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OEM to ODM Is INNOVATION the Key? What are the concerns?

OEM to ODM Is INNOVATION the Key? What are the concerns?. Cheung, Desmond Guangzhou Panyu Fantasia Creation Toys Leading Wifi ™, BlueTooth ™ Toys Maker. Characteristics of OEM . My company background:

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OEM to ODM Is INNOVATION the Key? What are the concerns?

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  1. OEM to ODMIs INNOVATION the Key?What are the concerns? Cheung, Desmond Guangzhou Panyu Fantasia Creation Toys Leading Wifi™, BlueTooth™ Toys Maker

  2. Characteristics of OEM • My company background: • Electronic toy factory makes massive volumes with worker size peak at 2,000 people (2008), starts from 1995. • Equipment (SMT, bonding, injection, spray, tempo, conveyors) • Human Resources • Comply to Quality Standards • Big quantity production (100,000 pcs to millions) • No input / small amount of input on product

  3. Why Changes? • Profit margin is low • Competition is brutal • Equipment: There is always a limit, and the limit comes faster than you think • Human Resources: • Minimum Salary: $600 (2005), $800 (2008), $1100 (2011), $1500 (2013). • Big quantity • = MORE PEOPLE+MORE EQUIPMENT+ MORE SPACE • = MORE HEADACHE • Comply to Quality Standards: changes every year • What if, we have a good idea on product? How to maximize our profit?

  4. Why Changes? • End user is expecting more drives my customer is expecting much more • The application, appliances, the domain is changing faster, and faster • 20 years ago, we made modules • 10 years ago, we made pure hardware (a TOY) • 3 years ago, we made hardware+software (a TOY + APP) • 5 years later ? (FORESEEABILITY+SUBSTANTIABILITY)

  5. What to change? • Old school saying: Better service to our stakeholders • In what areas? Price? Quality? • Price war = Suicide mission • Quality = endless mission • Setup a team to develop “something” from 2007 • Product Manager, Electronic R&D, Software R&D, external outlook design team, quality assurance, quality control, project manager…etc • WHAT ARE OUR SCOPES?

  6. Characteristics of ODM • In additional to those as an OEM, • Customers are more hands off because they rely on you • Ideas, ideas, WORKABLEideas • Turnkey Solution(S) and control of manufacturing • Industry, market know-how • Unique / leading technologies / something you can show off • 700 workers @ 2013 Peak

  7. Story 1 • At 2011, We thought: • Music is everywhere. Children are afraid of dark. Parents are busy to sing lullabies to child • Why don’t we make a cute looking night light with MP3? • Functions: • Touch to light up, so MAGICAL • SD card slot for MP3, so FLEXIBLE • Sleep timer

  8. Story 1 • Can’t sell. Our customers don’t want it. Why?

  9. Story 2 • At 2010, We thought: • Why remote control toy always need a Remote Control? • Why can’t we make use of smartphones? • PRIMARY INCENTIVE: CUT THE PRICE • Functions: • Toy vehicle with camera and can do video stream • G sensor can control the movements • Night Vision • With Speaker and microphone • Target on iOS™ device FIRST • We find a customer to DESIGN THE OUTLOOK

  10. Courtesy of BrookStone® http://www.brookstone.com

  11. Story 2 • Product (Version 1, 2) sold over 200,000 pcs around the world @ 2011, 2012, customers andwe make MONEY • Product (Version 1 ) won the 2012 RedDot Design Award, we help our customer become FAMOUS • Product builds the image that APP TOY = OUR COMPANY we define our POSITION and SCOPES

  12. Innovation or / and Engineering? • Engineering = Precise = Science = Follow the Rues? • Innovation = Think out of the box = Break the Rules? • 2 sides of a coin? • Innovation (idea) • IS NOT A PRODUCT (PRODUCEABLE) • IS PRICELESS • IS LIMITNESS • IS SUBJECTIVE

  13. Innovation or / and Engineering? • Engineering • DEFINES THINGS IN TANGIBLE AND MEASURABLE MANNERS • DEFINES THE PRICE ON DOING THE ABOVE • DEFINES THE LIMIT(TOLERANCE) • IS OBJECTIVE INNOVATION (IN OUR SCOPE) = SHINING IDEA and MAKE 1 PC ENGINEERING = DEFINES, AND COMPLETES THE SHINING IDEA TO MAKE 1 MILLION PCS

  14. My Innovation Path • I have to learn what is popular • I have to learn why they are so popular • I have to learn what is the basic technology behind • I have to try • I have to control the resources I spent to try • I have to do stage evaluation from my peer group, my customers, in order to stay objective • I have to be brave enough, to admit I am not GOOD enough

  15. My Innovation Path • After admitting I am not GOOD enough, I have to improve, and there are rounds of them. (PDCA cycle) • I have to learn to work with different groups/types of people of different nationalities, provinces, background, professions. • I have to wait, and wait and wait until that sparkle lights up.

  16. Employer Expectations • What kind of materials / technologies and why? • What are the tolerance by applying them, when making 1,000,000 pcs? • How much and how long? • Can we use less people, less power, less resources…etc? • If not working, then what? • If sales is good, what next? • You have to communicate with different types of people. Please polish your languages.

  17. Courtesy of: BrookStone®, Logicom® BeeWi™, Konix™, 小米™

  18. What’s the difference? • Uniqueness (Only one vs Only few vsthere are some) • Time to market, ROVER launches at 2011 • Too early? Smartphone penetration was not strong enough • Too late? 2-3 competitors at 2013 • Hook-up with smartphones • Excellent features vs good features • Price is right • Quality is GOOD • Design is BETTER

  19. More than happy to answer your questions: desmond@acctron.net.cn

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