Wearables Tech Con_ModusLink_Final

Keys For International Expansion
Paul Goates
Senior Director of Client Solutions
ModusLink
March 11, 2015

COMPANY CONFIDENTIAL
Introduction
 18 year career in logistics industry
 Advises on global supply chain and logistics
strategy and growth for top high tech accounts,
including Apple, Micron, Microsoft, Dell and
Fitbit.
 Supporting programs for high tech and healthcare
clients in the supply chain divisions of Schenker,
UPS and FedEx.
 Graduated from the University of Utah in Salt Lake
City with a degree in history with an emphasis on
the logistics of warfare.
 Played on the 9th ranked 1994 Freedom Bowl
Championship football team
2
Paul T. Goates
Senior Director
Client Solutions for ModusLink

About ModusLink
 ModusLink (NASDAQ: MLNK), is a global, omni-channel logistics provider.
 The company gives clients real-time visibility into their end-to-end supply and demand
chain operations, with expertise and facilities worldwide to manage forward and reverse
logistics.
 ModusLink is also affiliated with @Ventures which provides venture capital and growth
resources to early stage clean technology companies.
 The company’s operations are supported by more than 25 solution centers across North
America, Europe and the Asia/Pacific region with 3 contact centers – one in each region.
3

The Keys to International Expansion - Overview
 As companies enter a high-growth period, one of the main ways they look to expand is by
adding international sales. This is easier said than done.
 For a small but growing business, there are numerous considerations that you may not be
aware of. How can you expand quickly to transform your supply chain to a competitive
advantage? What are the best practices and potential problems you need to be aware
of when partaking in international business? What questions should you be asking
yourself?
 Today’s discussion will provide a "next steps for international expansion" guide,
highlighting the many and various things that companies need to take into consideration –
and offering practical advice on how and where to start.
4

Logistics 101 – The Basics
 So, what is logistics after all? What does it entail –
and why is it important to the burgeoning wearable
technology industry?
 You are only as strong as your …
 Wikipedia defines logistics as:
– “The management of the flow of goods between the point
of origin and the point of consumption in order to meet
some requirements of customers or corporations. The
resources managed in logistics can include physical items,
such as food, materials, animals, equipment and liquids,
as well as abstract items, such as time, information,
particles and energy.”
 To truly understand the importance of logistics, one
must look back at its history…
5

Logistics in Warfare:
The Very Model of a Modern Major General
"Gentlemen, the officer who doesn't know his supply chain as well
as his tactics is totally useless.“
- Gen. George S. Patton, USA
"Amateurs talk about tactics, but professionals study logistics.“
- Gen. Robert H. Barrow, USMC (Commandant of the Marine Corps)
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Logistics in Warfare:
The Very Model of a Ancient Major General
“The line between disorder and order lies in logistics…”
- Sun Tzu
“My logisticians are a humorless lot ... they know if my campaign
fails, they are the first ones I will slay.”
- Alexander
7

Logistics in Corporate America:
The Very Model of a Modern Chief Logistics Officer
"Leaders win through logistics. Vision, sure. Strategy, yes. But when you
go to war, you need to have both toilet paper and bullets at the right place
at the right time. In other words, you must win through superior
logistics."
- Tom Peters - Rule #3: Leadership Is Confusing As Hell, Fast Company,
March 2001
Dell in the mid-90’s …. Walmart …. Apple
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Growth of the Wearables Market
 The wearable technology market has seen
tremendous growth recently – with even more
expected in the next few years.
– The wearable electronics market is expected to grow
from over $14 billion in 2014 to $70 billion in 2024,
according to recent research from IDTechEx.
– The dominant sector will remain healthcare, which
merges medical, fitness and wellness.
9

Moving to a Global Marketplace
 As companies become successful and enter a high-growth
period, international expansion is often the next step.
– The idea of selling goods that are “new to that market” is enticing – and
often allows for resource re-use.
– International expansion is an excellent way to improve brand
awareness and solidify your company’s place in the industry.
– There’s a premium placed on beating the competition to new
geographies.
10

Challenges of Rapid Growth
 International expansion is not easy:
• Localization of Product
• Packaging
• eCommerce
• Call Center / Customer Support
• Transportation
• Government: Regulations & Taxes
• Reverse Logistics/After Sales
• Outsourcing
• Sustainability
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Keys to Expanding Correctly – Getting Started
 Evaluate
 Set a plan-of-attack
 Determine Timeline
 Assess Infrastructure
 Ensure Flexibility
 Mitigate Risk
Resources:
Consultants, Logistics Providers, Mentors
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eCommerce, Foreign Currency and Exchange Rates
 Can your eCommerce site handle the expanded
traffic?
 Can it easily be ported to a new language?
 Do you accept foreign currencies and automatically
factor in the latest exchange rates?
 Will your site and back end systems scale
successfully as new geographies are added?
14

International Shipping and Transportation
 What are the best routes to keep shipping costs
low?
 Have we traditionally guaranteed product delivery in
a short period of time? Can we maintain that
guarantee internationally?
 How will differences in fuel costs affect my
operations?
 Where do our facilities – manufacturing, assembly,
distribution, etc. – need to be placed to maintain a
sustainable shipping and transportation cost
structure, while continuing to meet customer
demand?
15

 Reduce carbon footprint while improving the bottom
line.
 By reducing the size of its product packaging,
using more recyclable materials, decreasing carbon
emissions and cutting transportation costs. (Bonus:
Reduced Labor)
 Better IT = better visibility across the entire supply
and demand chain = better decision making and
correcting problems sooner so that more efficient
ways of doing business can be implemented and
overall costs of doing business decreased.
 The antagonist: marketing focused on “customer
experience” …more balance needed
16
Sustainability in the Supply Chain

Outsourcing
 Many growing companies have found it helpful
to outsource many of these logistical issues to a
third party, freeing the young company up to
continue innovating.
 How much/how little is right to outsource?
 What should we retain control over?
 How do you choose a partner that is committed
to your success?
17

 Communication / Relationships / Trust
18
Outsourcing (Continued)

Government Involvement, Regulations,
Requirements and Taxes
 How involved/not involved do you have to be with certain
governments?
 Are there countries more open/less open to supporting business
expansion?
 What do you need to do/file to sell goods in a particular country?
 Each country has its own differing regulations and requirements for
selling products within its borders – everything from environmental,
to privacy, to disclosure to the materials used in the product.
 How can you manage different regulations in different countries?
Which country has the strongest regulations – and if we design the
product to meet those, will we be covered?
 What taxes exist in different geographies – and will factoring these
in affect where facilities are placed?
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Packaging
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 Does your packaging meet the need of every
country you’ll be selling to?
 How many packaging variations will you need?
 What environmental concerns need to be taken into
account?
 Are your facilities configured to support different
packaging for different countries?
 When do I kit/package? Origin or in region?

Customer Support Needs: Contact Center vs. Call Center
 Support is a critical element of maintaining a strong
connection with your customer base.
 Are your current systems able to handle
international customers?
 What training needs to be done to handle
international customers? Do you need facilities in
specific countries to serve your growing base?
 What analytics can drive better decisions and more
profitability?
 What kind of upselling or data gathering is possible
for expanded sales?
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International Returns and After Sales
 Can your reverse logistics be handled on an
international scale?
 Do you have one global facility to accept returns, or
have customers return goods within their regions?
 Do you have processes in place to not have the
returned goods be a total loss – i.e., the ability to
accept and refurbish the goods or strip them down?
 Don’t walk away from real money.
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Case Study – GoPro
 Nick Woodman founded GoPro in March 2004 to build and sell a wearable
camera to enable surfers to capture close up pictures while surfing.
 By 2012, GoPro had outgrown its existing supply chain process, as it
needed to improve scalability and better manage the supply and demand
realities it was facing – while setting itself up to manage future growth.
 The company sought to reduce supply chain costs and ensure
scalability by establishing final assembly in three continents.
 ModusLink had already built and was running a full reverse logistics
process for GoPro, getting returned products sorted, broken down and
back into circulation.
 The company had also been handling GoPro’s contact center operations
and soon began managing eCommerce, payment processing, packaging
and fulfillment….created powerful synergies.
23

GoPro Supply Chain 2011

Case Study – GoPro
 As a part of its supply chain evolution, GoPro began the “regional
postponement” process to lower its overall assembly expenses – including
inventory, labor, packaging and transportation costs.
 GoPro and ModusLink set up a process raw finished goods were
transported in trays sent to regional warehouses for final kitting and
assembly to be shipped directly to retail and consumers.
 This allowed GoPro to better manage supply and demand for its
products, ensuring regions of high demand had the products they needed to
fulfill customer orders – and that there wasn’t product waiting around to
be shipped in times of lesser demand.
25

Hong Kong
(SAL)
B2B
(Non-EU International Distys)
Cameras and remotes air
freight to region
Fremont, CA
(DCL)
B2C (NA)
Riverside, CA
(ModusLink)
B2B, RL
Postponement (NA)
Venray, NE
(ModusLink)
B2B, B2C, RL
Postponement (EU)
Singapore
(ModusLink)
B2C, RL (Asia)
Camera assembly
in China.
Regional Asia pack-
out Futian
(ModusLink),
distribute to Asia
distributors from HK
Ocean freight lower box
accessories to region
Key to success: partnered with a single global 3PL that could provide all of these services
GoPro Supply Chain Today

GoPro’s Supply Chain Success
 Using one omni-channel logistics provider to work with,
GoPro realized synergies through increased visibility,
supply and demand planning
 By working with ModusLink, GoPro was able to:
– Lower freight costs 75%
– Bring down inventory costs 11%
– Drop cut pick, pack and ship costs by 10%
– Increase final camera pack-out capacity from
15,000 to 70,000 per day
– Increase daily fulfillment capacity from
25,000 to 120,000 per day
– Improve air lift space efficiency by 10 times
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Contest
 #1 What is a key difference between a Call center and a Contact Center?
 #2 T/F: The best time for planning for holiday peak is six months in advance.
 #3 T/F: The end of the Supply Chain is when the goods arrive in the customers hands
 #4 T/F: Logistics is best described as the physical movement of goods
 #5 What are the two best countries outside the US for Europe and Asia logistics?
 #6 If Alexander fails in his military campaign, who is slain first?
 #7 Most important thing to remember with a logistics partner?
 #8 What year did the Utah football team win the Freedom Bowl (and National ranking that
year)
28

Paul Goates
Senior Director of Client Solutions,
ModusLink
425-998-7556 m
paul_goates@moduslink.com
Thank You!
…Questions?

Wearables Tech Con_ModusLink_Final

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