we work really close with and that's allowed us to maintain a really really high stand standard of product quality. Particularly because we're at that higher end of the market, there's a really high expectation of what that product should look like but also how it should perform. When the kids are just destroying them as much as they can. Internally, we're actually really good at challenging ourselves and trying new things. Where it becomes really tricky is in the ecosystem of the wider business, such as our distributors in Europe who have been used to selling the same thing for a really long time, and that's where the iteration of the prototypes come in really handy because we can prove to them that 'yeah we've done this in a really small way, and here are the stories from our customers', to really give them the confidence that it's going to be, you know, it's going to be a winner.

[Leaft Foods]

You know for where we are in Leaft Foods, you know we've utilised the support of the Food Innovation Network and the plant equipment that they have, as well as you know lab space all across the country, at universities, at Callahan Innovation, at Cris. But we're always thinking about how this will look at scale and how we're going to transition from where we are to... scale because we're only successful if we can make this... something which is truly scalable.

[Sam Gribben]

I always think that the biggest challenge is figuring out how you're going to get your product in front of people. And you can make the best product in the world but if you can't get it to the right people, it's going to be a really really hard battle. And so that's kind of why I started with the- figuring that problem out so, thinking about the distribution channels, and working on these partnerships, going to them and saying 'If I make this thing, and it's good and you like it, will you help to- me to distribute it? And that meant that we had our distribution worked out before we started writing any code.

[John Mansell]

Usually what happens is you might have a product and, let's say you filed some, you know, patent applications in New Zealand, and you're looking at your markets overseas to understand in which markets will you also want to pursue patent protection. That process takes quite a while, and it can be that your product offering precedes in those countries, it precedes you getting any enforceable protection. But the existence of your patent applications in those company- in those countries, sorry, will be evident, you can point to it. And there's the risk that any product that's being sold in those markets will eventually infringe your patents when they become enforceable, so any party who's making a rip-off is putting themselves in a position where they might become liable for damages down the line. Often, it's the case that the product process, you know, sort of, is quicker than the intellectual property. Ironically, that's sort of there to try and protect it. In the case of trade names, trademarks, those can be filed and enforceable quite quickly and so if you've developed value in your branding, that can certainly be protected and enforced usually a lot more quickly than say, you know, patents that cover the technology underpinning your product offering. And in those cases, you know, you'd be looking to engage overseas council and asserting your position against any people ripping off your brand.

[Ross Pearce]

A common thing is this challenge around manufacturing offshore, and the fishhooks involved in that which people learn through experience, but I think if we're smart about that we can pre-empt that. One of the common ones is often around quality, we hear that quite a lot, and the realisation actually that we do need to place a person in the remote factory to manage quality. And I think people do that after the event, I think we can pre-empt that by doing it before that happens. So, you know that can save a lot of heartache and a lot of money and a lot of time.

I was talking to a company recently who said they started by manufacturing a product, and they knew that the Chinese could always undercut the cost of that, they knew that from the get-go. They then went to being, not a product company, but being a systems company, so they added other stuff around that product. And then they have moved now to being a platform company. So, across that transition, and they're using the cloud to provide remote servicing and a whole bunch of things, so when they were a product company, they had one source of revenue, now they're a platform company, they have five ways of making money out of that same product. And it protects the product from the Japanese or Chinese who might be able to undercut the actual product cost, they can't compete on the value proposition.

With the technology that's coming through, and this overriding need to address that existential threat around climate and carbon in the atmosphere, I think anything that reduces shipping is important. Now that's a challenge for New Zealand, so remote from the rest of the world, or are we? I think we're closer to the West Coast of America than Europe is for example and China, and we're closer to China than America is or Europe. So, I've never been quite sure that our distance from global markets is real, we're certainly a long way from Europe. But if we can do things which negate the need to ship physical product, then this is a real bonus and a real value point in the world that we live in, particularly for ethical consumers. So, if we can use technology, 3D print, the advance of Industry 4.0, which is about using data, robotics, machine learning, AI, sensors, IoT, it means that you can actually manufacture lights off anywhere in the world, once you've set it up. Although this is only just at the beginning, you can see that within 10 years this will be a common practice, and so I think New Zealand businesses need to start thinking about some of those opportunities that are coming because they help level playing field a bit, and also play to that need to address some of the climate challenges that's in front of us.