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Wearables & IoT Boom Creates Supply Chain Challenges

Entrepreneurial designers are creating new ideas for wearable and connected devices daily. Consumers are racing to support their Kickstarter campaigns. Unfortunately, many brilliant ideas are killed when it comes time to move from prototype to full-scale manufacturing.

There's no question that these markets holds great promise. For example, ABI Research predicted that 455 million wearable devices will be sold by 2019, generating $46.5 billion of revenue worldwide. Healthcare devices will account for the largest chunk of the pie, with 121 million smart watches accounting for $21 billion in sales, the research firm said.

“The barriers to entry are low in the wearables market, because the parts exist,” Robert Thompson, director of consumer business development for microcontrollers at Freescale Semiconductor, told us. But many great ideas founder as part procurement starts.

At the same time, the crowdfunding community is pushing back on designers to make sure they've considered manufacturing and procurement issues. “One of the major challenges that crowdfunding sites have run into is that a product idea will go on the site, get funded, and then run into problems with manufacturing,” said Sam Wurzel, CEO and co-founder of the online parts sourcing company Octopart. “Today, these crowdsourcing companies are highly incentivized to maximize the number of campaigns that are successful.”

Smart designers search for parts that are already in use in other markets and design them in, but there is a downside to this approach, Wurzel said. “One challenge that everyone in the wearable markets [will face] will be around end-of-life products and availability.” Many designers go with smartphone market parts, and the lifecycle on those is about 18 months.

Small and midsized design firms in the early stages of product production can't simply call up a franchised distributor and buy a few hundred parts. “A lot of memory makers, for example, don't go through distribution for these parts,” Thompson said.

The electronics industry is starting to find ways to help these entrepreneurs find ways to design new devices for manufacturing from the start. Freescale Semiconductor, for example, announced its Freescale-Enabled Wearables Reference Platform (WaRP) early this year. “We provide the parts that allow you to make the finished product,” Thompson said. “We want to help people get to market as quickly as possible while addressing development challenges that include form factor, battery life, cost, and usability.”

(Source: WaRPboard.org)

(Source: WaRPboard.org)

The reference design includes a board, schematics, Gerber files, design files, and a complete bill of materials. The components used have been chosen both for technical specifications and for potential ease of sourcing. It is priced at $149 and is currently available for pre-order. It is expected to ship in October.

— Hailey Lynne McKeefry, Editor in Chief, EBN Circle me on Google+ Follow me on Twitter Visit my LinkedIn page Friend me on Facebook

18 comments on “Wearables & IoT Boom Creates Supply Chain Challenges

  1. Eldredge
    September 25, 2014

    “One challenge that everyone in the wearable markets [will face] will be around end-of-life products and availability.”


    This problem is not unique to the wearable device sector, but does folow from the strategy of trying to repurpose components that are in other sectors. It may end up being one of the hazards of that strategy.

  2. Daniel
    September 25, 2014

    “Entrepreneurial designers are creating new ideas for wearable and connected devices daily. Consumers are racing to support their kikstart campaigns. Unfortunately, many brilliant ideas are killed when it comes time to move from prototype to full-scale manufacturing.”

    Hailey, why it happens? Is it due to lack of infrastructural & financial support. I think start-up villages and aingel funds can address this issues.

  3. Daniel
    September 25, 2014

    “This problem is not unique to the wearable device sector, but does folow from the strategy of trying to repurpose components that are in other sectors. It may end up being one of the hazards of that strategy.”

    Eldredge, you are right and the problems are same across all domains for start up companies.  Crowd sourcing is the way of collecting initial investments and there after no rolls by them.

  4. Hailey Lynne McKeefry
    September 25, 2014

    @Jacob, I believe that it has more to do with the reality that designing a product once takes a different skillset from building hundreds, thousands and even millions of that items. As we discuss every day, manufacturing and supply chain issues are complex. There are a variety of issues, both those that can be predicted and mitigated and that those that can't, that have to be overcome to get a product from design to end user. Packaging, logistics, etc. Distributors, contract manufacturers and other are working to help of course…

  5. Eldredge
    September 25, 2014

    @Jacob – At least with device obsolescence, there is often a replacement component offered, although it can have design change impacts to other packaging components as well.

  6. Taimoor Zubar
    September 28, 2014

    @Jacob: I don't think there's anything wrong with the fact that a large number of good ideas are not able to turn into commercially viable products. The fact that the final product doesn't just need to be an innovative product and should also be cost effective imposes a big constraint. Across all industries its a norm if ideas don't really become useful products for the society.

  7. Taimoor Zubar
    September 28, 2014

    “This problem is not unique to the wearable device sector, but does folow from the strategy of trying to repurpose components that are in other sectors. It may end up being one of the hazards of that strategy.”

    @Eldredge: When you say “repurpose”, do you mean that the components are being recycled from existing devices and being used in new ones?

  8. Eldredge
    September 28, 2014

    @TaimoorZ – Repurpose was a poor choice of wording – I really meant that, by trying to use components or devices that have been proven in other sectors, they are choosing from devices that are already well through their life cycle – more likey therefore to reach obsolescence sooner rather than later.   

  9. Daniel
    September 28, 2014

    “At least with device obsolescence, there is often a replacement component offered, although it can have design change impacts to other packaging components as well.”

    Eldredge, you are right. But it all consumes your precious times. Timing is a very important factor in this life cycle.

  10. Daniel
    September 29, 2014

    “I believe that it has more to do with the reality that designing a product once takes a different skillset from building hundreds, thousands and even millions of that items. As we discuss every day, manufacturing and supply chain issues are complex. There are a variety of issues, both those that can be predicted and mitigated and that those that can't, that have to be overcome to get a product from design to end user. Packaging, logistics, etc. Distributors, contract manufacturers and other are working to help of course…”

    Hailey, design can be apply at any domain. it can be a device or component or packing material, cases etc. there is no doubt that design is the basis of all the level of efforts. Even problems can also design I such way that it can be in complex or simple way. What i meant is design is the foundation of everything; over its building blocks are keeping

  11. Daniel
    September 29, 2014

    “I don't think there's anything wrong with the fact that a large number of good ideas are not able to turn into commercially viable products. The fact that the final product doesn't just need to be an innovative product and should also be cost effective imposes a big constraint. Across all industries its a norm if ideas don't really become useful products for the society.”

    Taimoor, you have to analyze why it's not possible. It may be due to poorer design or lack of clarity. Any way investment won't be a major issue because crowd funding and Aingel sourcing are in place to help companies for launching products.

  12. Hailey Lynne McKeefry
    September 29, 2014

    @Jacob, i see what you mean…and that's certainly true to me.

  13. Taimoor Zubar
    September 29, 2014

    “I really meant that, by trying to use components or devices that have been proven in other sectors, they are choosing from devices that are already well through their life cycle – more likey therefore to reach obsolescence sooner rather than later.   “

    @Eldredge: So if I understand correctly, you're referring to the fact that these components might have models which are close to obsolence and it may be difficult to find newer models in the future? If that's the case then it may lead to issues with the repairs and maintenance side.

  14. ahdand
    September 30, 2014

    @Taimoor: Anyway that risk is there at any point. I don't think it can be ignored at any point. 

  15. Daniel
    September 30, 2014

    “i see what you mean…and that's certainly true to me.”

    Hailey, thanks.

  16. ahdand
    September 30, 2014

    @Jacob: You have to manage the risk. You can mitigate it but surely managing part has to be. 

  17. Ashu001
    September 30, 2014

    Taimoor,

    Need not always be the case.

    Many applications don't need Upgrades consistently today.

    Also they can stay in place effectively for a long time.

    Here,Older Interconnects with which consumers have had more experience previously can be enormously beneficial for them.

    After all,Previous Experience makes the Job so much more easier than if you were starting totally from scratch today.

     

  18. Daniel
    October 7, 2014

    “You have to manage the risk. You can mitigate it but surely managing part has to be. “

    Nimantha, risk is always there. How you are facing and managing is important.

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