Biomedical Engineering Reference
In-Depth Information
for decades have sales only in the low tens of millions of dollars. It is not
uncommon for AT companies to have sales that are even smaller. Of the
approximately 170 wheelchair manufacturers operating in the United States
as of 2003, only five companies had sales in excess of $100 million, although
the industry total reported revenue was $1.3 billion [ 6 ]. Thus the majority
of established AT companies could not attract venture capital. Furthermore,
starting up without adequate resources is one of the most detrimental factors
in the long term success of new companies [ 3 ].
Similarly, an established company operating in small markets is faced with
limited revenues and little free operating cash. Cash flow is the key resource
for pursuing new product innovation - an endeavor often seemingly at odds
with maintaining a profitable small business. As well, all companies operating
in small markets must prioritize their employees, who are a prized resource.
Often a lack of cash results in a lack of people with the expertise and time
to mount a thorough and viable product development stream.
Some areas of product development and innovation that need ample cash
and resources include:
People and software for product design.
￿
Prototype development and design iteration.
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Intellectual property analysis and protection.
￿
Market testing and feedback.
￿
Manufacturing considerations.
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Small market operations shape all of these issues. Are the people with rele-
vant experience available for design? Does the company possess prototyping
capabilities in-house or does the company need to source more expensive
solutions? Do the projected revenues support patenting costs? If so, which
geographical markets are realistic for a small company to successfully deliver
the product to the end users? Does the company need to hire outside firms for
market testing, and if so, how dicult will it be to gather enough customers
for proper evaluation? Academic researchers face a similar problem when ad-
dressing specific medical problems (essentially a small market). For example,
researchers in spinal cord injury have diculty running clinical trials without
expensive multi-centre collaborations across North America.
Manufacturing issues also comprise many of the obstacles in small market
operations due to the inherently low volumes involved. Manufacturing a new
product requires new tooling, processes, and training for the supplier. These
costs are somewhat (though not entirely) fixed regardless of volume size, thus
putting a greater burden on companies with only low volume sales projec-
tions. In addition, excess inventory in stocked parts and finished product for
higher volume manufacturing incurs a non-negligible expense. The alterna-
tive to this expense is for the company to absorb a higher per-unit item cost
by running an operation with minimal inventory. However, this strategy may
incur further costs by increasing customer delivery times and also has the
disadvantages associated with back-ordered products.
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