Fitbit

Project Proposal

Mission Statement:​ The Medwatch is a uniquely designed device that assists, alerts, and
reminds users to efficiently and conveniently take their meds while using a fashionable and sleek
watch.

1
 Table Of Contents

Meet the team………………………………………………………………………3

Market Size and Segmentation and Competitive Priorities/Capabilities….……..4-6
Product Design and Bill of Materials……………………………………….….......7
Operational Strategy………………………………….........................................8-13
S​upply Chain Design & Supply Chain Top Down
FlowChart….………......…14-15
Supply Chain Strategy………………………………………………………....16-17
Make/Buy & Vertical Integration Decisions…………....…...………………....…18
RiskAnalysis/Mitigation……………………………………………………….….19
Location & Distribution Strategy……………………...…........……………....20-22
Project Plan……………………………………………………………………23-25
Sustainability and Social Responsibility………………………………………26-27
Conclusion………………………………………………………………………...28
Works Cited…………………………..…………………………………….….29-31

2
 ………….​Meet the Team

Madison Lewandowski - ​Chief Executive Officer

● Establish priorities and focus

● Develop and maintain an organizational vision with team
● Plan ahead and communicate to ensure all deadlines are met

Kyle Hegarty - ​Chief Financial Officer Katie Grey- ​Chief Marketing Officer

● Ensure all financial elements of the ● Analyze specific KPIs to maximize

project are meeting the company's
standard
● Produce financial reports that clearly and
concisely report accurate data
Kayla Bialorucki -​ Information Systems
Analyst/Senior Accounting Manager
performance
● Develop and oversee the marketing plan
● Define marketing strategies to support the
company’s overall goals and objectives
● Produce product development, branding, and
communications
Henry Schmidt-​ Production and
Supply Chain Manager

● Perform, analyze, and ensure network

security for computer related activities
● Perform financial functions related to data
collection, entry, and report generation
● Produce the most efficient outputs for the
department through the use of information
systems
● Measuring and analyzing performance gaps
● Oversee the supply chain by promoting
the design, development, and
implementation of warehouse,
distribution and logistics solutions
● Ensure the quality of the product

3
Market Size and Segmentation:
MedWatch has a vast market that includes both males and females who need their pills

and medicine readily available. This population is rather large, according to the CDC

approximately 150 million Americans used prescription pills at least once a month.1 Examples

comprise of high risk heart attack patients, females on birth control, and those with severe

allergic reactions.

The focal market segment are seniors of 60+. ​Senior care is a $750 billion market that

remains outdated. 2 The MedWatch provides a new alternative method for senior care patients to

effectively take their medicine. Additionally, through the MedWatch App, it will allow doctors

and family members to effectively monitor the patient’s use. Furthermore, for those aged 50-64,

75% use prescription drugs. For those 80 and older, the percentage jumps to 91. 3 This is a huge

potential market that could benefit from the MedWatch!

1
​(CDC)
2
(Redpoint Ventures, 2016)
3
(Georgetown)

4
Competitive Priorities/Capabilities:
Competitive priorities can be defined as “the dimensions that a firm’s production system must

possess to support the demands of the markets in which the firm wishes to compete.” Competitive

priorities are useful for companies to develop competitive advantages and distinguish themselves from

competitors. MedWatch has chosen to prioritize both flexibility and quality.

Competitive Priority: Flexibility

Flexibility is an important aspect of the company, as it can offer a firm distinct advantage due to

the capabilities that generate decision making options. Furthermore, different forms of strategic flexibility

deal with dynamic environments, which are difficult for competitors to imitate. Seniors take a wide

variety of pills and thus, it ultimately depends on the person and medication that is needed. In addition to

the type of medication, the size of the pills will also vary from person to person. As a result of this, it is

important for the design of the MedWatch to account for flexibility, tailoring each product towards each

senior and their specific needs.

Competitive Priority: Quality

In addition to flexibility, quality is an important competitive priority for MedWatch. Medication

is put inside of the device, so it is important that MedWatch is top quality, because lost medication would

become a liability and result in a negative brand image.

In order to maintain these competitive priorities, MedWatch will perform quality checks of raw

materials and maintain a high level of customer contact in order to meet the demands and needs of

seniors. To achieve these goals, the company will utilize a survey with options, such as band size, pill

5
divider size, and pill section size and send it to people within the target market (seniors). Multiple

employees will oversee the design, raw materials, and finished products in order to make sure errors and

defects are reduced and the chief marketing officer will remain in contact with the customer after the

delivery of the product to get feedback.

Competitive Priorities Competitive Capabilities

Quality Utilize the highest quality -Utilize top quality machines

materials and processes
and materials including
aluminum(sheet metal and
welding wire), Gorilla Glass,
and Indonesian sandalwood
-Perform quality checks of
raw materials to ensure a
high level of customer
contact and meet the
demands of consumers

Flexibility Tailor each watch towards -By using a variety of

each senior and their specific different top quality
needs materials that offer comfort
and style, in addition to
personal engraving,
customers are able to choose
the watch that best suits their
needs
-Each watch will account for
the type of medication
needed, size of pills, and
individualized engraving on
watch bands

6
Product Design:

7
Operational Strategy:

● Bill of Materials

The bill of materials is a chart that lists the various materials used to make a
product and their costs. MedWatch’s total material cost per unit is $10.58. With $10.00 of
variable costs including labor as well as shipping and $10.00 of fixed costs including
overhead, the total cost per unit is $20.58. With MedWatch’s standard batch size being
1000 Medwatches, the total cost to make one batch is $30,580. With the MedWatch
being retailed at $120.00, this leads to a profitability of $89.42 per unit. This makes the
total profitability per batch to $89,420.

8
● Process Flowchart - ​The process flowchart below demonstrates the start to finish
production of the MedWatch and the steps taken to avoid excess manufacturing costs.
The Wear and Tear & Quality Check (QC) step is an important part of this process as the
next step (Engrave Watch) is both expensive and timely, so any defect detected
beforehand will improve reaction time to unplanned events.

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● Machines
For Welding Storage Area -
Fanuc Arc Welding Robots
➔ American Company -
Automated systems
➔ Link -
https://www.fanucamerica.co
m/industrial-solutions/manuf
acturing-applications/arc-wel
ding-robots
For Engraving - Epilog Laser
(for wood wristband)
➔ American Company - Scans
and then engraves
➔ Link -
https://www.epiloglaser.com/
laser-machines/g2-galvo-lase
r-series.htm
10
Measuring Productivity:

Due to the fact that a majority of the processes are automated, productivity can be
measured by units produced per hour. Other productivity measures include the use of
multifactor productivity equation to maximize the relationship between inputs and
outputs. Additionally, as the company aims to be as sustainable as possible, the company
will set goals to eliminate excess waste and reduce the company’s carbon footprint.
M edW atches P roduced (in $)
M ultif actor P roductivity Ratio = Labor + Overhead + M aterials (in $)

● Batch Size
Batch size is set at 1000 units. The automated process allows for large batch sizes.
Referring to the process flowchart and the supply chain design, producing batches
of this size allows for the product to be assembled easily and then customized to
each customer.

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 ● Sales and Operations Planning Matrix (S&OP)
The Sales and Operations Planning matrix is a tool used to match the 
manufacturer’s supply with the demand predicted by utilizing past and predicted sales 
information from the sales department to collaborate with operations in order to create a 
single production plan. Since Fitbit will be using an assemble-to-order design based on 
customer orders, leftover inventory will only be 10% of the predicted sales. Therefore, 
the operations team will not have to produce more than 10% above the predicted sales for 
that month. 

MedWatch- Year 1 Sales and Operations Plan

Seniors: Customizable Unit of

medication watch Measure:
(Assemble-to-Order) 1,000
Units

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

SALES

Sales Forecast 10 15 20 30 40 55 70 82 90 95 115 135

OPERATIONS

Operations Plan 11 15.5 20.5 31 41 56.5 71.5 83.2 90.8 95.5 117 137

INVENTORY

Inventory Plan 1 1.5 2 3 4 5.5 7 8.2 9 9.5 11.5 13.5

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 Demand Issues and Assumptions
Assumption 1: ​FitBit expects devices sold to increase 7% year-after-year.4 In addition,
according to the report, Technologies for Long Term Health Care and Home Health Care, the
global market for elder care technology is expected to grow by 19.2% each year.5 These statistics
were used to form the sales forecast.

Assumption 2: ​If MedWatch is able to maintain market share within both the digital watch and
senior care markets; as senior care market exposure increases, demand is likely to increase
exponentially as well. Consequently, operations must increase in order to meet the demand,
which will shift the assemble-to-order operations plan to one primarily focused on mass
customization.

4
​(FitBit Inc., 2019)
5
​(GlobeNewsWire, 2018)

13
Supply Chain Design:

● Supply Chain Top Down FlowChart

All the manufacturing and construction of the MedWatch will be performed at the FitBit

warehouse in San Francisco. For this reason, all of the raw materials (indonesian sandalwood,

and aluminum) will be shipped directly to the warehouse where the FitBit watch face is already

being produced. From there, the watchband construction and pill pocket welding will occur in

order for the engraving to be done. The two FitBit distribution centers are located in San

Francisco and Boston. From there, the watches will be distributed to the retailers from each

distribution center.

14
● Supplier Information

15
Supply Chain Strategy (Creativity & Innovation):

● Supply Chain Design: Efficient or​ Responsive

MedWatch has decided on an Assemble-to-order, responsive supply chain design.

Assemble-to-order is a manufacturing work flow in which a customer’s order triggers a

manufacturing order for a product, which is then built using components and subassemblies

stocked by manufacturers. Thus, Fitbit will not need to build everything from scratch. Customers

ultimately have the opportunity to decide on which watch bands they would like, and engrave a

message on the band to indicate what condition they have to alert bystanders in an emergency.

By utilizing this strategy, Fitbit will be able to effectively produce customized watches, ensuring

quick delivery, and generate a higher turnover ratio, resulting in lower costs. Furthermore, the

subassemblies can easily be replaced once they have become obsolete, resulting in no dead stock.

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 ● MRP Platform

After researching several MRP, ERP, and CRM platforms, MedWatch should take advantage of

an MRP platform- specifically the Fishbowl Manufacturing Software. ​Fishbowl Manufacturing offers

advanced work orders, manufacture orders, bills of materials, and other tools that are needed to maximize

efficiency in the MedWatch production process. Fishbowl Manufacturing is a great solution for both

simple and complex manufacturing needs, and it will also make purchasing processes and work orders

automated to maintain optimal levels of finished goods. This will be ideal for MedWatch because

employees will be able to effectively track and manage the sale process. Furthermore, ​MedWatch has

decided to prioritize easily customizable products that are high quality, which are main goals for this type

of MRP Platform. The manufacturing system will ultimately be useful in speeding up manufacturing

operations, eliminating inefficiencies in the company’s production line, tracking product locations and

amounts to ensure accurate inventory counts, and reducing workforce requirements by empowering

workers to do more in less time, etc. MedWatch also utilizes an assemble-to-order strategy, and thus, it

will be important for the company to utilize a shareable work order strategy, which ​Fishbowl

Manufacturing offers. This flexible software solution also offers e-commerce and merchant services

which will allow MedWatch to manage shipping from order to delivery. Overall, ​Fishbowl

Manufacturing Software will be a useful tool for MedWatch as it can offer multiple locations, part

tracking, manufacturing, shipping integration, LIFO/FIFO/Standard accounting methods, landed costs,

consignment, in addition to a complete wireless barcoding system for warehouses.​ This MRP solution

will help MedWatch automate their inventory transactions to eliminate stock-outs and purchase forecast

and tracking.

17
Make/Buy & Vertical Integration Decisions:

This chart depicts the costs of doing the watchband engraving in-house, vs

outsourcing the engraving to a company.

In-house Engraving (Make) Outsource Engraving

(Buy)

Fixed costs $10,000 $0

Variable costs $10 $16

If engraved manually, investment costs for equipment are $10,000 for the engraving
machine. The per-unit cost of manually engraving the watch band is $10 per frame which
includes $4 for labor and $6 for overhead. On the other hand, outsourcing it would result in
$0 fixed costs because the company would not need to purchase any equipment for the
engraving. The variable total costs expense is $16 which includes $11 for to outsource the
engraving at Lazer Designs (an engraving company in the US) $5 for shipping per watch.

= 1667 watch-bands to break even

Utilizing predicted sales using the S&OP matrix on pg. 13, in-house engraving was
predicted to be the most efficient and profitable way to go about the engravings. According to
this tool, sales are predicted to reach 10,000 units in the first month which is well over the
number needed to break even, resulting in profit after the few days of sales.

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Risk Analysis/Risk Mitigation:

There are three major risks that can be mitigated to prevent a failure in the supply chain
process. While it is impossible to fully predict the future, Fitbit can strive to be as fully
prepared as possible and work quickly to mitigate the process.

● Raw Materials Risk

With suppliers from China, Indonesia, and the US (plus additionally suppliers for
producing the watch) there is potential risk when it comes to acquiring the raw materials for the
wristband and aluminium storage for the pills.
❏ Mitigation: To ensure raw materials are in a constant flow for production, the
MedWatch will have backup suppliers that are closer (and more expensive) to
the manufacturing plant. Backup suppliers allow for a quick solution to acquire
raw materials when the supplier cannot produce the materials needed. Extra cost
for backup suppliers increases the total manufacturing cost of the product to
increase by $3.50 to $14.08.
● Sustainability Risk
Most of the MedWatch can be broken down and reused such as the aluminum and glass.
However most consumers do not properly dispose of the product. The MedWatch is at risk of
having a larger carbon footprint than necessary.
❏ Mitigation: To encourage recycling and proper disposal of the MedWatch, it will
contain an engraving on the band that says so. Additionally, the packaging will
also heavily emphasize this point. Other possible mitigations include a take back
program included with the purchase of the watch (closed loop supply chain).

● Lead Time Risk

With an assemble to order supply chain, there is potential in a longer than expected lead
time (from the time of order to deliver). Additionally, the engraving process will add additional
time and resources to the supply chain.
❏ Mitigation: One of the MedWatch’s competitive advantages is quality. By
marketing this feature, consumers would be more willing to wait for a product
that is long lasting and durable. Furthermore, Fitbit can constantly inspect
processes through a variation of models such as the Six Sigma process for
improvement. Improving the supply chain will also decrease lead time.

19
Location & Distribution Strategy:

● Nearest Neighbor Heuristic

The Nearest Neighbor Heuristic was one of the first algorithms used to solve the
travelling salesman problem approximately. In that problem, the salesman starts at a random
city and repeatedly visits the nearest city until all have been visited. Its purpose is to quickly
yield a short tour, but not necessarily always the optimal one. In an effort to utilize energy
efficiency and reduce its carbon footprint, while still offering a variety of locations around the
United States, Fitbit will limit the transportation distance for MedWatch deliveries to retail
stores from San Francisco, California to Boston, Massachusetts. Using the Nearest Neighbor
Heuristic, or traveling salesman method, Fitbit will deliver to each retail store exactly once
before returning to Fitbit’s headquarters before delivering more. Because Medwatch uses an
assemble-to-order strategy with transportation beginning at the Fitbit Headquarters, where
MedWatch is assembled, the route will begin at Fitbit’s headquarters. Utilizing the shortest
route, Fitbit will follow the shortest route from Amazon to BestBuy to Target to Kohls to
Walmart, then back to Fitbit, having a distance of 8,102.5 miles.

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 ● ESRI GIS

MedWatch’s target market includes those who are older, use medication regularly, as well as people
who use wearable technology. According to ESRI GIS, the states with the most people over the age of
60 are California, Texas, Florida, and New York. These same 4 states also have the most spending on
prescription drugs, as well as the most amount of people who wear Fitbit watches. This data has led
MedWatch to decide to primarily distribute MedWatches to companies located in San Francisco,
California and to the eastern U.S. to Boston, Massachussettes. Distributing MedWatches to these higher
populated areas with potential customers who fit MedWatch’s target demographics should ensure the
most sales and the highest profitability.

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 ● Weighted Score Preference Matrix- Centralized Placement

Utilizing both ESRI GIS data to evaluate location factors, and the Weighted Score
Preference Matrix to evaluate other quantitative factors important to MedWatch’s competitive
priorities and success as a company, San Francisco California is predicted to be the best location for
the MedWatch facility. Locating the facility in California allows MedWatch to increase production
efficiency since it is located at the headquarters so processes will be integrated and the maximum
amount of supervision over these processes can take place. Furthermore, since the MedWatch
production process utilizes an assemble-to-order strategy, assembling the products in a location
closest to customers6 and complementary products are the most efficient, removing the extra step of
shipping inventory materials to stores farther away for both assembly and distribution once
manufacturing is completed. In this way, postponement will be less of an issue, only having to
worry about shipments of outsourced materials and not the entire product.
Evaluating locations Fitbit already has facilities, it was understood that Massachusetts and
California would be best for facility utilization.7 However, Massachusetts would be less efficient
because of how far away it is from the headquarters, the majority of Fitbit customers and existing
locations. Therefore, reducing energy efficiency in the shipping process. In addition, since Fitbit
headquarters is located in San Francisco, locating the plant in the same location allows Fitbit to
utilize already existing facilities and improve process efficiency even more quickly since key
design decisions will be made in the same location as production, so communication can occur
more effortlessly
Lastly, though electricity might be slightly more expensive than it would have been in
places such as Texas,8 power availability and low cost will still be utilized since it is least expensive
to produce onsite. Therefore, after a careful evaluation of each location with special attention on the
importance of each, utilizing a centralized placement strategy to hold MedWatch inventory onsite at
the San Francisco facility is the most efficient and allows for the most flexible and efficient
processes to take place.

6
(GIS data, 2020)
7
(Craft, 2020)
8
(Statista, 2020)

22
Project Plan:
In order to decide on how to go about the project with the maximum amount of efficiency,
these tools were used: Gantt Chart, Work Breakdown, Critical Path
● Critical Path

Activity Activity Immediate

Time (days) Predecessor(s)

Shipment of wood 50 —
(Indonesia) to
FitBit (CA)

Wooden Watch 2 Shipment of wood

Band Construction (Indonesia) to FitBit
(CA)

Shipment of wire 7 __
(CA) to FitBit (CA)

Shipment of 30 __
Aluminum (China)
to FitBit (CA)

Attachment of Pill 2 Shipment of wire

Pocket to watch (CA) to FitBit (CA),
Shipment of
Aluminum (China)
to FitBit (CA)

Engraving on 3 Wooden Watch Band

Watch Band Construction

23
● Gantt Chart
Below is a Gantt Chart which breaks down different tasks to be completed once the
product gets approved on a certain start date (April 1​st​). Along with the tasks are how
long each task will take until completion and how risky each one is. As the Medwatch
aims to be as sustainably as possible, a sustainability workshop is included in this chart
for all employees and suppliers are also welcomed to join.

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 ● Work Breakdown
The following chart demonstrates the work that needs to be completed in order to begin
production of the MedWatch. Each task corresponds with a team member who is responsible
for the completion of the particular task.

25
Ethical Supplier Selection (Sustainability & Social Responsibility):
When deciding which materials to include, options were analyzed both on material
sustainability for the MedWatch and for the environment. In addition, Medwatch takes social
responsibility seriously-choosing only to outsource from companies who take action in socially
responsible programs. Specific sustainable materials and programs MedWatch is involved with
are listed below.
● Environmental impact of Aluminum
Aluminum is used in many different products and fields because of its very useful
characteristics and its sustainability, which is why it will be used in MedWatch. The aluminum
industry works closely with the U.S. Environmental Protection Agency to report and reduce
emissions and they have recovered scrap to reduce the energy to 5% of what it takes to extract it
from the earth.9 The Aluminum Association says that its 100% recyclability and sustainability
creates very competitive business advantages, provides advantages in product development, and
creates jobs. Aluminum is also part of the solution to a more fuel efficient future.10
● Environmental impact of Indonesian Sandalwood
MedWatch will use Indonesian sandalwood for the wristband. Indonesian Sandalwood is
less affected by water damage, and it ages better compared to many other watch band materials.
Sandalwood is a sustainable material that is not only biodegradable, but will also lower the
environmental impact and decrease the carbon footprint. Furthermore, this material will put less
strain on the wrist compared to other materials such as steel, which will be beneficial for the
target market of an older crowd. It absorbs harmful carbon emissions, which helps fight climate
change. 11Indonesian Sandalwood becomes naturally enhanced over time with skin’s oils and it
helps saves the skin with its non-toxic and hypo-allergenic qualities.​ It is also durable and easy to
cut and shape, which is a great feature for customizable watch designs.

● Environmental impact of Corrugate

9
Aluminum. (n.d.)
10
​Aluminum Sustainability.(n.d.)
11
​Ovi Watch (2019)

26
 For packaging of the product, FitBit decided to use corrugate. This is because ​corrugate is
one of the most environmentally effective and easiest materials to recycle. It can easily be made
into new products that not only saves trees, but also large amounts of water (up to 99% less) and
energy (up to 50% less), as opposed to virgin vibre.12 Additionally, it only takes about 2 months
to completely decompose (while plastic takes up to 1000 years). This is considered extremely
fast compared to most other materials.13 Not only that, the package is designed in such a way that
allows users to reuse the package for storage if they desire, instead of tossing it.
● Social Responsibility of Corning
Fitbit focuses it’s social responsibility on obtaining ethical suppliers. Fitbeit currently
uses Gorilla Glass by Corning. While the glass itself may take additional resources to produce,
there is no post production environmental impact of the glass. Additionally, the glass can be
recycled, however, most consumers do not recycle the glass. To improve the sustainability of the
product, the MedWatch will emphasize proper disposal after its use. The MedWatch will have an
engraving on the wristband reminding the customer to recycle the product and the packaging will
also focus on this message to reduce the product’s carbon footprint. Additionally, Corning, who
produces the glass, is an actively socially responsible company, focusing on programs for fair
wages, equal pay and responsible supply chain ethics along with a strong Human Rights Policy.
MedWatch can look to collaborate with Corning to continue to promote social responsibility and
work towards sustainability.

12
Cardboard. (n.d.)
13
How Long Does It Take for Cardboard to Decompose? (n.d.)

27
Conclusion:
MedWatch is not only a unique device that ​assists, alerts, and reminds users to efficiently
and conveniently take their meds, but FitBit ​is mainly focused on the well being of consumers.
The MedWatch adds value to Fitbit and furthers the company's development in the health and
technology industry. Given the information and data provided above, the MedWatch looks for
advancements in taking this product to market.

28
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