The Hybrid Model of Molding
Published date: 19 Nov 2020
Vice President of Business Development at Injectech, Dave Splett, provides a guide to finding the molding company that will help your business find success.
Finding the right company to assist in the development of your next plastic component should appear to be a simple process. However, when pressured by capital expenditures, a need to drive costs lower, and tight deadlines, many medical OEMs and their employees soon realize the potential for this simple process to become expensive and time consuming.
With thousands of molding companies worldwide, there will be anomalies found with specific companies. It is important to understand the ‘general’ practices involved with a hybrid business model and the discernment between the two commonly found types of molding companies to facilitate strong decision making.
The relationship between a custom molder and an OEM is purely transactional. The custom molder can best be defined as a contractor, whilst the OEM will pay for the mold base outright, the custom molder will manufacture parts. This relationship is advantageous to the OEM. If the custom molder doesn’t perform against the OEM’s deadlines, they have a right to move the mold base to another shop. However, this transactional relationship places all the risk on a start-up or an OEM looking to develop their next product. Mold crashes during manufacturing are more common than is usually thought. Typically, a custom molder will charge the customer each time there is damage to the tool.
Product Line Specific Molders
Product line specific molders can best be defined as a vendor. Molding companies that fall into this category are already successful with their own product lines and are viewed as the experts in their component/product field. Typically, they are asked to either modify one of their existing molds or build a new mold to meet a customer-specific demand. They usually do this with good results. However, it is important to understand the following points:
Their machine time for their own product lines will always be prioritized;
Often, they have high cavitation molds and will not entertain a new product if the annual quantities are not in the millions of pieces;
They will quote inserts and pins (the functional part of a mold base) or quote the entire mold base as well. This is referred to as a Non-Recurring Engineering (NRE Fee). The NRE covers the tooling and their time. However, they will still retain ownership of the tool;
They will make profit on the tooling as well as on the part;
If they do not meet your deadlines, you cannot move the tool to another molder; and
If the part is similar to something they currently run, the customer will be charged according to their existing price structure.
As we know, not every new project immediately demands millions of parts, and a new project (or start-up company) cannot justify the high costs of building a mold base. Enter the hybrid model.
Hybrid molders are a combination of a custom molder and product line specific molder. Their focus is on developing relationships with customers by offering flexibility and transparency. Hybrid molders can therefore be best defined as a partner.
Like the custom and product specific molder, the hybrid molder will begin the quote process with the same questions, i.e. ‘What are the annual quantities?’, ‘What are the material requirements?’, and ‘What is the target price?’.
The next step is where the hybrid molder differentiates themselves from the other two. They will first see if the product fits in a current mold base. If it does:
Making profit on tooling is not the main goal of a hybrid molder. They would much rather perform well and run the customer’s product for years. A common NRE covers the cost of the tool and the cost of managing the project (i.e. creating drawings, designing tooling elements and validation costs);
The hybrid molder will ask the customer if they need exclusivity. If so, the NRE will result in the customer owning the tooling. If the hybrid molder doesn’t perform, the customer is free to take their tooling elsewhere; and
If exclusivity is not needed, the hybrid molder will determine whether or not they would like to add the part to their own product offering. If so, this opens up flexibility for the customer. The hybrid molder may decide to cover the costs of the tooling in exchange for marketing it as their own product too. Since the hybrid molder is paying for the cost of tooling, the tooling will remain in their ownership.
If the product does not fit in a current mold base:
A new mold base will need to be built and the quote will follow more closely along the lines of a custom molder; and
The differentiating factor here is that if the mold base fits a future product line the hybrid molder is planning on releasing, they may offer to assist in covering some of the tooling costs.
Preparing for Discussions with Molders
Additional items to consider when evaluating a molder are whether a controlled clean room is required, their reputation, the molder’s validation processes, their lead time and any regulatory requirements such as ISO 13485:2016.
When contacting a molder, it is best to have answers to as many of the following questions readily available. Quotes can be provided with minimal information. However, to avoid miscommunication and potential surprises, answers to the following points are highly recommended.
Does the customer have a 2D drawing or 3D model readily available? If not, is a sample available? If drawings or samples are not available, a molder’s design team can assist.
What is the estimated annual quantity?
What is the target price expectation? (molders ask about quantities and target piece prices to determine the cavitation of the tool. A cavity makes one part. The higher the cavitation, the lower the piece price. However, the mold base will be more expensive as it is larger).
What are the material requirements? Does the customer know the type and grade of the material? Are any regulatory items required; such as RoHS, Reach, DEHP free, TSE/BSE free, biocompatibility information, will the material be acceptable with the upcoming EU MDR criteria? If the material is not known, the molder can still make a material recommendation upon learning more about the end use application and sterilization requirements.
What is the customer’s expected timeframe?
Will the part be used in a new or existing product line?
Are there any patent considerations or potential patent issues?
Are there any specific packaging requirements?
Injectech, LLC has been using the hybrid molding model since the company was formed in 1998. Our team has multiple years of experience with all three molding models mentioned above. Our difference can be found in flexibility, utilizing internal capacities to lower costs, and a focus on the customer’s needs. Injectech is confident in the hybrid molding model and firmly believes it is a customer’s right to take their tooling to another shop if needed. Injectech also believes it is their responsibility to ‘make it easy’ for their customers to buy a product.
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