Research insights from Jennifer Kent, Ph.D. Vice President, Research Parks Associates

The exact structure of industry supply chains naturally varies by industry, based on market needs, strategies of market leaders, and the legacy of a market’s historical development. The smart door lock and smart access control product industries have developed such that both established, and start-up OEMs do the vast majority of R&D, product iteration, manufacturing, and assemblage of distinct components themselves. Other industries have developed a supply chain tier between components suppliers and the OEM that offloads much of this work – commonly referred to as Tier-1 suppliers.

The auto industry is among the most recognized Tier-1 supply chain structure. Companies like Continental, Bosch, Denso, Panasonic Automotive, and Magna, among others, design and develop whole systems or modules for a vehicle, while sourcing individual components for the system from farther up the supply chain. The auto OEM focuses on the overall design of their vehicles, assembly of various vehicle systems, balance of their product portfolios, product marketing, developing sales strategies, and other mission-critical tasks.

More mature industries that leverage a Tier-1 supply structure aim to realize a variety of benefits:

More cost-effective R&D: Most companies are limited in how many projects they can do at once; they can focus on mission-critical things, and everything else is a nice-to-have or just goes to the wayside. A Tier 1 structure allows companies to outsource research and development time and costs to specialists, which can extend and broaden projects/deployments.

Rapid pivots: The smart door lock and smart access control market – like the smart home market generally – innovates at an extremely repaid pace compared to the traditional manufacturing lifecycle. Tier 1 suppliers help OEMs operate on a more agile timeframe and respond to changing market conditions more quickly.

Circulate knowledge – Tier 1s develop competency on leading-edge technologies and approaches by serving OEMs with varying product specifications and visions. They then serve as a clearinghouse of knowledge, advancing the whole industry, and saving OEMs from having to individually build redundant competencies in-house.

Take the pain out of interoperability – Devices typically evolve in common stages of IoT development, and as IoT development advances from single device/apps in multiple ecosystems, companies need to make business decisions about investing in interoperability. In an industry where multiple leading protocols have attracted and developed a sizable, sustainable ecosystem, the best hope for broader interoperability rests in bridging technologies that can enable ecosystems of ecosystems. Those technologies include voice control and their requisite API integrations, open platforms that provide a common language, and application layer initiatives. As the market matures, business models will have to account for these multi-ecosystem integrations and the cost of creating and maintaining them. A Tier 1 structure allows suppliers to handle integrations and build on new standards like Matter or directly as needed and removing the stress of these developments from the OEM.

  For the smart access industry to leverage the same benefits of a Tier-1 supply structure, several critical factors would be necessary for success. First, a Tier-1 supplier class must demonstrate the competency needed to gain the trust and confidence of established brands to outsource work previously done in house. Suppliers also must demonstrate a high level of responsiveness to deliver on the rapid product lifecycle timelines that smart product development demands. Finally, OEMs and their Tier-1 suppliers must practice tight collaboration to ensure critical objectives are met.

This research is an excerpt from a white paper, Smart Locks and Access Control Supply Chain: Scaling Innovation, released in partnership with PassiveBolt. Read More

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