Thought the following might also be worth highlighting from the webinar, Dave talking about manufacturing and inventory.
Very informative and illustrative of their manufacturing/risk managment strategies going forward.
28 Min: Re-ordering, Sales Run-rate v Inventory Run-rate.
In response to several questions, Dave explained how - because of the weight of the Ohm units due to the magnets used for ease of installation - they decided to air freight some units and sea freight the rest, the bulk by sea freight. Naturally, the sea freight units took longer to arrive than the air freight units.
He goes on to say:
"However, because sales and contractual commitments are running sufficiently ahead of installations, we don't have an immediate - as in this week or next - inventory problem, especially as the sea freight inventory has now arrrived in both Adelaide and USA.
"Because margins are so good we have the flexibility to air freight more than sea freight in the future, and because sales and contractual commitments are running quite a bit ahead of our installation rate, that means we have a little bit of additional time to consider what our re-ordering will look like.
We will be making decisions around re-ordering this quarter and will provide updates as appropriate.
But we absolutely do have to re-order, there is absolutely no question about that, and we absolutely do not expect to be re-ordering inventory in additional lots smaller than 1,000 units, and possibly more than that.
In terms of manufacturing capacity, "Our manufacturer in Taiwan has absolutely the capacity to manufacture in substantial volumes greater than we have ordered so far, so we don't have a constraint in the product when it comes to manufacturing.
We will aso be looking at things such as risk-buying components in the future to make sure we have access to the product as we need it. Our manufacturer in Taiwan has been a phenomenal partner and is not in anyway a bottle-neck for us there."
As Dave said, the questions around what proportion of units to air freight versus sea freight were made before they had "line -of -sight" on the Digicel deal. As a result, they have already put in place strategies to meet what is nothing less than exponential demand in growth of sales and contractual commitments, more importantly to mitigate any potential risk around ability to execute installations.
