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Jawbone Fails To Pay Key Business Partners and Has Almost No Inventory In Stock: Sources (businessinsider.com)
BarbaraHudson writes: The battle between Fitbit and Jawbone may be coming to an end. Business Insider is reporting that wearable fitness maker Jawbone is facing some serious financial problems as the company has almost no inventory in stock and is running out of options to generate revenue. If you click on any of the products for sale on their site, it will say that they're all sold out. Business Insider reports: "Jawbone's Facebook page is littered with complaints from customers saying they have been unable to get in touch with a customer service representative to help with defective products. The Jawbone Facebook account has been responding to these issues, blaming a backup of complaints for the delays. A Jawbone spokesperson said the complaints were because of Jawbone's customer service restructuring. Another person close to Jawbone told Business Insider that there is almost no inventory left and the company is running out of options to generate revenue. The speculation among some Jawbone employees now is that the company might sell to a private equity firm if it can't raise more money, the person close to the company said. Jawbone also declined to explain why its inventory has sold out. A spokesperson said, 'they have sold through what they have to sell.' The company said it was not because it couldn't pay vendors though. It would not provide any estimate on when products would be available for sale on its site again, but did say it planned to make more products." The report says that, according to an internal NexRep email, the company cut ties with the customer service agency NexRep earlier this month after Jawbone failed to make payments. "The email, written to NexRep employees by a NexRep executive, claims that Jawbone is 'struggling financially' and that it couldn't pay NexRep for its services," reports Business Insider. "It also says Jawbone is 'fighting hard' to raise more funding. 'Jawbone is not able to pay us for past services, and their ability to pay us in the future is uncertain at this point,' the NexRep email reads." This resulted in "many staffers being laid off."
Probably for the better. According to a study in theJournal of the American Medical Association, JAMA, fitness trackers don't actually help with weight loss. People get fixated on the numbers from the trackers and stop following a recommended diet.
I made one mistake, and bought one of their first generation trackers. That device was difficult to use and software was terrible in UX department. I dropped it to garbage can, after a while, due to small added value to my life versus lots of time and effort invested in usage. Then I have repeated mistake, this counts as stupidity, and bought one of later generation devices. That was working better, but difficult to use, software was better but with some inexplicable tendencies etc. So it was a mixed performance product. Later on device started to generate obviously incorrect data, which turned out to be a software problem, that can only be solved by erasing 1+ years worth data from their online only database. The clip on the device, which was problematic to begin with has broken, with no feasible customer service option available etc. So it is a very nicely designed piece of garbage.
I could never understand why would any company risk JIT (just-in-time) on anything mission critical. At the same time everyone does it and disasters keep happening.
Money. Storing extra inventory is wasteful and expensive. If the supply chain is sufficiently robust then the risk of a stock out is minimal or can be absorbed if it happens. Companies like Toyota that have JIT production systems generally work very closely with suppliers to ensure reliability and they have draconian punishments if something goes wrong. If a supplier shuts down an auto assembly line with a stock out the fines are (no exaggeration) something like $10,000 PER MINUTE the line is idle so the suppliers are typically highly motivated to not cause a stock out.
Excess inventory is considered one of the seven deadly wastes. Defects, WIP, overproduction, waiting, motion, transportation, and overprocessing are all unnecessary expenses and companies should strive to minimize them. When you keep safety stock you have overproduced, generated excess WIP, have parts waiting for processing, and moved parts your customer doesn't actually need. All of that costs money. Now granted you have to weigh the cost of that against the cost of a stock out. Sometimes safety stock is unavoidable but it isn't something desirable.