EPP Corporation

Current purchasing methods evaluated

Traditionally, buyers send requests for quote to three vendors each time a requirement for low volume components presents itself. The vendor then provides a quote on the best price in several quantities with their best delivery. After all quotes are evaluated, purchase orders are placed with the lowest bidder. Ironically, this process is the most expensive way to purchase components, particularly for recurring, smaller quantity parts requirements.

The traditional method incurs unnecessary costs in the following key areas:

• Administrative Costs
• Unit Cost
• Inventory
• Inspection

Administrative Costs
The first cost associated with this practice is the cost of soliciting the quote and the analysis of the information. The admin time to issue the quote, phone, fax or email the request and collect the numbers can range from $15-50 per part depending on the company over head which can result in a total cost of $45-150 to solicit three bids. The cost is multiplied by the number of times per year, which can be 2-3 times. That is $135-450 annual cost per part before an order is placed.

Unit Cost
The second issue is the unit cost itself. Most vendors evaluating a request for quote are unsure how the order will be placed. They wonder if the order will be a one-time order, whether it will be the only order for this part this year, when the order will be placed and what the schedule will be. If they need raw material to produce the part, the material needs on the quote are based on the quoted quantity only and, because of the uncertainty, will represent a higher cost. Uncertainty and low volume can add 15-20% or more in the unit cost.

Inventory
The next cost incurred by the conventional system is inventory. Most companies purchase 3-6 months supply per order. This is inventory which sits on the shelve waiting to be assembled into a billable sale. Depending on the cost of money this inventory can cost ½% / month to 1% per month and can translate to several hundred to many thousands of dollars (or millions) of cost that is sitting on the shelf. That is a waste of working capital and profit.

Inspection
The incoming inspection process incurs additional costs. The inspection department ordinarily inspects each shipment received. Quality inspectors are well-paid professionals and each inspection can take anywhere from a few minutes to several hours depending on the complexity of the part. Assuming that a normal part takes about an hour, an average cost could run $80-100. Add to that cost the time the parts are in inventory waiting to be inspected which could be a day or a week. That represents additional working capital wasted.

The most cost effective purchasing method

Over the past fifteen years EPP Corporation has developed a proven supply chain management system that produces maximum savings for customers. EPP’s system works as follows:

• The buyer provides drawings for all plastic machined parts that will be needed for their production over a 12-month period and gives a rough estimate of annual quantity. The quantity is not set in stone, but is necessary as a benchmark.
• EPP evaluates all the parts together as one requirement. Material needs are combined and submitted to the material vendor. The material vendor is advised that the material will be released as needed and is expected to hold the price for one year. In the end, materials saving can exceed 20%.
• Production costs are evaluated next, and reduced to accommodate efficiency improvement expectations. Parts will be scheduled and run when similar components are being produced in order to save on tooling changes. Also, machining time is often reduced each time a repeat part is run. EPP plans for these improvements and calculates the 10-20% cost savings into the estimate.
• After the annual purchase order is placed for all the parts, the only other commitment for the customer is a delivery release forecast. A 12-week forecast that updates each week is ideal. Many customers simply forecast a monthly or weekly release and adjust the quantity as needed.
• Scheduled releases minimize excess inventory. EPP holds ample inventory in the pipeline in case of a “spike” in need driven by unusual requirements
• All parts are manufactured with strict quality standards guided by ISO procedures, SPC, and customer inspection protocol to ensure all critical dimensions are addressed. Along with the promise of dock to stock quality, the customer has the choice of receiving first article inspection reports, sample inspection reports, and certificates of material compliance for every release. This eliminates cost of incoming inspection by the customer.

The Math

Average cost of a discrete quote………………………………..$300/part/ per year
Average cost of a discrete purchase order……………..component cost plus 20%
Additional production cost ………………………………component cost plus 5-15%
Cost of excess inventory…………(interest%)(component cost)( inventory days)
Additional cost of material………………………………………5-15% component cost

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Total………………………………………………………………………..Significant Savings

Please note: savings can vary depending upon individual company costs.

There is no question that supply chain management is a paradigm shift. However if a company does the math, the pay back is enormous. The supply chain management system used by EPP accomplishes a low cost overall cost with the quality assurance and delivery flexibility provided by US manufacturing.

To find out how much you can save with EPP’s supply chain management system, contact us at 847-952-8400 or sales@eppcorp.com today!

How to use the Plastic Design Guide

1. Refer to the Design Considerations at the bottom of this page. Consider whether each item on the checklist is a factor in the application or affects performance requirements for the component design.
2. Select the categories that have the greatest affect on your application.
3. Review the materials in the Plastic Properties Handbook and make a list of possible material candidates.
4. Contact our technical support to discuss options or ask additional questions.

Plastic Machining Design Considerations

• Thermosensitivity – tolerance can change in different temperature conditions
• Sensitivity to humidity and hygroscopic absorption affects tolerance
• Sensitivity to chemicals and oils
• Notch sensitive corners and square ID’s
• Tolerances
• High loads
• High impact
• Fatigue loading or cycle loading requires consideration of flexing, deflecting, and compression
• Temperature – max/min extent of time
• Electrical considerations such as insulating properties
• Wear resistance or abrasion resistance
• Dimensional shape retention (load, cold flow, temperature)
• Regulatory requirements (FDA, UL, etc.)
• Appearance (color, texture)
• Optical requirements
• Outdoor use

Now that you’ve identified the important factors in your application, evaluate material specs in the Plastic Properties Handbook and select your material!

New product development teams nationwide are frustrated with corporate cost cutting and lack of capital for their R&D plans. Valuable projects are put on hold because R&D budgets cannot cover the expensive introductory costs of new tooling and initial manufacturing of new designs. In today’s economic environment, corporate cost cutting is needed to help companies survive the recession. However, if companies can develop new products that provide value at today’s price levels, they will emerge from this recession well ahead of the competition.

Many companies are searching for ways to move new product development projects forward without breaking the bank on initial investments. Research and development, prototypes, and pilot run quantities have to be completed with very minimal investment and without compromising flexibility of quantity and design.

Smart companies have employed strategies to enhance their new product development. A good example lies in companies manufacturing products that contain plastic parts. If projects have plastic components, then the cost of tooling can be a huge obstacle. Tooling and molds can cost tens of thousands of dollars. The solution: have the plastic parts machined. Prototypes as well as the first few years of production quantities can be produced for a fraction of the cost.

Machined plastic parts include little or no tooling charges, and can be delivered in two weeks. While molding requires full commitment to a part’s design, design changes to machined parts cost absolutely nothing. Request a Quote from a quality plastic machining vendor for a fast, cost-effective solution for new product development and launches.

Contact EPP Corporation now to see how plastic machining can help your new product hit the market and put your company ahead of the game!

Not all plastic machining vendors are equipped to offer all parts. Others may not be able to give you the best prices. The following guidelines can help you locate a fully-qualified, cost effective plastic machining specialist:

1. Material Knowledge
2. Purchasing Practices
3. Equipment
4. Quality and Price
5. Looking For the Best

Be sure to ask potential vendors how they comply with these guidelines.

If you have a need for plastic machined parts, request a quote!

Engineers and buyers often reach out to metal machining companies to produce plastic machined parts, thinking, “They use the same manufacturing processes, don’t they? Does it really matter?”

It does matter. If you’ve wondered whether you should have a metal machinist produce your plastic parts, The Short Answer Is – No, You Should Not.

Here’s why:

Cutting fluids for each material are crucial: Equipment used to machine metal – even if only used for metal occasionally – can contaminate parts with oil-based cutting fluids. Many plastics are also very sensitive to petroleum based cutting fluids and will degrade if they come into contact with these fluids. Additionally, many plastics are hydroscopic and will absorb the cutting oils. If the parts are being manufactured for FDA-approved uses or medical applications, they will not meet standards.

Metal fragments contaminate plastic parts: It is difficult to adequately clean a machine that has been working on metals, especially if it has been working on stainless steel. This can lead to another contamination problem. If the plastic material is soft, residual metal fragments can become embedded in the parts.

Metal shops are experts in metal, not plastic: Metal machining companies rarely have any in-depth knowledge of plastic materials, or more specifically, which material to use in an application. Plastic machinists know what plastics are best for any function, and can produce the part you need without the “trial-and-error” processes a metal machinist would use. A good plastic machining firm will have the material knowledge and the right machining processes to consistently give you the highest quality parts.

If you’ve got plastic machined components, EPP Corporation can help. Request a Quote!

With every project that includes plastic components, you will need to answer the question, “Should I machine or mold this part?”

The two major factors needed to reach your conclusion are quantity of parts and level of dimensional tolerance. As a general rule, you should consider plastic machining when lower volumes are needed or tighter tolerances on the dimensions are needed – or both.

Quantity of parts is significant because of the tool cost of a molded part. If you are injection molding your part, the molding tool will typically cost several thousand dollars and tooling for complex parts can cost hundreds of thousands of dollars. Tool costs can make injection molding unfeasible for a low volume run.

Quantities between 100 and 1,000 – on some parts even up to 5,000 – are usually good candidates for conventional or milled plastic machining. Screw machining of plastics can be practical and cost effective from 500 pieces all the way up to 100,000 pieces or more.

Tolerance is a factor because machined parts can typically be produced at a tighter tolerance than molded parts. Each plastic material behaves differently, but you can generally achieve tolerances +/- .005” for molded parts. Plastic machined parts can be produced +/- .001” or better depending on the material and design. This is why critically precise industries – like medical devices, aerospace, fluid power, telecommunications, and many others – have turned to machined plastic.

One last advantage to machining is flexibility of design. Once an injection mold has been produced, it can create only that design and any modification to the design requires expensive changes in the mold. Design changes to a plastic machined part are immediate and have virtually no impact on tooling costs.