Case Study: Speck

Speck Uncovers Significant Cost Savings on Air Freight & Packaging Materials by Establishing a Facility in Mexico

Speck Products has been a market leader in the electronic accessory category, selling fun and unique products for every personality. Founded in 2001, Speck's focus on innovation, lifestyle, design and fashion has made Speck a one-stop shop for accessories for your iPod, iPhone, smart phone, laptop and other electronic devices. Speck strongly believes that device cases are meant not only to keep these delicate devices protected but that they should be stylish to reflect the character and unique taste of every customer, making them more fun to own and use. Its products can be found worldwide at Apple retails stores and at most major electronics dealers.

In the winter of 2009, Speck began searching for opportunities to minimize costs while maximizing the flexibility of their production. Speck's detailed analysis compared shipping retail-packaged products from China to the US, with establishing a final retail packaging facility in Mexico. From this thorough logistics analysis, Speck uncovered significant savings opportunities as well as added value aspects outside of their current business model. By shipping smart phone cases in bulk to Mexico, they would considerably reduce air-freight costs and lead times.

Speck's main concerns were maintaining the quality of their product along with the appearance of the packaged product. They performed an extensive due diligence study on border brokerage costs, freight costs associated with border crossings and sourcing packaging materials in Mexico. Speck determined that Tijuana would be the best location to optimize their operations. Speck knew it was essential to find a reliable partner to ensure a quick and smooth transition into Tijuana.

Because of NAPS' proven track record, Speck selected NAPS as a strategic partner and was able to meet its performance goals. In just 8 weeks, Speck was up and running. The company achieved substantial cost savings on a per unit basis from lower freight costs alone. It is expected that Speck will move more operations to Tijuana over the next year. The final phase is planned for the 1st quarter of 2011.

Given Tijuana's access to high quality and low cost packaging materials, Rose Ortiz, Speck's Latin America Operations Manager, made it clear that that Speck is "very focused on the quality of our products, including the packaging, and would not have used materials in Mexico, even at a lower cost, if the quality was not there." Speck is also impressed with the quality of the workforce. "We have been very satisfied by the workforce our team has been able to put together with the help of NAPS. The workforce was easily trained and is consistently on time and up to our standards. The employees are more educated relative to the Chinese workforce and are more motivated to be a part of our team," explains Rose.

According to Rose, Speck has achieved significant cost savings of the product as a whole, since establishing a packaging facility in Tijuana. Speck will continue to ship from China retail packaged non-phone case products, larger items, bags and any other accessories that do not take extra air space. Speck realized that by focusing on products that take up substantial air space, such as smart phone cases, they can optimize freight utilization. By packaging smart phone cases for retail in Tijuana, Speck has also realized significant savings on freight costs from China and significant savings on actual packaging materials. Additionally, Speck finds added value in increased flexibility and reduced lead times by being in Tijuana.

Speck has thrived by relying on the expertise of the NAPS team, allowing management to focus on production. "NAPS has made our transition seamless and their expertise shows up in every key area from import/export to IT, to working with all levels of the Mexican Government. We are sure that many issues that would have slowed us down or maybe even stopped us, were handled by NAPS without us even knowing. We have benefited tremendously from NAPS' overall understanding of the Maquiladora program," Rose comments.