Scaling Up: From Prototype to Commercial Product Launch

TL;DR

Bringing a new product to market, especially in the realm of advanced materials, involves more than just a functional prototype. Companies frequently face challenges in scaling production, managing inventory, and defining market entry strategies. Our discussion highlighted that while initial prototypes may be “inferior” to the final product, the true hurdle lies in achieving commercial viability. We emphasize that our role extends beyond being a mere spray drying company; we act as strategic partners, offering expertise akin to a consultancy. We support clients, regardless of their size, in navigating the complexities of product launch, from defining batch sizes and inventory strategy to projecting demand and market expansion. Our differentiated approach, leveraging sophisticated IP in delivery technology and a highly attentive management team, allows us to deliver significant value, even if our servicess are not ‘cheap.’ This partnership ensures that the innovative products we help create can command their intended value in the market.

Navigating Product Launch and Production Planning

Will: Yeah. No, that makes sense. And I almost, I asked the question and I almost just directed it straight to you, Will, because it does warrant almost a numerical answer from that financial sense of things. But I’m almost more satisfied with the answers, the fact that the other two answered the other aspects that i wasn’t expecting as much first we have one last question before we wrap up and that is for companies that are launching a brand new product how do you help them think about production planning things like batch sizes inventory strategy and scaling up demand over time i think it would be interesting to hear Will’s and Uli’s perspective on this.

Hendrik: I can start by saying that it depends on whether you’re dealing with a well-established company that understands their product requirements, the new product requirements, the market that they want to penetrate, and exactly what is the objective with that product, what is going to be the delivery system of that product.

If you start with a smaller company or a startup company and they want to develop the market and they’re not sure what they want. For any one of these variables, APD can help and support. We see ourselves as a collaborative extension of the R&D side, but also from the sales side of these companies. During the development process, we would also develop batch sizes. We would look at the inventory strategy.

Strategic Partnership in Contract Powder Processing

Hendrik: Are we going to procure the raw materials? Is it contract manufacturing? is it toll manufacturing? How are we going to support them and help them through this? And then look at the timeframe requirements and exactly, are they going to start small or are they going to go to higher level volumes, right from the beginning? And then how are we going to support them? And Will was mentioning this earlier that, APD has the capacity through, expansions that we did on our capacity or tolling capacity or the rank capacity through the last couple of months. We know that we can accommodate each level of requirements that these customers have, whether it’s low intermediate volumes or high volume requirements.

Ulli: One of the important things to keep in mind here is that there are two scenarios. In one scenario, which is probably more the established company who’s had a track record of go-to-market strategy and their distribution strategy and the sequence of when they’re going to launch either in what channel or in what geographic region.

The other one is a little bit more the, it’s not only a brand new product, it might be a brand new company. And then, we can help in defining what is that launch strategy like is this an e-commerce play only and then a year later you go into brick and mortar retail or it’s us only and a year later you open the european market and two years later you open the asian market so those definition of those strategic parameters along with let’s say as firm as possible making educated projections about the volume you can expect given is there a particular effort on the sales side?

Ulli: Is there a particular effort on the marketing side? Is there, all the wonderful things that we used to call 360 around the launch? What is the education that’s being provided?, are there certain events that you need to hit in terms of do you have a, annual sales meeting where all your sales representatives come and this is the launch date and you need 150,000 of the product available.

All these different elements, all these different parts of what the strategy looks like then helps inform the cadence of the volumes that need to be available. And depending on the industry, that particular customer might want three months of inventory on hand, six months on hand. When we do cytodexine inclusion, our shelf life for these products is three years or more, depending on the product.

Ulli: There might be particular customers that have an appetite for doing two years of inventory on hand because it makes them really flexible, really nimble. I know I’m not really saying what needs to be done for each company specifically, because that’s a function of launch strategy, product markets, and so forth. But all these elements we can discuss and help shape in the conversation with a customer.

Beyond the Prototype: Scaling for Market Success

Will: Yeah. For a company that’s launching a new product, how do we help them think about production planning? I’d say it’s very straightforward. What we do is we help them model their business from the financial perspective of the inputs on that product business model. The emphasis is on COGS, ingredient production pricing curves, forward thinking, understanding those curves, understanding how those curves change, change over time, change with scale, change with input variability, change with risk, change with time and pricing work with us. And we tie it to strategy. What are the different scenarios? How can those input scenarios affect those curves, affect their options, affect their possibilities in the market? Ultimately, the most fundamental value we can give them is that our team is a partner.

Will: The people you see here, they have access to. We are proud of the fact that we are sophisticated thinkers not just a run-of-the-mill spray drying company our drying technology is differentiated we have very unusual and sophisticated IP for delivery technology at the nutrient level but we have a management and production team that is very attentive to our customers and we get involved to the level they would like that to support them as a true partner. And many of us have done not just business domestically for decades, but internationally. And we have the reach and the channel and the contacts to help them if that’s valuable. And that’s, I think, a very key and unusual distinction for many of these partners, much more valuable for the smaller, younger partners.

Will: If that’s something that can help them launch, grow, get traction, we do that regularly. We spend a lot of time with them. We encourage them to come directly to our factory in Payson, spend time there with us and interact face-to-face.

Sometimes that’s feasible for them. It’s not always feasible for them. We still give them lots of time and attention, but the more interaction they can have with the team, the better. And so the support transcends the things that we can do from a factory level, from a technology level, but truly supporting them at the strategic level as well.

Ulli: And what’s interesting about that is that, you guys almost border on, from what I would view from an outside perspective, from other, industries even, you guys almost border on being a consultancy firm or a consulting agency at the same exact time because you have such a broad spectrum of expertise in the industry., not that’s necessarily exactly what you guys are, but you have the level of expertise that I think a lot of people would expect out of hiring somebody who’s purely a consultant. And you have the level of almost like the 30,000 foot view that a lot of, I think, manufacturing, contract manufacturing, B2B vendors, technically regulated industries don’t always necessarily have from a manufacturer, which I think is a really, really interesting aspect that is unique to advanced pattern dynamics from an outside perspective.

Will: Yeah, well, I appreciate that. And to a great extent, we try to provide much of the value that clients would see in that type of relationship, though, to a great extent, I resist that label, if only because it sends a signal to clients that it’s something they’re going to have to pay for. We don’t charge for that. Our prices are not cheap, though, but it’s because we’re differentiated in everything we do, and we’re working with customers where we’re delivering value that we expect follows the products and the things we’re creating with those clients into the market and creating differentiated products and goods that should go into the channel and command value for them as well.

But what we’re really doing is we’re investing on the front end to create the strongest possible relationships that have lasting value. And I think as a testament to that, I hear every day from the CEOs and contacts in these businesses just on a friendly basis or an update, which is very reassuring to me.

Will: It’s, I think, a reflection of the fact that we are very successful at building relationships with our clients, and they choose to stick with us, to come back to us with new projects. And very recently, one of the most flattering things I heard was during an introduction that one client was making to a new prospective client. He reported that on his first visit to the factory, we didn’t know him or his team very well at all. And yet they were greeted by our team. And over the course of the day, they were treated like absolute royalty, which had never happened to them before. And that’s the way that we try to treat all of the people we interact with.

Ulli: Yeah, no, that’s amazing. And I think through these interviews that comes through, through all these conversations that we’re having, and even just through each question that gets answered, I think that comes through. That’s it for today. This has been a really in-depth conversation about this, but I honestly really, I’ve enjoyed this. Unless you guys have anything else to add, I think we’ll wrap up.

Will: Looking forward to the next discussion, but I think that’s it for today.

Hendrik: Yeah, it should be fun.

Ulli: All right. Bye, guys. Thank you very much, Stephen, Will, and Andrew. Bye.