The Workbench Thesis
Today, more than ever, industry is changing.
Following COVID-19, the rapid evolution in brand behavior that previously came by choice now comes by necessity. This pandemic has reshaped our understanding of how businesses should operate, where value lies, and most importantly — how we should prioritize agility. We’ve seen this most visibly in the disruptive effect of the virus on global supply chains.
The risk of variable demand has reared its ugly head and the companies that are surviving a slash in consumer demand are those that have remained asset-light throughout their lifecycles. The brands that are surviving through this crisis are those which opted to pay a premium in order to stay risk-averse. In the context of consumer goods, these are the companies who outsourced their supply chains.
Brands reaping the benefits of asset-light operations arose on the back of market trends that existed long before COVID-19 was in our sights. The rise of e-commerce over the last two decades has been dominant, accelerating in recent years with just under 14.9% aggregate growth in 2019 alone (https://www.digitalcommerce360.com/article/us-ecommerce-sales/). For e-commerce brands, supply chain and manufacturing operations could have gone one of two ways — companies could have built out manufacturing capabilities in house (s/a Harry’s Razor acquiring a factory) in order to iterate quickly and independently.
Alternatively, they could start working with contract manufacturers (CMs) that handle most of their core manufacturing and supply chain work while building out a small supply chain team internally to handle whatever is critical to the IP of their brand. For instance, a sustainable clothing company may outsource their entire supply chain, from material sourcing to fulfilment to a CM. They would then employ a small supply chain team to regularly audit and verify sustainable and ethical sourcing and production practices throughout this supply chain.
At the end of the day, the decision to bring manufacturing in house, or to outsource comes down to a single core question for the brand: is manufacturing a core competency?
A mix of factors led to contract manufacturing becoming the predominant strategy used by emerging brands. The legacy retail companies of yesterday built brands on the backs of consistency and efficiency — opting for control over agility. The e-commerce brands of today are building brands in line with Eric Riess’ ‘Lean Startup’ philosophy — moving towards “asset light” strategies, where manufacturing capability can be scaled up and down, shifted left and right all in response to consumer demand. Owning a factory today is like owning a data-center, most don’t because your business needs change quickly, critical infrastructure does not.
You rarely want such massive capital infrastructure on your hands unless you have full confidence in the longevity of the product you’re building. For example, Tesla or Harry’s have a feeling of 10+ year confidence in the products they’re building, therefore they bring some or all of their manufacturing in house.
For most modern brands, taking on a factory is an asset they don’t want to own.
Manufacturing equipment is a huge liquid capital expense and not conducive to quickly shifting product lines, adapting to new manufacturing processes, and scaling production with demand. The age of e-commerce has driven us from the world of manufacturer driven customer adoption to one where customer behavior rules above all. Social media and e-commerce have created shifting consumer demand and have enabled customers now, more than ever, to find custom solutions that are “just for you”.
This mindset has made CMs, who handle and maintain brand supply chains, particularly attractive for startups and mid-market companies alike. A supply chain architecture like this allows new e-commerce startups to take on previously untouchable incumbents by providing them with the critical infrastructure necessary to focus on their brand and scale manufacturing seamlessly with demand.
This new standard of outsourced manufacturing doesn’t come without challenges, however. What brands gain in agility, they lose in control and visibility.
This necessitates the need to build deep partnerships and strong collaboration with CMs. There are two stages of production in which brand-CM collaboration is critical — during new product/process introduction (NPI) and during mass production (MP). NPI is a very multidisciplinary process, usually guided by a product team. Successful NPI brings together procurement, quality, marketing, and supply chain teams as well as the CM itself. The major milestones that make up the NPI process vary across companies and industries however the standard roadmap looks something like this:
- Concept/Idea
- Feasibility Study
- Design and Development
- Pre-production
- Launch/Manufacture
- Mass Production
- Improvement
(https://www.sofeast.com/glossary/npi-process/)
The scope of work throughout the NPI process varies and as a result, the project driver changes hands from the product teams at the beginning to the supply chain teams at the end. The frequency at which a company goes through NPI is strongly connected to the industry they are in.
For instance in consumer fashion, the product release cycle is quarterly and therefore, fashion brands are for all intents and purposes constantly undergoing NPI ahead of next season’s launch. Outside of fashion, NPI is most frequently seen in Hi-tech and CPG industries. The playing field has shifted — now, brands must iterate quickly and effectively, all the while keeping tight feedback loops with their CMs in order to seize opportunities as they become available. In order to take advantage of the agility that comes with working with CMs, brands need a way to gain back the control and visibility they miss by not having their manufacturing in house.
The two traditional systems of record at physical goods companies are Enterprise Resources Planning (ERP) and Product Lifecycle Management (PLM) software. The challenge is that neither of these software categories were ever designed to manage NPI from end to end.
ERP’s core use case in NPI is in financial bookkeeping, aka Purchase Order (PO) Management, which incidentally doesn’t occur until the tail end of the NPI process.
PLMs alternatively, are focused on controlling and tracking engineering changes. They fail, however, to incorporate aspects of NPI related to finding suppliers, logging quality checks, and providing supply chain transparency.
During NPI, teams within companies have to collaborate closer than ever before, but also with their CMs that are going to build the new product. They need to work together to finalize a stage-gated production plan, understand upstream supplier capabilities, and work together throughout the process in order to hit milestones.
Without a core solution, efforts to digitize NPI and provide a source of truth within the existing software ecosystem fall short — resulting in excessive meetings, email threads, and back & forth exchanges between brands and CMs. This is why we created Workbench.
Workbench is a project management platform for brands to collaborate with their contract manufacturers throughout the NPI process, and into mass production. Workbench is meant to be used by companies with frequent product releases where manufacturing of a product is outsourced to a single CM. This includes fashion, home goods, cosmetics, consumer tech, and others. Broadly, this can be categorized as CPG and Hi-Tech as industries.
At Workbench, we believe that getting things right during NPI is hypercritical to a brand’s success. NPI is how companies continue to generate revenue and stay up to date. Historically, NPI has taken place over email and spreadsheets of versioned production plans sent back and forth, with no core source of truth and no simple and effective means to coordinate and collaborate.
In order to succeed in today’s challenging business environment, brands need to embrace any means to faster, more efficient product releases. With Workbench, we make that possible.
