Friday, September 19, 2014

Production Ramp for New55 FILM

Production ramp up estimates are usually expressed in straight lines, but never, in my experience, occur that way. There are bumps, delays, overages and changes along the way. Our supporters have pledged for New55 FILM to become a sustainable product, not a one-shot deal. That means we have to 1. estimate the steady state sales demand and 2. tool and schedule materials and labor for the required numbers.

The chart shows how it all might work: On the vertical scale are units per week. I prefer to have that as a measurement because it works well with production assemblers, who may work part of the week, or have a certain quota to meet. If week 7 fell a little short, for instance, then the assemblers still have week 8 to look forward to.  This is better than waiting a month to find out if production targets are being met.  So in our case we will call start of production "week 1", which starts out as zero.

The steady sales demand estimate is pegged at 1000 units per week.  This number surprises some people as rather small, but it represents the point where in steady amounts the product nears break even which is the term for "not losing money, not making money".

Since nobody imagines that the Kickstarter "demand" of some 20,000 units can all be built and shipped at once (nor could they be unless we hired a lot of people and then had a big layoff after the first 20,000 are shipped, which would be very wrong!) a scale-up ramp that within a reasonable time achieves the steady state demand is used and the shipping schedule is established to fit it.

Early "orders" get filled first and in the sequence they came in, which means that a trickle will go to the first few supporters and from then a stream will build up until all have been shipped.  This kind of "first in, first out" method is very common, and along with a scale-up ramp, allows a small number of people to be employed on a steady basis through the demand. It also has the advantage, the very big advantage, of allowing us to fine tune the process, which will naturally get better over time if there is no "panic".  Steady, sustained, even and smooth are the words you want to hear.

The big risk is what happens after the demand is filled. A sharp drop off in orders would be bad. More orders than expected would be good.  1000 units per week (that means 200 boxes of 5 sheets) comes to 25 units per hour in the normal week.  That's a good and sane starting pace that is fair to the assemblers and achieves - we hope - a new instant film product that can be made for many years. Time will tell.
There is also a low side estimate within statistical possibility


Anonymous said...

I warn you should not "overshoot" and end up with layoff. What is present sales supposed to be like, and have you done marketing job yet? A 1 thousand per week that is 4000 per month at $6 each so a box is $30 each? 800 box per month X $30 = $24,000 X 12 = $288,000. JGU

mercedes said...

I missed the kickstart and wanted to know if there is an area to add to pre-orders or where I should be able to buy new 55 once it's out.
thank you.

rlfsoso said...

any idea how much a box (5 sheet) would be for people outside the kickstarted? A range would be sufficient to get an idea, like 50$–75$ or cheaper… Thank you. Looking forward to see New55 available. Rolf

Ken Nadvornick said...

Because I understand the desirability of steady demand, especially in a small volume situation, I have intended all along to establish a steady monthly purchasing quota for myself.

During the winter when I'll get outside less, my stocks will rise. During the summer, they will deplete. Stock rotation will be in play.

But my plan from the start has been to try as best I can to even out my bumps on my side, and not contribute to you guys having to do that for me on your side.

Yes, I realize I'm only one customer out of thousands. But I'm also the only customer I can control. So I will.

The biggest unknown for me at this point is how many units per month to begin standardizing on when the time comes.


Sam said...

On-the-market pricing will not be determined until there's visibility on the go-to-market component costs sometime in 2015.

Anyone who would like to be kept informed of go-to-market news and new product information can subscribe to the New55 FILM mailing list ...

rlfsoso said...

Thank your for your reply! Anyway I can and will have to wait until you have reached your goal: new55 available! R.