# Transcript

HENRY HASLAM
Essentially we have two different types of supply chain currently. We have two types of product, one that's essentially a very low-tech kit product that the consumer actually assembles themselves, which is what we've grown up on. It's what we've sold over the last three, four years. And that involves a lot of procurement from, essentially, UK, European and Chinese manufacturers or distributors.
So about 50 per cent of our products come through distributors, electronics distributors. And they're based in the UK and in continental Europe. And about 50 per cent of our components will come direct from manufacturers, typically in China. And so what we do is we, essentially, source one of the two.
And what allows us to make that decision is the cost, the landed cost of these components in the UK and in our manufacturing site, which is here in London. And so we'll look at things like the cost at the supplier but also the transportation cost, any duties and taxes, and also minimum order quantities. So when you're going out to the Far East, there are large minimum order quantities that we need to address.
And so, once we've made that decision, we will procure those components. And they all come in bulk to our manufacturing facility – our mini factory, as we like to call it – here in London where the kits are actually assembled. So we have local labour coming in and making the kits. And then, from here, they go to one of our two fulfilment centres. So we have one fulfilment centre in the UK – the Heathrow Airport – and one fulfilment centre in New Jersey to serve the US market.
With a new product that we're bringing out, there are actually more advanced manufacturing techniques involved, which we don't have capability of doing internally. And so I've actually appointed an original design provider here in China who are going to help us take our design, do the design for manufacture. So that's looking at the printed circuit boards and making sure they're right for the machinery; looking at the plastics, making sure that, when you're injection moulding them, they will come out correctly and you're not going to get any marks, etc.; and actually help us to bring that product to market. And so that will come directly from China and will go to our fulfilment centres without us touching it from our mini factory here in London.

[ON SCREEN] Relationships with customers & suppliers

From a customer's perspective, our two main channels are direct to retailers. So the retailers will buy from us in bulk. And they, obviously, fulfil from either on their own websites or in their own stores. And also we have our own direct customers on our own e-commerce site.
So, from a customer perspective, we're trying to make sure we have a deeper relationship with them, one, from an e-commerce perspective so that we can understand why they're purchasing from us. And supply chain makes a huge part of the customer journey. So, yes, you can have a great customer journey online. And, like, you can buy the product very well.
But, obviously, you have to fulfil it in the timelines that you're giving them, etc. So we think we have an integral part in the whole customer experience. And so understanding what people want, when they want it – so convenient, speed, etc. – balancing that is interesting for us.
Similarly, from a retail perspective, it's very important, from our own perspective from inventory holding requirements, that we have a view of when orders are going to come in and when orders are going to be required. So we work closely with our retailers to help us understand when they want their orders so that we can plan effectively and we're not short on stock or have too much stock, etc.. So we really push that relationship to try and work out when we need the stock and where we need the stock.
From a supplier perspective, we have two types of supply, really – some that we just place orders with and they'll fulfil the orders and there's no real relationship there. But the distributors, we tend to have a better relationship. And we do a bit of co-planning with them. So we will forecast out 18 months. And we'll say, these are our requirements likely to be over the next six months. And so they can take those requirements into consideration so they can then plan their supply chain, plan their orders, manage their costs a bit more effectively.
But it also helps us to make sure that they have the stock that we need when we need it. So it's very much a collaborative planning exercise to say, OK, this is how much we're going to need and when we're going to need it. And then they can make sure that they have the correct stock and they're not overstocked.
And so, when we have issues with our supply chain, it is typically when we have the transactional relationships where we just order from them. There's no planning. There's no understanding of their stock levels. Generally, the suppliers we have a better relationship with – the better planning relationship with – we tend to have the stock when we need the stock because of the fact that we've planned out a bit further in advance.