Fitbit, maker of personal health and fitness technology OEM, has set itself an audacious goal: To make everyone in the world healthier. To that end, the company has a product portfolio that has evolved and changed quickly—a reality that means the supply chain has had to evolve along with it.
Fitbit products are sold in 65 countries, in 55,000 stores. The company has over 200 SKUs. The company’s supply chain is immense, global, and diverse. In fact, it has more than 200 suppliers on its roster, and 70% of the products it buys are multi-sourced. It works with five manufacturing products to build its health trackers.
Basically, Fitbit is like many other large consumer electronics OEMs, working in a market that changes quickly, and that is known for slim margins and demanding customers. The question is, then, how this organization is flourishing. In 2017 , Fibit hit $1.6 billion in revenue and has a history of consistent growth since 2011. The supply chain has a lot to do with that success.
At a recent Cognitive Sourcing Summit, hosted by LevaData, we sat down with Kevin Purser, head of global supply chain sourcing & procurement at Fitbit to find out about the company’s supply chain strategy. Purser joined the company in 2015, having worked in senior supply chain positions at a number of global electronics manufacturers including VeriFone and Cisco. He leads a 33-person sourcing team.
The secret sauce of the company, according to Purser, is a combination of good practices, good people, and the right technologies to support sourcing decisions. For the last several years, the company has been moving toward evolving its’ digital sourcing strategy, while ensuring that it uses the information it collects to make real business differences.
EBN: What are the biggest supply chain challenges that Fitbit is facing as a maker of consumer electronics products?
Purser: The shift has taken place that our biggest challenge is just sheer scale. I’m not talking about component shortages, but rather can we get enough materials and build product fast enough to fill the shelves. When I joined Fitbit in 2015, it was six months from when I started to when we were finally in stock. We couldn’t make the devices fast enough. Our devices have a 12- to 18-month product life cycle. To further complicate things, as a company, we were not just adding products, but we weren’t doing end of life on any products.
That dynamic is one that is going away. On long in the tooth products, I worked with lifecycle planning team and to understand the potential revenue of the products. We had to look at what they are driving for the company from a revenue standpoint as well as understanding what maintaining them might be costing us from an opportunity standpoint. Then we had to really drive our plans based on that. With the product team, we looked at the attributes that each product that drives customer expectations had compared to other product offerings in the lineup. It’s a higher-level conversation.
From a developmental standpoint, we’ve started to focus on identifying our sweet spot for devices and application characteristics. Now, as new and competent competition comes into the market, the stakes are higher than ever before.
Supply chain is a big piece of the strategy for Fitbit. We think about products from a technology perspective and how would we source them. We think about that from the design phase. Should we buy this, make it or joint develop it? Should we co-develop it in a heavy model or light model? Amount of effort put in partner. We have those conversations from the start of a product design. Those are starting to drive how we are going design, build and fulfill those products.