‘Made in Europe’: Better for users, the environment and the company
Nuki NewsWhile many companies opt for production in Asia for cost reasons, Nuki has taken a different path: Its Smart Locks have been produced in Europe since the very beginning. Why was this decision made so early on? What are the advantages of European production? But why is Nuki still keeping an eye on Asia? Alexander Ketter, Chief Operating Officer at Nuki, explains.
Nuki Smart Locks have been on the market since 2016. Starting with the initial prototype, the electronic door locks are made in Europe. What strategic considerations underpin the European approach to production?
ALEXANDER KETTER: In the early days of Nuki, it was extremely important to us to maintain close ties with our development and production partners. Our main concern was to ensure short development cycles and thereby achieve a faster market launch while maintaining high quality. That’s why we had a European supplier for our Smart Locks when we launched them in 2016. We have never deviated from this European approach to production – nor do we intend to.
Due to the lower costs, many companies opt to produce in Asia. What are the advantages of European production over possible cost savings?
KETTER: The main advantages are the shorter distances and the resulting time savings. We can reach our suppliers within a few hours. This means that we can clarify any open questions more quickly and we are more flexible when it comes to short-term changes in demand.
How does manufacturing in Europe affect the quality of Nuki products?
KETTER: European industry is heavily influenced by the automotive sector, which attaches great importance to the quality of its suppliers. This focus has greatly improved quality standards in recent decades. Other industries also benefit from this. And that includes Nuki, as many of our current suppliers also supply the automotive industry. When it comes to quality, however, we don’t just rely on others. Continuous quality improvement is part of our company DNA – in all areas of our business. Our double ISO certification also confirms this: ISO 9001 and ISO 14001 certify that we meet the highest international standards in terms of quality and environmental management systems.
How does the proximity to the production sites affect the speed with which Nuki can respond to market demands or make product improvements?
KETTER: Being close to the production sites has a significant influence on our pace of innovation and product improvement. On the one hand, for a hardware product like a Smart Lock, in-person coordination on site is essential to resolve any issues and improve the product. Doing so is much easier when the suppliers are only a few hours away. On the other hand, shorter distances result in reduced transport times and minimize buffer times. Shorter buffer times, in turn, enable us to pass on improvements to the Smart Lock to our customers much faster.
What does that look like in numbers?
KETTER: I can best illustrate this with a simple example: The transport time from Asia by sea is about two months. Taking into account production lead times and stock levels, it takes four to five months from the time of order to the receipt of the products. So we need almost half a year for any change to a product during production in Asia. In Europe, transport by lorry takes two to three days. Taking into account production lead times, it takes two months from the time of ordering to the time we receive the products. I can reduce the buffer by four months. If we manufacture our Smart Locks in Europe, our users will benefit from product improvements months earlier than if they are manufactured in Asia.
What are the sustainability benefits of producing Smart Locks in Europe?
KETTER: E-commerce is a very fast-paced business. Demand and customer requirements change rapidly. If I want to satisfy the demand of this market, I need a fast supply chain – which is only possible with air freight when it comes to goods from Asia. Since air freight causes very high CO2 emissions, the only way for Nuki to be fast is to have a European supply chain. The most obvious advantage in terms of the environment is the reduction in CO2 emissions that would result from air freight from Asia. We also pay attention to sustainability in our actual production in Europe.
Does Asia still play any role for Nuki in the long term in terms of production?
KETTER: We are keeping a very close eye on the manufacturing industry in Europe, but of course we haven’t forgotten about Asia, where there is a great deal of innovation taking place. In order to offer our customers innovations more quickly, we are trying to combine expertise from Europe with that from Asia. For example, by leveraging the speed and experience of Asian injection molding tool production, but carrying out the manufacturing process fully automatically in Europe.
Is there any further potential to expand the European approach to production? Might there be special challenges or risks here as well?
KETTER: There is definitely more potential. As already mentioned, our Smart Locks have been manufactured in Europe since the early days. However, some of our products are still manufactured in China. However, we decided several years ago to gradually relocate the final assembly of all our main products to Europe. We are able to manage the associated challenges or risks. Personnel costs in some Asian countries have risen considerably and European suppliers are becoming more and more competitive. That’s why we put everything in place early on to ensure that the process of relocating the final assembly of all our main products to Europe can be completed in two years.
