Krista Donaldson, the CEO of D-Rev, recently gave a TED talk on her company’s new prosthetic knee designed for those living on less than $4 a day. Donaldson stressed that products for this market need to be designed for mass production. “How do you ensure
technology reaches users?” Donaldson asked. “You can have
this great invention, you can have this great design, but
how do you get it to the people who most need it?”
Logistics is hardly the sexiest aspect of the social-
innovation sphere, but in many ways it can be the most
critical. For many aspiring engineers, dreaming up the
product is the fun part, and awards are dutifully doled out
for the most promising designs. But the real challenge often
comes in addressing the issue of, as Donaldson says, getting
products in the hands of those who need them most.
Supply-chain economics is surprisingly complicated. The
decision whether to manufacture in the local market or
externally in a global center—say, in China or India—largely
depends on the type of product and its intended customer
base. It also raises some difficult questions. For example,
when an organization works with manufacturers local to the
community they are serving, they will almost always employ
workers from the region in question. But in many cases the
quality of locally manufactured products can’t match what
can be produced in China.
“I feel it is very hard to maintain high quality with de-
centralized local manufacturing,” Donaldson told Demand.
“You can do it, but there are a lot of checks and balances
that need to be in place, and so we really believe the best
model for the end users is often centralized manufacturing,
D-Rev’s plan for the ReMotion Knee is to manufacture in
Asia, most likely in China, and then move to an Asia-based
third-party logistics company, or 3PL, that warehouses the
product and ships it out to where it is needed.
Vin Narayan, who oversaw development of the
ReMotion Knee for D-Rev, explained, “The idea is that
the clinic [in India] will order with us, D-Rev will relay that
order to the 3PL [in, say, Hong Kong], they will pick some
knees from the master carton, package them and ship
them directly,” as they can to any country in the world.
Centralized manufacturing, much of which takes place
in China, makes it easier to maintain consistent quality
standards, and bulk orders placed with one factory can
sometimes mean lower overall costs. But potential jobs
in the sales region in question are lost, supply chains are
longer, and more lead time is needed to get a product to
The decision on where to manufacture can also lead to
intellectual property issues, as Sarvajal found out when
launching its clean-water program in Rajasthan, India. Sarvajal
provides clean drinking water to those at the base of the pyramid, offering “water ATM” equipment to local franchisees for
them to operate while Sarvajal controls all aspects of production. Some of the franchisee are themselves savvy business
people who know the local market and who might be capable
of manufacturing the equipment from blueprints.
While there may be some advantages from decentralized manufacture, turning over the control to a local
franchisee means a loss of quality control of the end
product. That’s a very real concern when contamination of
the product (water) can be introduced at many stages in
the process. Also, that sort of decentralization would mean
a loss of revenue for Sarvajal—a thorny issue when the end
goal is to get clean water, at scale, to people at the last
mile, not to maximize profits for the company in charge.
To avoid the problems associated with centralized manufacturing in a country like China, Burn Manufacturing CEO
Peter Scott initially employed a hybrid approach when first
launching the production of his Jikokoa cookstove in 2010.
“Right now we are making ‘blanks’”—a flat piece
stamped out of a large thin sheet, with a custom profile—
“in China, then we do a lot of forming, powder-coating,
assembly, riveting, and boxing in Kenya,” Scott said.
That process is going to change this summer, however,
when Burn opens a brand-new 20,000-square foot facility
in Nairobi. “By June we’ll be blanking all of our parts [in
Nairobi],” Scott said, “so we’ll be going from raw materials
to finished goods, all within that one factory.”
According to Scott, this means the creation of about 200
new jobs for local workers in Nairobi within the year, and an
output of 3. 5 million stoves within the next decade.
“Kenya is a more expensive place [than China] to operate,” Scott said. “Electricity is more expensive and there’s
more corruption. But labor in Kenya is cheaper and there’s
a lot of aid and development money that can come in to
support it too, so if we’re making stoves in China, there’s
no grant funding in play.”
Logistics is hardly the sexiest aspect of the
social-innovation sphere, but in many ways it
can be the most critical.