Advertisement

Blog

Supply Chain Makes or Breaks Wearable Success

Especially in the wearables market, success is all about getting the right product to the market quickly, with the distance between idea and fruition going from the years of the past to only months now. In the wake of this new reality, the electronics supply chain moves front and center in being a strategic supporter of these initiatives.

“There's been a big shift,” said Bashar Nejdawi, executive vise president and president, North America Mobility for Ingram Micro. “Now, it's all about building in real time and leveraging live forecasts coming to the point of sale systems and advanced planning systems.”

The market for wearable products is large and growing.  This year, OEMs are predicted to ship a total of 45.7 million wearable devices, up 133.4% from the 19.6 million units shipped in 2014, according to the most recent forecast data from the International Data Corporation (IDC) Worldwide Quarterly Wearable Device Tracker. By 2019, IDC estimates that total shipment volumes willreach 126.1 million units, resulting in a five-year compound annual growth rate (CAGR) of 45.1%.

Worldwide Wearable Device Shipments, Market Share and Year-Over-Year Growth by Product, 2014-2019 (Units in Millions)

Product Category

2014 Shipment Volumes

2014 Market Share

2015 Shipment Volumes *

2015 Market Share*

2019 Shipment Volumes*

2019 Market Share*

Wristwear

17.7

90.4%

40.7

89.2%

101.4

80.4%

Modular

1.6

8.3%

2.6

5.7%

6.7

5.3%

Clothing

0.0

0.1%

0.2

0.4%

5.6

4.5%

Eyewear

0.1

0.3%

1.0

2.2%

4.5

3.5%

Earwear

0.0

0.0%

0.1

0.1%

0.6

0.5%

Other

0.2

0.9%

1.1

2.4%

7.3

5.8%

TOTAL

19.6

100.0%

45.7

100.0%

126.1

100.0%

Source: IDC Worldwide Quarterly Wearable Device Tracker, March 30, 2015

* Forecast figures.

Today, the ability to cash in on the potential of this market is tied directly to the ability to react quickly to demand, whether organic or driven by marketing activities and promotions. “Now, the supply chain uses a high component of technology including big data, analytics, and other technologies,” said Nejdawi. These technologies, used correctly, have the potential to support and empower the breadth of supply chain activities, reaching even into the warehouse for tracking and moving products and to the end of the product life cycle to support reverse logistics activities, he added.

Although the push to get products to market is universal to the electronics market, mobile products are particularly susceptible to supply chain shifts. “The uniqueness of the mobile market is around the significant amount of impulsive buying,” said Nejdawi. 

The recent release of the Apple Watch, which garnered a record number of orders in the first days when it was available for pre order, offers a perfect example. Although the Watch was officially launched at the end of April, the high demand of online orders means that in-store customers will have to wait until later this month to buy a Watch at a brick-and-mortar location. 

Source: Apple

Source: Apple

Since demand is difficult to predict, the supply chain needs to be nimble to ensure the OEMs success. “The supply chain today has to be short and agile,” added Nejdawi. “Look at the amount of responsiveness that Apple will need to deal with backlogs due to the huge amount of interest that the company created.”

In the mobile market, although early adopters may be willing to wait to be the first to get a new piece of technology, the next wave of customers who are savvy technologists, may like a particular product but are aware that they have other choices, Nejdawi said. “OEMs who can't keep up lose sales,” he added. “There's a clear demand window and if you miss that window, demand will shift.”

To win, mobile product OEMs need to take a less is more strategy—ensuring that they offer a limited set of just the right products to the market. “Customers are doing more and more shopping online, so OEMs need to offer distinctive features that will make the product competitive, and at the same time, customers have a high expectation of having the products they want quickly,” said Nejdawi.

Mobile product OEMs are faced with the difficult task of creating the right number product SKUs to offer buyers enough options to satisfy their wants and needs while limiting the list of products to a number that will not create manufacturing challenges. “At the end of the day, it's a very limited number of colors that sell in most markets,” said Nejdawi. “OEMs should consider launching a couple of SKUs on a new product, leveraging components that they have and can get to market quickly. They should focus on launching the product that will sell most. “

Second, OEMs should ensure they have supply chain partners that have planning tools in place to help manage the forecast from the channel, and generate the mechanics of getting products into the market. “Companies that use technology in the supply chain avoid getting into issues,” said Nejdawi.

When launching a new wearable, OEMs need to focus on having the right amount of product, not too much or too little, on hand from the start. It's a difficult problem but, with the right partnerships and technologies, it's possible.


Join over 2,000 technical professionals and embedded systems hardware, software, and firmware developers at ESC Silicon Valley July 20-22, 2015 and learn about the latest techniques and tips for reducing time, cost, and complexity in the embedded development process.

Passes for the ESC Silicon Valley 2015 Technical Conference are available at the conference's official site with discounted advance pricing until July 17, 2015. The Embedded Systems Conference and EE Times are owned by UBM Canon.

2 comments on “Supply Chain Makes or Breaks Wearable Success

  1. docdivakar
    June 9, 2015

    There are really two major questions here:

    first one is how does one design, prototype and manufacture in high volume using the supply chain for wearables, and,

    the second, how does one work with the same supply chain to make it more responsive to fast-changing consumer demands while retaining its resiliency.

    The answers to these questions are quite different since they are very contextual and depend on product's life cycle. When designing a new wearable product, one of the most common mistakes startups make is to use an eval kit and then try to 'engineer' around it. This most often leads to multiple prototyping runs and longer development cycles. It also puts pressure on the supply chain which has to some extent assume the risk for volumes that may not materialize.

    Volume production, re-spins and subsequent manufacturing lots on the otherhand have different challenges -cost reduction, quality and reliability improvements and enabling improved user experiences while still following the JIT manufactuirng. These production cycles are much more shorter.

    In my experience of working with few wearables startups, most are DoA in the concept to prototyping phase itself. Of the few that do make it to the high volume manufacturing and re-spin phase, most important parameters contributing to their success tend to be the right contract manufacturer (EMSs), items on the BoM and their evolution to cost reduction, manufacturing process, quality and reliability.

    MP Divakar

  2. Hailey Lynne McKeefry
    June 9, 2015

    Everything you say is true, docdivakar. I've talked to many designers who have focused completely on the question of how to create a device that achieves some function without a thought to the manufacturability of that design, or of what supply chain might be needed to support a true product launch. I am willing that bet that many exciting products die in this particular ditch.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.