Marland Mold Inc

When Does the Lowest Price Cost More?
or
How Much Will One Second Save Your Company?

Marland has been investing in R&D focused on reducing the cycle time of our molds. While our fastest molds are somewhat more expensive to make, they assist our customers in making significant reductions in cost per part. This paper is written for Executives who purchase molds to help them evaluate the economic value of reduced cycle time. We wish to demonstrate that the lowest price can often mean higher costs for your company.

The speed and reliability of a mold determine not only how productive the mold is, but also how efficiently employed are the other assets used in molding your parts, e.g. press, chiller and downstream equipment. We have created a hypothetical 72-cavity polyethylene closure mold to illustrate. The target production is 275,000,000 per year.

The Hourly Rate includes the use of the press and related equipment, labor and profit margin. It does not include the price of the mold or the cost of resin, the assumption being that the cost of resin is common to all possible alternatives. Using this model, we ask the question, “If a mold costing $25,000 more than another could save one second in cycle time, how would this impact your company?”

CYCLE TIME SAVINGS CALCULATION

Quantity Quoted/Annum:	275,000,000
Cycle Time in Seconds	7.0	6.0
Cycles / min	8.57	10.00
Molding Efficiency	90%	90%
Cycles / hour	514	600
Number of Cavities	72	72
Parts / hour	33,326	38,880
Hours/Order	8,252	7,073
Hourly Rate	$46.58	$46.58
Total Operating Cost	$384,373	$329,462
Annual Savings			$54,910
5-Year Savings			$274,552

A one second reduction in cycle time yields savings of $54,910 per year in this example. If the incremental cost of the mold for the one second reduction in cycle time was $25,000, the payback would be less than 6 months and the 5-year net savings would be a quarter of a million dollars.

The savings as illustrated above are understated. The cycle times that the new generation molds are producing can are under 4 seconds and will soon be under 3. The higher cost for the new generation of mold designs has rapid payback and can often warrant upgrading presses and downstream equipment to optimize cycle time savings. Maximum savings in cycle can be achieved when Marland works with you and your customer early in the design of the closure and selection of material.

Cycle time reductions from earlier generation tools can be achieved with new tools even if the closure design and material selection remain unchanged. A new generation mold for an existing closure design can usually save in the order of 15-25% compared to earlier generation molds. This would double the savings as illustrated above to $109,821/annum or $549,104 for a 5-year period.

More modest reductions in cycle time frequently can be achieved by rebuilding an existing tool applying as much of the new technology as possible within the limits of the existing mold design.

While we do not have adequate data to make the case with arithmetic certainty, you may wish to consider the question, “If I can make the desired number of parts in 20% less time, what does that do to the energy component of my cost?”

When purchasing a new mold, will you examine mold performance or simply award to the low bidder? How much more would you be willing to pay for a mold which would provide your company with these kinds of savings? Marland is prepared to guaranty the cycle time of our molds with financial penalties if we do not perform as promised.