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  August 6th, 2015 | Written by

What’s Behind the Resurgence in Hardware Manufacturing?

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  • Riverwood Solutions Research Findings: hardware is back.
  • Majority of supply-chain executives agree Internet of Things is driving a hardware manufacturing resurgence.
  • Most supply-chain executives view product launches funded on crowd funding platforms as least likely to succeed.

Riverwood Solutions, a supply chain services and operations consultancy, released survey results today gauging the opinions of chief information officers on the current resurgence of hardware manufacturing.

The survey found that supply-chain executives attribute the recent resurgence of hardware manufacturing to the popularity of wearables and the Internet of Things.

Research shows that the consumer wearables market will experience 38 percent annual growth for the next five years, while business wearables will experience a 139-percent growth rate during the same period.

Hardware is usually more challenging to bring to market than is software, due to the complexity of the manufacturing, supply, and geographic issues involved. The hardware manufacturing resurgence puts an even brighter spotlight on supply chain issues that already are becoming a global challenge.

Navigating the supply chain, especially in a hot market like wearables, can be a nightmare,” said Mike Kasparian, CTO at Atlas Wearables, a maker of fitness trackers.

Of the supply-chain executives polled, 76 percent agreed that the recent resurgence in entrepreneurial interest in hardware manufacturing is likely a result of the public’s interest in the Internet of Things. Fifty-two percent attributed it to the public’s interest in wearables and 36 percent felt the resurgence is due to fact that it is cheaper to manufacture hardware than it has previously been.

When the executives were asked to weigh in on which funding mechanisms made them skeptical that a product would launch on time, 50 percent picked crowd funding platforms Indiegogo and Kickstarter, suggesting that supply-chain executives have low expectations that fledgling entrepreneurs will be able to deliver hardware manufacturing projects on schedule. Family money also inspired little confidence among supply-chain executives as a source of capital.

The executives surveyed agreed that manufacturing delays pose a significant threat to the potential viability of a given product and the long term success of a company. When asked what consequence a company would most likely face if it is unable to deliver a product on time and to scale, over half (54 percent) agreed that going out of business was the most likely to occur.

“Most companies are funded on their vision, not on their hardware delivery strategy,” said Brad Knight, CEO of Riverwood Solutions. “But even the most brilliant vision is useless if a company can’t deliver the goods. There has been little hardware manufacturing over the last two decades, and now there’s a hardware skills gap at most companies. A thorough and well-researched supply chain delivery strategy should be a critical requirement of funding any business proposal where hardware is involved.”

Riverwood Solutions helps equipment manufacturers improve supply chain performance, optimize their operations, and maximize the value of their outsourced relationships.

Forty-six percent of the supply-chain executives surveyed said most entrepreneurs optimistically believe they can bring a product to market in six months to a year. When asked what is the most likely cause of manufacturing delays, 38 percent of the executives said it was because entrepreneurs go straight into manufacturing and 33 percent pointed to the fact that companies do not adequately pilot and test products.