How to Succeed as a Hardware Startup — a DCL Logistics Partner Spotlight with On Tap Consulting
Andre Neumann-Loreck is a founder and managing partner of On Tap Consulting, experts in operations, sales, and marketing for companies in consumer electronics, industrial, enterprise, and medical device markets.
On Tap Consulting is a firm of industry experts in operations, sales, and marketing, who work with companies (most notably Owl Labs, Whisper, and Skylight) to save them time and money and (payroll) expenses. On Tap accelerates product development, manufacturing and operations, and sales channel strategy and execution so those companies get to market faster and scale more effectively. On Tap is a close partner of DCL Logistics—many DCL clients work with On Tap at various stages of their business.
We sat down with On Tap Consulting founder and managing partner, Andre Neumann-Loreck , to ask about how he views partnerships within the logistics industry. Before founding On Tap Consulting, Andre was VP of Engineering and Operations for Cisco Consumer Products (Linksys and Flip Video), and prior to that he established the supply chain and Ops team as VP of Ops and then C.O.O. at Pure Digital Technologies (Flip Video).
His advice to hardware companies is three-fold—in order to be a scalable company, outsource to reputable partners, work closely and collaboratively with those partners to unlock the most value, and ensure that those partners are correctly aligned with your business goals.
Outsourcing for Support
Everyone who works in hardware has heard the adage “hardware is hard.” Yet there is no shortage of startups creating new products and entering the marketplace with big growth projections. What may seem counterintuitive to lean, boot-strapped startups, is how beneficial outsourcing logistics support and working with supply chain partners can be for their scalability.
“In general hardware companies—both startups as well as larger companies—are understaffed in operations, which makes partnerships, such as with the right 3PL, crucial to overall success. You can’t do everything internally if you are looking to move fast. But you need to know how to ask for partnerships, how to utilize them and get the most value.”
Leveraging support from supply chain partners can add the right kind of expertise and experience. Finding and investing in partnerships will ultimately help your company run smoother and scale organically.
“For example, many companies would benefit from some sort of postponement strategy, and without the right expertise, without the right partners, those postponement strategies aren’t even considered,” Andre explains. “A young company might not see the value in shipping a ‘plain vanilla’ product from Asia and then adding ‘special sauce’—such as special features, colors or add-ons—once the product arrives in the US. Doing postponement like this can be a more effective inventory management strategy, because it minimizes the number of SKUs until later in the cycle. By working closely with a capable partner like DCL, which has the experience to think through what makes the most sense, which has the infrastructure to do this kind of postponement, a company can actually increase their product availability, improve their fulfillment process, and see greater customer satisfaction as a result.”
Unlocking Value of Partnership
Having an experienced logistics partner means you have someone on your side who can think about the way the supply chain is designed and optimized. A pitfall that many companies fall into is treating their supply chain partners more like vendors. Andre explains, “Partnerships are paramount to the success for startups, and even though that’s what most startups would say, that’s not how they behave. They tend to default to relationships with 3PLs and supply chain companies that are ‘arm’s length’—they tend to view relationships as transactional.”
To unlock the value of partnership, companies should put effort into building a solid relationship with their fulfillment service providers; only then will they get the leverage the partner can provide to the startup, and thus be able to scale easier. “You have to sit on the same side of the table with your partners, to lay out business objectives, business problems, ask questions and advice,” Andre explains. “You share forecasts, you share issues and understand their concerns. You can’t just give them an order when you need them to perform a service or a task, and then sit back and hope and expect that they’re going to perform without having developed the right relationships, without having provided them context, without having thought through what approaches make the most sense for both parties.”
The transactional approach may end up costing more money in the long run. Andre expands, “If you choose a 3PL because they are a few cents cheaper, you won’t get the same overall service possible with a 3PL who can act as a true extension of your company. To understand your overall supply chain costs you have to look beyond just the ‘transactional cost’.”
Finding the Right Fit
In order to unlock the full range of capabilities of your partners, companies must invest in the relationships. “I think that even the smallest startups can create real, valuable partnerships with their CMs [contract manufacturer], their 3PL, and other industry partners,” Andre says. “It doesn’t even require a lot of money, but it does deserve the investment of time and effort. And it starts with alignment.”
In order for a potential partner to help you achieve your business goals, your business goals must align with your partner’s goals. Andre says, “If you’re asking the partner to do something that’s not core to their business, they might still do it for you but they are likely to charge more and the real test will come when things get difficult; problems arise all the time. A lack of alignment with your provider will result in their unwillingness to invest to try to solve problems for you, because doing so is not core to their business. Your problem is not something that they have to solve anyway for their business as they work towards their business goals.”
Finding right-alignment and working with supply chain partners is a place where On Tap Consulting can help. On Tap experts are often brought in before a company hires a head of operations or a full time operations team. Andre explains, “We can ensure that startups avoid the common pitfalls and mistakes that plague so many startups, and make real progress against their business goals, ahead of their regular hiring of full time people into those roles.”
How can Companies Work with On Tap Consulting?
Andre and his team provide the operations, sales and marketing expertise they have learned over the years to help companies get the distribution they want, get them into the right retailers, and ultimately help them move their product into the market faster and with optimized scalability.
With their 25 person team of experts, On Tap is able to help companies establish cohesive relationships with supply chain partners. They’ve been doing this for over seven years and have worked with hundreds of startups. On Tap engages on strategy and tactics, in operations, marketing, sales, or a combination of all three. Andre says, “We save companies money and time; we are very hands on, we do the work, we deliver the work product, and we manage ongoing processes as well. For hardware startups, there are so many details, so many questions that have to be addressed. There’s so much follow up that has to happen, and you need the right expertise in key roles. On Tap is able to step into those situations, before there’s a need for a full-time person, on a fractional time basis. We provide the expertise that companies need to be successful along the way.”
About On Tap Consulting
On Tap Consulting is a team of over 25 industry experts who provide operations, sales, and marketing knowhow for companies in consumer electronics, industrial and enterprise markets. They specialize in cost reduction, product introduction, operations and supply chain management, integrated marketing strategies, channel strategy, and building your company for maximum health and growth.
Tags: Expert Advice & Tips, Omnichannel Fulfillment
