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October 21, 1999

6 Min Read
Economies of scale:  Where size and productivity part ways

Molders are notoriouslybusy-changing molds, changing materials, installing new machines,designing parts, shipping parts, meeting old customers, and scouringfor new customers. Chances are that in the midst of this chaosmany have stopped to wonder at what point all this business startsto erode productivity.

Bob Hoffer Sr. wondered the same thing more than 40 years agowhen he and his wife started Hoffer Plastics in Elgin, IL. Asthe company grew from one machine in 1953, Hoffer wanted alwaysto keep his plants to a size that could be feasibly managed byone plant manager.

"You have to know exactly what you're doing, whether thejob made money or lost money, how many hours you were down, howmany cavities you blocked-everything," says Hoffer of hisphilosophy. "You want a manageable number to achieve maximumbenefits."

The key is finding the most manageable operation size. He eventuallysettled on 12 machines. For a plant manager, foreman, and threeassistant foremen, this seemed to be the most manageable number.And for years Hoffer Plastics has adhered to that standard-despitethe fact that all eight of the company's plants reside under oneroof. In one physical space of 340,000 sq ft exist eight virtualplants, each with 12 presses and one plant manager. Each plantis an independent entity that shares common tool maintenance andadministration resources.

But a few years ago Hoffer started to wonder if more wouldn'tbe better. "I thought, 'Suppose we try 24 machines,'"explains Hoffer. "I was thinking it might really be the plantmanager's fault that we couldn't be more productive with moremachines. So we tried it for a long time. And our production dropped."Downtime increased, output decreased, and revenue declined.

"What we found was that one manager wasn't able to handle24 machines," Hoffer says. "So, while we might be wrongat 12 machines, we know we were wrong at 24. What happens is thatyou lose the personal attention that the plant manager and foremengive to a job, and it just kills productivity."

The Logistics Factor
Limiting plant size to 12 presses, by nature, limits other productionvariables as well. A 12-machine facility can only handle so manymolds, so much material, and can accommodate only a certain numberof customers. It's a self-limiting arrangement that ensures theplant will likely never overextend itself. But how does a moldermeasure whether he or she is trying to do too much?

Inspired by Hoffer, Sid Rains, president of IMM PerformanceProducts, has developed what he calls the Logistics Factor, acalculation that can be used to measure how manageable or unmanageablean operation is.

Rains, who has had a long career as both a molder and a supplierto molders, has identified a series of variables that, when takentogether, produce a Logistics Factor-an abstract, relative numberthat provides a measure of a plant's efficiency.

The Logistics Factor includes several variables:

1. Number of presses: Each press requires planning orscheduling plus an operator, technician, or other support.

2. Number of molds: Each mold requires planning or schedulingplus maintenance.

3. Number of different materials: Each type of materialrequires planning, ordering, and delivery to match the press andmold schedule.

4. Number of colors molded (optional): Each color requiresplanning, ordering, and delivery to match material, mold, andpress.

5. Number of customers: Every customer has a differentneed, product, procedure, and schedule.

What's your Logistics Factor?

 Since a Logistics Factor is meaningful only by comparison, IMM asks you to use this form to calculate your own. Then fax it to us and we'll publish what we receive for you to compare. We won't publish company names, but we will list the variables and results you send. Fax your form to Karen Wood, managing editor, (303) 321-3552.

 Your name:

 Company name:


 Custom or captive:

 Major market served:

 Number of presses:

 Number of molds:

 Number of different materials:

 Number of different colors:

 Number of customers:

 Logistics Factor:

A molder could add other variables that also complicateproduction, such as secondary operations or assembly, brands ofpresses, sizes of presses, sizes of injection units, and typesof screws and front-end parts.

The formula, once the variables are assembled, is simple: Multiplyall of these variables together to get the Logistics Factor. Basically,the higher the number, the more complicated and less productivethe plant is.

Consider, for example, three hypothetical molding plants. PlantA is a typical custom molder with a limited number of customersand molds, and therefore a limited number of materials. PlantB is a housewares molder with many colors and molds, but few customers(this profile could fit many custom molders as well). Plant Cis a closure or commodity molder with a high number of pressesand a slightly larger group of molds and customers, but few materialsor colors.

The table below shows howthese three plants might compare for each variable, and what eachLogistics Factor would be. The factor by itself is a meaningless,abstract number. But when compared to others, it starts to takeon meaning. By comparison a molder can detect where elevated variablescontribute to a more complicated operation. It points out wheresimplification may streamline operations.

 Logistics factors for three hypothetical molding plants

























Logistics Factor




Plant B, with the highest factor, is hindered by a large number of molds and many colors. Plant C has the most molds, but its factor is kept down by few materials and colors. Plant A enjoys fewer presses, but as a custom shop has to manage several materials in different colors.

The question is, how do you use the Logistics Factor?The obvious goal is to lower the factor by reducing variables.One of the easiest to reduce is the number of presses. This doesnot imply that molders should sell presses, but instead considersubdividing plants into groups of subplants, or suboperations(a la Hoffer Plastics).

Rains also suggests that a molder decide what factors are importantto his operation and benchmark against other plants that are involvedin the same or similar endeavor. "The most important thingto remember," Rains says, "is that each and every logisticfunction requires people. If you have a very high Logistics Factor,then you will need lots of people, computers, and planning. Yourstrategic plan should include an effort to drive the LogisticsFactor down, not up."


Contact information
IMM Performance Products
Medina, OH
Sid Rains
Phone: (330) 239-5704
Fax: (330) 239-3904
E-mail: [email protected]

Editor’s note: Sid Rains is the main dinner speaker at IMM’s next Molding Management Conference, Jan. 31-Feb. 1 in Scottsdale, AZ. See the complete conference program or contact Mel Friedman at (919) 845-2517 for more information about the conference.

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