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Moldmakers and purchasing agents: The language barrier

Ask moldmakers what they think of purchasing agents and they don't mince words. "Purchasing only looks at the bottom dollar with little concern for the quality of a mold and a reliable vendor," says one of the 125 respondents to a recent survey completed by the American Mold Builders Assn. (www.amba.org). With about one-quarter of the AMBA's member companies responding to the survey, it is evident that moldmakers and purchasing agents have issues. 

Results from the AMBA survey show that the majority of mold shops (90 percent of respondents) deal with both purchasing and engineering when quoting, negotiating price, and developing a mold program. Only 2 percent responded that they work primarily with purchasing, and 8 percent reported they work primarily with engineering. 

However, about half of the moldmakers responding said that purchasing and engineering people typically don't work well together to facilitate the mold buying process. When asked why these two groups don't seem to work well together, most respondents said that purchasing and engineering have different agendas; also cited was a general lack of communication between the two departments. 

When it comes to agendas, moldmakers said that purchasing people buy strictly on price, while engineers are better equipped to make decisions based on quality and value. Generally, reported purchasing agents, purchasing has budgetary responsibility for a mold program. Whether or not a program falls within budget rests on the shoulders of the purchasing department. 

However, this often puts purchasing agents at odds with moldmakers and engineers, who better understand the tooling process and the costs involved. This knowledge covers less tangible factors like productivity, efficiency, downtime, and maintenance considerations. 

Different groups within a large OEM have varying responsibilities, explains Jay Mortensen, who has a background in manufacturing finance and is currently with Maytag's Global Procurement division in Chicago. "When budgets and performance measures are fractured, it is easy to overlook important costs and risks related to procuring, developing, operating, and maintaining a mold," he says. "By using a disciplined, strategic cost management process the benefits of understanding the total cost of ownership can be realized." 

Understanding Customers 
Most moldmakers responding to the survey (77 percent) said they understand the procurement procedures of their OEM or molder customers. Of the 20 percent who responded that they do not understand procurement procedures of their customers, 52 percent admitted they were unable to collect payment or had payment delayed because of misunderstandings about procedures. 

Susan Patton, purchasing manager for Corning Gilbert Inc. in Glendale, AZ, says it's not absolutely necessary for moldmakers to know their customers' purchasing policies, but it is critical to know who authorizes projects and expenditures. "Small shops who serve large multinational companies often clash philosophically," she notes. "However, it's just smart business to protect yourself from getting burned. Somebody was perceived to have the authority but didn't. It's just good common business sense to find out who has the authority." 

Although 15 percent of survey respondents reported that engineering determines who will build the mold and places the PO, in a more typical scenario, according to 37 percent of respondents, engineering determines the vendor and purchasing places the order. Only 16 percent of respondents said that purchasing chooses the vendor and places the PO with some input from engineering. And a mere 5 percent of respondents said that purchasing chooses the vendor and places the PO based strictly on quotes received with no input from engineering. 

Rick Finney, president of M.R. Mold Engineering in Brea, CA, says it's particularly frustrating when nontechnical people are involved in the quoting process. "They ask for some-
thing we can't do and we try to talk to them about the technicalities of a mold and why we can't build what they're requesting, but they don't understand what we're talking about," he explains. "We get drawings sent to us that have no specifications on them. We call and ask, 'What do you want?' They ask, 'What do you recommend?'" 

Finney, like many moldmakers, is more likely to respond to RFQs that are focused, detailed, and indicate that the customer knows what it wants. 

Educating Customers 
Overwhelmingly, moldmakers responding to the survey said the biggest problem they have dealing with purchasing people is their lack of knowledge about molds, manufacturing, and the process of mold buying. Less than half (45 percent) of the moldmakers responding said that purchasing people understand molds and mold buying. That said, however, few moldmakers try to educate customers on the subject. Only 7 percent offer some type of formal education for customers, such as a plant tour. 

Tech Mold Inc. (Tempe, AZ) is one moldmaker that regularly holds seminars for customers. Frank Baker, director of sales and marketing for Tech Mold, says that "educating the customer is the best way to get them to be on your side." Tech Mold sponsors seminars at its customers' facilities for engineers as well as purchasing agents, and has sold or given away more than 10,000 copies of the book What is a Mold? since its publication five years ago. 

Such seminars improve purchasing techniques and help establish long-term relationships between moldmakers and customers. "Going from one moldmaker to another [based solely on price] is not in the best interest of anyone," comments Baker. 

The Purchase Order 
A whopping 95 percent of survey respondents said they begin work on a mold without a purchase order, a practice that can come back to haunt the moldmaker. Just more than one-quarter of the respondents (26 percent) said they have been refused payment of an invoice because it lacked authorization from purchasing. 

Many moldmakers get caught in this trap because of the pressure to satisfy engineering, which is usually up against a tight schedule. Waiting for the red tape involved to cut a PO can threaten the entire production schedule. Moldmakers also know that if they refuse a job because it lacks a PO, a competitor will certainly pick up the program. 

Some mold shops said they begin work on a mold with a written authorization from the project engineer. Here the moldmaker risks being caught in the middle between engineering's demands and the purchasing department's reticence to issue a PO. 

Patton says that most moldmakers are "trusting their customers too much" by relying on verbal instruction. "They think they're doing us a favor by going ahead without a purchase order," she says. "Purchasing plays a key role in the process, and my job is to make sure the right people are involved in the mold purchasing process from the get-go." 

IMM's Benchmarking Report: Third quarter 2001, data group 2 of 3

The IMM Benchmarking Report is in its fourth year and this month provides data from the third quarter of 2001. We've developed a strong core group of molders who have volunteered this data, but we are constantly looking for more participants who want to take advantage of what the report has to offer. The validity, vitality, and survival of this report depends entirely on data from molders. If you enjoy and make regular use of this report, we encourage you to join today. 

For those new to the Benchmarking Report, the project is simple. Several molders have volunteered to share their benchmarking data with us each quarter. The information comes in two parts. The first is the profile data (see table, below), which characterizes the molders by press quantity, resin quantity processed, parts quantity, and revenue, among other measurements. The information in the pies is the benchmarking data. We're measuring nine benchmarks: machine utilization, productive downtime, training per employee, mold change time, scheduled ship date on time, accident incident rate, scrap as produced, customer returns, and employee turnover. Each month we present three of these nine benchmarks. 

If you want to get involved, participation is easy. In exchange for your time and data each quarter, you will receive from IMM detailed reports on key production and market data for every participating molder. Reports are available in hard copy form or as Excel spreadsheets if you would like to manipulate the data yourself. To receive a sample report, e-mail the address in the box below. 

Should you choose to participate, your anonymity is guaranteed. Use the contact information listed below if you are interested in joining the program, or if you have questions regarding it. We will fax or e-mail to you the forms you need to enroll and get started. This service is free of charge. 





Contact information
Injection Molding Magazine
Denver, CO
Tony Deligio
(303) 321-2322
[email protected]

Market Snapshot: Packaging

It's nearly impossible to walk through any retail establishment without finding signs of plastic packaging. Consumer products from food and dairy, pharmaceutical, and household items to industrial products such as paint and spackle come in a variety of molded packages that offer convenience, better preservation qualities, and recyclability. As a market, packaging seems to offer unlimited opportunities for growth as plastics continue to replace glass, metal, and paper packaging. 

Yet, molders serving this market saw slight growth in 2001, mostly in single digits as economic weakness made an impact. Still, packaging molders seem to be faring better than their counterparts servicing a variety of other markets. Greg Landis, president of Landis Plastics Inc. (Chicago Ridge, IL), says he's grateful to be in the food packaging industry, as it is the largest segment for rigid packaging. Although Landis Plastics' sales were up 9 percent in 2001, "I don't know that the whole market is up that much," comments Landis. 

"We've always gotten some new business [each year], and most of the growth is in the cultured side of the business, such as snack dips and yogurt," he says. Landis Plastics currently operates five facilities dedicated to high-speed, high-volume injection molding and decorating of food containers. 

 (est.)(est.)
Table 1. Dairy Products*19891993199820032008
Shipments (billion $)25.730.643.654.066.7
Total container demand (million $)14861571180220252273
Plastic container demand (million $)677676740770813
*excludes fluid milk and cream


Growth is expected to continue in the dairy industry. A report by The Freedonia Group Inc. reveals that U.S. shipments of dairy products are projected to expand 3.8 percent yearly to nearly $54 billion in 2003 (see Table 1). Growth markets for dairy products include cheeses, especially specialty cheeses and bagel spreads; yogurt, especially dessert flavors and other items targeted towards children; organic dairy foods; and flavored creamers and ice creams. 

The Freedonia report also notes that demand for food containers used to package nonbeverage dairy products and related nondairy substitutes will grow 2.4 percent annually to $2 billion by 2003, stimulated by good growth in dairy product shipments. Another good sign for molders of food containers is that "plastics containers have usurped most other applications from paperboard, although plastics continue to make inroads in frozen desserts and niche markets like grated Parmesan cheese," says the report. 

However, the report adds that "plastic food containers will expand at a slow pace through 2003, having captured a significant market share from paper over the past several decades," but will "benefit from sustained growth in markets like yogurt and bagel spreads, with further inroads in applications like puddings and ice cream." 

Berry Plastics Corp. (Evansville, IN) is a leading molder of packaging for a variety of markets including the dairy industry (yogurt and sour cream containers) and industrial products such as paint and spackling. The company also has an aerosol overcap business and a closures division that serves the milk, water, hair care, and pharmaceutical dispensing markets. 

Curt Begle, Berry's marketing manager, says packaging will continue to be good business. "I think every study shows continuous growth in packaging and in particular plastics packaging," he says. "It's not a tremendous climb, but a steady one. Some markets we have yet to penetrate, and there are a lot of opportunities out there in the food industry specifically." 

Figure 1. Caps and closures shipments

Caps and Closures 
The caps and closures market also represents a growth opportunity, according to a report by The Freedonia Group, with U.S. shipments of plastic caps and closures advancing 4.6 percent annually through 2005 to 114.4 billion units (see Figure 1). Material demand for this market should hit 2.5 billion lb by 2005. More than 70 percent of that material will come from the plastics segment, dominated by polypropylene and polystyrene, keeping plastic closures the largest and fastest growing industry segment. 

Plastic closures will continue to benefit as plastic bottles and jars replace glass containers and compatible metal closures in applications ranging from baby food to hot-fill foods such as sauces and condiments. Technological advances are also allowing plastic closures to compete more effectively in glass packaging applications like wine. 

Serving a number of markets and geographies, but focused on its molded products, The Aptar Group (Crystal Lake, IL) produces dispensing closures, pumps, and aerosol valves. This $1 billion corporation runs 700 to 800 injection molding presses worldwide, according to Steve Hagge, Aptar's cfo, and generates 60 percent of its sales outside the U.S. 

Through the first half of 2001, Hagge says Aptar saw strong sales, up 9 percent. During the September time frame, Aptar saw a slowdown, and through Q3 2001 business was relatively good, but flat in terms of revenue and profitability. "There's a lot of uncertainty with our customers," Hagge notes. "In spite of the short-term issues, we're very positive about the long-term outlook for packaging."