210. Steven Blustein: A New Structure Of Production—The Plug-in Entrepreneurial Network
A lot economic thinking about the structure of production and entrepreneurs’ challenges in the assembly of resources can be revised in the 21st Century. There are networks of value-driving resources already assembled, connected and operating, into which entrepreneurs can plug their business ideas. We talked to the CEO of one of the leading networks for insights into how it works.
Entrepreneurs are rethinking and redesigning the production structure of the economy.
Value generation includes the identification of unmet customer needs, the design of a new solution for those needs, and the assembly of a production structure to deliver the solution in the form the customer prefers to experience it.
Historically, entrepreneurs have been required to master all three components. Now they can focus on customer understanding and solution design, and plug in to a pre-assembled production structure.
Lack of supply chain and production knowledge and experience are no longer barriers to fast and effective business progress.
Let’s say an entrepreneurial firm or team has a new product – perhaps an idea, perhaps a prototype, perhaps even tested for customer response. How is to be turned into a manufactured and delivered reality? What are the product specs, what are the right fabrics and the right colors and the right feature sets, what is the compatibility with current manufacturing machinery or is customization required, what are the right production steps for packaging and surface design, what about shipping and warehousing, and marketing and sales? What financing arrangements are needed?
We can call all of these assembly steps a “supply chain”. If the team does not have supply chain knowledge or the experience of creating products quickly, then great challenges, consuming lots of time and effort, lie ahead.
What if all this knowledge and experience were available for any entrepreneurial project or team to plug into, seamlessly, with the freedom to pick and choose customer elements, selecting the very best resources, but only those that are needed?
This is a reality today.
An entrepreneur who created product success on his own has assembled the network infrastructure for future entrepreneurs to plug into.
Steven Blustein created and operated a successful company in the pet toy industry. He conceived of a product design and then went through all the hard and time-consuming work of turning a design into product specs, including materials selection, testing and sourcing, as well as finding a factory to manufacture, packaging, branding and surface design, shipping and warehousing, sales and distribution, legal, finance and accounting. Such a resource assembly and integration task is not only challenging and difficult, but wastefully time consuming. It might require contacting 50 manufacturers before finding the right one to work with, for example.
What if someone else could take on this burden, solve all the manufacturing and supply chain problems, and reduce the time and expense required? That’s exactly what Steve Blustein did.
The Gembah value proposition is to help entrepreneurial businesses grow by focusing them on customer value generation, while others provide all the supporting infrastructure.
Steve Blustein’s company is called Gembah. In his previous company, Steve had personal experience of the time, effort, challenges and trial-and-error frustrations of identifying and contracting with and fine-tuning manufacturing resources, and building the supply chain from factory to market. He describes traveling to China 60+ times for his own business and the time he committed to learning the language. He experienced the diversion of time and effort away from his focus on serving customers, no matter how committed he was in principle. Entrepreneurs inevitably become consumed by operational detail.
His current company, Gembah, aims to solve that problem for entrepreneurs. It offers a client-customizable network of supply chain components, all selected and vetted to be best-in-class, and provides the management and co-ordination as a service, so that the entrepreneur no longer needs to devote time and effort to doing so.
Gembah maps the value production and supply network for the entrepreneur, and the journey processes and stages, and provides hands-on assistance at every point. Journeys are classified by general type (e.g., for hard goods, soft goods and mechanical / electrical), and then transparently customized and priced for each individual entrepreneurial project.
The entrepreneur can have direct connection to the producing factory (no intermediate trading company or agent) or can choose hands off management through a Gembah account director. Control always rests with the entrepreneur.
The starting point for the journey is flexible.
The supply chain journey can begin even before there’s a product design or even a fully fleshed out idea. Or the journey may start for a company with an existing supply chain seeking a new product to add to their portfolio. Or it could be an existing supply chain that a company seeks to relocate or strengthen or change in some way. Gembah offers complete infrastructure assembly and re-assembly to meet client needs.
There are different kinds of journeys entrepreneurs can choose. For example, a “direct to manufacturing journey” is one appropriate for existing goods that a seller on Amazon or other platforms might want to add to their range with only slight customization and some branding and surface design embellishments. Another might be a time-compressed product development journey. Steve gave the example of a company that sourced a new Bluetooth speaker to their own specs which they were able to manufacture from existing tooling, customize the feature set to make it unique, add branding, and launch in 5 months versus the more usual 52 weeks.
Gembah clients tap in to a large and growing knowledge base, and no part of the supply chain and manufacturing back-end for products is uncovered or unavailable.
Gembah aims at a complete service, with no gaps in the capacity to meet client requests, apart from the upstream components of doing the selling and generating revenue. There are experts available to help with design, marketing and branding, as well as financing, and also in opportunity identification via market scans. Most services are provided directly, some via partnerships.
There is even the potential for a reverse flow in which the manufacturers bring the product ideas and finished products to a seller who is a client of Gembah. The development costs are already spent and the seller benefits.
The prospect is for a new production structure in the economy integrating better companies with better value creation performance.
In today’s production structure, we observe problems of concentration, with large corporations dominating industries and markets, and the so-called small and medium sized businesses constrained, no matter how creative they are, by limited access to capital and infrastructure.
The prospect now is for this to change. Those who succeed at identifying important unmet customer needs can plug in to the manufacturing, supply chain and infrastructure network that companies like Gembah assemble, customize and manage.
We’ll replace industry concentration with a new set of empathic, value generating entrepreneurial companies. They’ll be better companies (e.g., less bureaucracy because it’s not needed, less financialization that distorts their results focus)) with better performance (greater concentration on customers and customer value creation, and more flexibility in adaptively reconfiguring operations when market changes call for it). Entrepreneurial companies will be newly empowered to rise and to thrive, wherever they are in the world.
Steven Blustein on LinkedIn: Mises.org/E4B_210_LinkedIn