Start-ups' Supply Chain Needs: Flash vs. Substance

We've been interviewing electronics-industry executives about the minimum annual customer revenue that various sizes of EMS suppliers will take on. One of the points that came up repeatedly was executives' willingness to accept smaller-than-optimal projects so long as they view the product and/or market to be strategic for them, betting that the revenue would soon climb to their minimum and then beyond into their "sweet spot."

For example, perhaps the customer is a start-up with new technology for a high-growth industry that would expand the EMS company's technical and industry-sector portfolios. But how can the executive discern between a start-up with (only) flash and one with substance-that will truly deliver ROI?

We at TFI have witnessed many tech-industry start-ups that became ideal EMS-customers in a reasonable amount of time. Here what they have in common: (1) Vision, (2) Innovation, and (3) Supply-chain acumen.

Having grown up in Silicon Valley I can attest that Apple Computer and Cisco had these qualities, and that these once start-ups panned out as customers for a number of EMS companies including Flextronics, Jabil, and Hon Hai. SolarBridge is a good customer for Celestica. eSolar may have this promise for Sanmina-SCI.

But if you want us to put our 3-point success formula to a test, race over to Kleenspeed Technologies Inc. We're betting on this start-up for the "substance" side. They make electric cars and Smart Energy Storage Systems, using lithium technology tested in KleenSpeed's own electric vehicles. We toured the company, which resides at NASA Aimes Research Center (Silicon Valley), and interviewed the executives to determine that the company indeed has the three keys:

(1) Vision. President and Founder Timothy Collins developed his vision for making electric vehicles affordable based on having been an investment banker and a miner. "I learned a lot about the environment from the mining industry using cyanide to extract gold, and as an investment banker and I couldn't stand that people complained about expensive electric cars." His strategy to create a less expensive car and a second life the the battery - thus reducing the cost of ownership - is brilliant and immediately compelling.

(2) Innovation. KleenSpeed's philosophy is that a driver should never worry about the battery, and mandate is that the battery must never be stressed - by over or under discharging or charging too rapidly. So, the first thing that CTO Dante Zeviar created was a telemetry board. Because of KleenSpeed's association with NASA, they believe they can measure data faster than any other company. Collins says, "The faster you measure the data, the more control you have over the data, and the more the data means to you, resulting in a better battery whose chemical life exceeds warranty." By the way, Zeviar and his team of engineers have designed everything from electric bikes to scooters to economy cars to sporty cars to award-winning race cars.

(3) Supply-chain acumen. The third ingredient was especially easy to confirm because KleenSpeed's COO Dave Kichar has been a TFI client over the years at EMS companies. He is a seasoned expert at running and managing electronics-manufacturing operations - exacting speed, quality, and value-for-the-cost again and again. One of Kichar's philosophies is to "right size" the EMS to the OEM customer in capabilities and scale, to avoid costly upsets when an overly-large supplier is under-responsive or severs the relationship.

Here is how the three keys come together at KleenSpeed: Collins' vision for affordable electric vehicles is brought to life by Zeviar's designs and realized by Kichar's operational and supply-chain acumen. The EMS company that wins KleenSpeed's builds will be a winner indeed, breaking through the minimum revenue barrier in record speed.

What start-ups do you know with vision, innovation, and supply-chain acumen that could be an EMS favorite customer?