Avistar Communications Corporation

Avistar (OTC: AVSR) delivers the industryís most advanced and proven desktop videoconferencing capabilities to technology partners and end users worldwide. Many leading technology firms such as Citrix, IBM, LifeSize, and Logitech choose Avistarís modular software technology to power their unified communications solutions because it is a more flexible, efficient and smarter alternative. Avistarís innovative software-only, fully virtualized and bandwidth managed technology solves major infrastructure and user challenges associated with enabling video communications between individual employees and/or teams throughout an organization. Companies across a wide variety of industries depend on Avistarís desktop videoconferencing solutions for everyday business communications with deployments ranging in size from 30 to 35,000 users. Avistar is traded on the OTC and reported quarterly revenue of $2.5M for an annual calendar year of $10M. www.avistar.com.

Mr. Davis was retained by Avistar in the start up phase to establish operations, pilot production and production of the first prototype design of the video conferencing products.

The first steps were to establish the Bill-of-Material system and a change control procedure along with the production of the units. It is critical to establish the appropriate controls on production at the first release of a producible product. One of the primary areas of waste is in obsolete inventory and excessive procurement of components. Not only is there close attention to production, components with long lead, single source and production control is essential. Working closely with marketing to produce realistic procurement of components and production are at a critical stage in a start up operation.

One of the primary issues in a limited production is the build schedule driven by a supply/demand procedure with sales and marketing. A realistic build can only be produced with working closely with the team otherwise resulting in losses in obsolete production of product or excessive costs incurred with revision to existing inventory that is very costly as it requires a unit to acquire additional costs that have an affect in standard costs and inventory control. The time to establish the fundamental procedures between operations, sales and marketing are critical in the early stages of business development. It often is the difference in meeting revenue and cost projections and is difficult to implement in a small company environment.

These procedures implemented at the early stages of pre-production and production had an impact on the profitability of the business and contributed to the current success of the business.

Each phase of operations is dependent on the above processes and procedures to insure successful pilot and limited production. The aforementioned are different from full production as the personnel required have additional skill sets that are critical to the initial phases of production. If these process and procedures are not established, again, additional cost is incurred ramping up production to meet marketing requirements. In essence, each phase of engineering and production are critical to be in place and the responsible managers all must be in the same direction or issues will develop. It is critical to understand not every problem can be anticipated, but having the framework in place will minimize waste and most important, cash flow. The investors of a start up operations must be informed on performance as they are the usual source of additional funding when required to advance the business to the next phases.

The considerations are production control, system engineering, inventory control and all the smaller roles of inventory and production management. In the case of Avistar, there was no ability to produce a product in the management facilities and a subsequent manufacturing location needed to be found and all necessary items necessary had to be procured for the near term production. The requirements for short run production and volume production are significantly different.

The personnel hired for the initial phases are candidates for the larger scope of production; hence, the skill set of each person requires knowledge of more than a specific job description. In this example the person hired as operations manager needed skills beyond product requiring understanding of engineering concepts and design, operations issues as build schedules, inventory and procurement management.

There is also a requirement for an engineering technician that understands the process of a product release from engineering and the processes necessary to produce the product.

At Avistar, a unique requirement was a camera mounted on a monitor. In todayís available products the audio and visual hardware is imbedded in the monitor for this purpose. The Davisgroup maintains specific consultants that can produce these products. The camera design, tooling, electronics and interface to the conferencing product was accomplished in a shot time frame to coincide with the product release.

All of the issues from concept phase through production are very critical for a companyís future success and Avistar is one of the companies that prescribed to the attention to detail and strategy for not only a successful first production offering but the continued success of the business over the past years. Avistar has established name brand products with a good inroad to the available market for these products.

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