Table of Contents Executive Summary 5
Phase 1: Production Model
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- 3.1.2 Design Production Model
- 3.1.3 Regulatory Requirements
- 3.1.4 Production Model Laboratory
- Figure 2 Office Plan View 1500 ft 2
- 3.2 Phase 2: Procurement for Components and Assembly
- Table 5: Cost Structure
- 3.3 Phase 3: Sales Operation
- 4 The Human Resource Plan
- Figure 3: Organizational Chart
3.1 Phase 1: Production Model3.1.1 Intellectual Property (IP)The design was performed by three student engineers under the supervision of a professor at the University of Saskatchewan. The ILO (Industry Liaison Office) at the university has issued a letter to the three engineers stating that the university holds no rights on the CarBack design and releases all intellectual property to the three engineers. A patent review has recently been performed by Mongeon Associates Ltd. This review was paid for by the three founding engineers at a sunk cost of $60,000. The result states there is intellectual property freedom to manoeuvre with the CarBack design, there are no existing patents that would infringe on CarBack . The patent review indicates that there is existing IP real estate to pursue a patent if that direction is chosen. There are two options on the IP roadmap, the first is to keep the design a trade secret, hit the market first with CarBack and ramp up sales, capitalizing on uniqueness and lack of initial direct competition. The second option is to go through a time intensive and expensive patent process which publishes all intellectual property to the public; legally the design is protected but the legal representation for defending the patent is expensive. Due to the high tech nature of the CarBack design, a time horizon does exist for the technology. The ability exists for engineering/R&D firms to design a similar product with an estimated two years and proper investment. The strategy going forward is to keep the design a trade secret and focus on gaining market share within the first few years of sales. 3.1.2 Design Production ModelThe existing design is a working prototype that was designed and built by 3 engineers from the U of S for their senior year capstone design project. The prototype is made up of goods that total a cost of $500. The prototype uses components that have the ability to perform more tasks than is necessary for the standard operation of the unit. By selecting appropriate components that match the operational abilities the production version is estimated to cost a factor of magnitude less than the prototype. The first year will require the reprogramming and selection of proper components based on lowest cost available. The engineers will focus on surface mount components such as microcontrollers, resistors, capacitors etc. and lower cost GSM communication technology. This process to go from prototype to production model is estimated to take one year with two full time engineers ($75,000 each/yr + benefits), an office with laboratory equipment is necessary to facilitate this operation. 3.1.3 Regulatory RequirementsSince the device will be used as a low voltage electronics device sold in Canada a CSA (Canada Standards Association) approval process is necessary. This approval process includes dielectric and ground fault testing to obtain CSA approval. This certification process can be performed in Saskatoon by Shaughnessy Electric for $7500. The CarBack device communicates to the end user via text messages which uses cellular phone towers. Since the airwaves are regulated by CRTC (Canadian Radio Telecommunications Commission) the CarBack device will have to be approved for use in Canada before sales commence. The CRTC certification process will take one week in Ottawa where devices are approved; $7,500 is the cost for certification and this process usually requires some modifications. A further $7,000 is set aside for one of the engineers to travel to Ottawa for the process. 3.1.4 Production Model LaboratoryThe laboratory is to be located in Saskatoon Saskatchewan for phase 1. After the first year is complete and the production model is designed and ready for the manufacturing process the laboratory will be converted into a sales force headquarters and distribution center. There is currently office space for rent on Miller Ave. in the industrial end of Saskatoon for $2,500/mn including property taxes. The utilities are estimated to be $300/mn, speciality laboratory supplies like an oscilloscope, solder irons and voltage generators will be $10,000 and other general office supplies for $5,000. Figure 2 includes a floor plan of the laboratory; the loading dock area easily gives a full size UPS van access at any time. Figure 2 Office Plan View 1500 ft2
3.2 Phase 2: Procurement for Components and Assembly3.2.1 Component SourcingThe components necessary for the production model can be found on Mouser.com, which has a large distribution center in Houston TX. Mouser is a large volume supplier of electronic components and gives deep discounts to purchasers of over 10,000 units. Environmental impact will be taken into account for the sourcing of all components to ensure they will be lead and mercury free. The engineers have outlined a detailed list of components that put the components at $50/unit for low volume orders and $30/unit for orders over 10,000. These components can be shipped from Mouser to anywhere in the world including direct to the assembler. 3.2.2 AssemblyThe assembly process is outsourced to the lowest bidder through a procurement process performed by the Business Manager. Selection will be based on three main criteria: lowest cost, ISO 9001 certification, and speed of assembly and delivery. The process for assembly would be performed as follows: Retool assembly facility to assemble CarBack systems Receive components from low cost electronics supplier direct shipping Mount and solder all electrical components onto printed circuit board Perform quality control tests Package in CarBack boxes, ready for sale Ship units to Saskatoon headquarters for further distribution The assembly process is estimated to be $10/unit including shipping with a minimum order of 5,000 units. The shipping would be direct to Saskatoon for distribution. If large retailers place orders of 1,000 units or more provisions can be made to ship these direct from the assembler to the retailer’s distribution center. The packaging will be minimal to cut down on costs and the environmental impact. Table 5: Cost Structure
3.3 Phase 3: Sales Operation3.3.1 Traveling Sales StaffOnce phase 1 is complete and there is a production ready model the President will hire five sales staff. Each sales staff member will be granted $36,000/yr in salary plus benefits and 5% commission on gross sales made specifically by that sales member. Benefits include $450/mn for car and cell phone allowance plus $0.42/km for sales trips. It is scheduled that half of the working days in a year for sales staff will be on the road incurring hotel and restaurant expenses paid at $100/night and $50/day per diem for meals. The sales staff will be geographically located across the country to ensure proper product penetration country wide. The initial sales force at five will be decreased gradually over five years as the product sunset nears. 3.3.2 WebsiteA website will be designed by the engineering staff in year one, the website will be largely used for product information. Any purchasing of CarBack will be directed to a retailer in the area of interest. 4 The Human Resource PlanCarBack is primarily a sales and marketing company. With a product in hand, production outsourced overseas, and a marketing strategy CarBack’s task is to market and sell the product within a limited timeframe to, preferably, a auto manufacturer, or retail distribution outlets such as Future Shop and Visions. Because of the limited time frame and narrow customer base of distributors it is important that CarBack launch quickly and effectively to seize market space before the business and technological window of opportunity disappears. Accordingly the company will start with maximize the Sales Staff at the outset and reduce the sales staff to two after four years and zero after five years when the company will be wound down. It is important that the President be aware of the technological ability of the product but primarily it is the President’s responsibility to ensure that sales targets are met and all product are sold after five years. Aside from the President and the Sales Staff, including a Lead Sales Representative, the business will employ a Business Manager to ensure the business and distribution aspects of the company run smoothly. 4.1 TrainingTraining will be provided by the President for all staff. It is CarBack’s intention to hire as experienced personnel as possible. Training will consist of technological information so the Sales Staff will understand how CarBack works. Also included will be sales targets, approaches, demonstrations with vehicles, customer service policy, complaint policy, and relevant information regarding pay, commission, and allowances. 4.2 Hours of OperationGiven the geographic distribution of the Sales Staff they will effectively be working as their own boss. Because of this independence the Sales Staff can set their hours as they see fit with the assumption they meet their sales targets. The Office, staffed by the Business Manager and the President, will have normal hours of operation except for the President who may be travelling or seeing potential clients. Figure 3: Organizational Chart
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