How a multinational molder selects suppliers

Nypro operates 24 molding companies and nine moldmaking shops in 10 countries. Less than two years ago, Nypro had 600 molding machines. It has 870 today. Nypro buys anywhere from 80 to 100 presses a year, all ranging from 50 to 500 tons. However, with the decentralized operating autonomy of its far-flung facilities, Nypro has acquired or inherited more than 20 different brands.

For a number of financially sound reasons, corporate management felt it was time to rationalize the company's vendor base. Only investment in the best equipment available would allow Nypro to provide the lowest total system cost. The company also felt global standardization on three brands of machines that best reflected Nypro's business focus and goal of being the best in the world would create a more uniform, more distinguished, corporate image worldwide, one designed to keep global customers focused on Nypro.

Developing a short list would enable Nypro to leverage its buying power into better prices and deliveries. It would accelerate Nypro's ability to seamlessly transfer molding technology between plants, improving the worldwide support it provides to its ever-mobile multinational customers. Internally, training would be facilitated, as would personnel transfers. Fewer vendors would ease service support and parts procurement.

Now imagine having to manage such a project in a company of Nypro's size and scope. Nypro ended its 1998 fiscal year in July with sales of $449 million. It buys many millions of dollars worth of molding machines each year. But the general managers at Nypro's plants around the world run their operations successfully with a substantial degree of autonomy. The last thing anyone wanted was a top-down mandate. So the first thing done was form a team.

Narrowing the List

Daniel T. Meek, corporate vice president, and Jerry Joyce, capital equipment and tooling manager, put together a diversified team that included hands-on people from the shop floor and from engineering, as well as GMs. Together, they developed detailed, standardized specs for Nypro molding machines, although room was left for the GMs to choose a few specialties where warranted, like smaller injection units, vented barrels, and other options. Then the team took six months to develop these specs. Throughout this and all subsequent phases of the project, Meek made sure none of the GMs at any of Nypro's facilities was left out of the loop.

Next, the team targeted vendors, starting with the 20-plus molding machine brands already in-house. Nypro's admitted bias towards high end, fully closed loop, accumulator-assisted machines capable of cycling a test mold in five seconds or less narrowed it down to 12. The team members then picked the top number of marques at each plant and came out with eight. They compared these with the top brands Nypro did not already have, taking into account geographical logistics.

Ultimately, the team was driving to get down to three vendors. Why three? "It sounded like a good number," Meek jokes. "We knew we didn't want to single source our machines. I don't think there's any single vendor out there that could best service all our global needs." Nypro soon found narrowing the list to three would take something more than cost analyses and comparing specs.

The Finalists

They went to visit the suppliers to learn more about them and to educate them about what is involved in working with Nypro in long-term competitive alliances. Prior to the visits, Joyce sent detailed RFP packages indicating Nypro's interest. Top managers at the finalist companies were involved, and all were invited to visit Nypro's headquarters. Based on answers to a matrix of questions he and his associates had worked out, Joyce wrote a summary report addressing the pros and cons of each finalist, making sure he had a full view of each to present to the team.

Netstal and Engel were obvious choices. Nypro's long-standing commitment to Netstal was reconfirmed. Engel is its second biggest supplier. The final selection of an Asian-based vendor was the most difficult, but Nypro chose Sumitomo. Preferred suppliers of specialty machines, such as all-electric or multi-component machines, have yet to be selected. Nypro's GMs now choose from the new list of preferred suppliers. If rogue machines outside the list are selected, GMs have to go through a whole round of red tape to justify their choices.

Nypro now plans to apply this purchasing plan across the board. Resin suppliers are next. Nypro buys more than $100 million worth of materials each year. Then there's tooling. Nypro uses $40 to $50 million worth of molds each year, only 50 percent of which are built in-house.

In pursuing its purchasing in this manner, Nypro believes it inspires competition among vendors that ultimately benefits all. Meek and Joyce agree the technological gaps between the very best of what's out there today are very small. They say you can't just rely on specs, price, trials, and what a salesperson says. You've got to do the homework and the legwork to find what's best for you.