mistake in cycle time calculation = reason for price increase???

[Aleks]

Hello,

I have recently joined purchasing team for injection molded parts. After a year and a half of very successful project, the supplier came to us and requested 20% price increase, because he's done a mistake in a cycle time calculation when offering. It has turned out that the cycle time is "now" 40% higher. It sounds for me impossible, that after a year he fond out, that he did make a mistake in the calculation. If I got the idea right, once you've got the parameters for series production and have the parts released by quality (yours or customer), they stay the same and don't change over a time (maybe within certain margin of 5-10%)...If he did a mistake, he knew it from the beginning, didn't he? The material is PBT glass strengthened.

How far from reality can an injection molder be when calculating the cycle time?

I would very much appreciate your comments. I am new to the industry and my common sense could be wrong here...

Thank You in advance!

[rickbatey]

It could be that due to dimensional or size tolerances, resin or tooling changes (MFI too low/high, water passages stopping up or ejection issues) or other issues I've not mentioned, they can't make cycle time. But here's the caveat; if you didn't change any of the requirements, quantities, shipping dates or packaging requirements, then this really isn't your fault and necessarily your burden to bear. Now if things changed then that's another issue. Now I'd ask is this a good supplier and you want to keep them as a long term partner, then I suggest you go back to the table and try to negotiate a new deal.
I've been the guy that missed the mark on the estimates and had to find other means to make money on the job or admit to the folks above me that I made a mistake. But I've also been the guy that was able to run them faster than quoted and with a better scrap rate than we estimated.
BR,
Rick.

[Aleks]

Hello Rick,

Thank You very much for your answer. The quantities have doubled and the next week after we've sent the revised order, he came back with the price increase. The quantities are within his capacities, and they are still in the range of what we were forecasting and what he was quoting. The design was changed to make the part feasible for the injection molding and all the changes were done before release for series production.

It's been a very good cooperation, so the price increase at the point of increasing the quantities is not what we or any other customer would expect...

Best Regards,

aleks

[rickbatey]

Aleks, he should be counting his lucky stars if the quantities doubled and the part runs well with no issues. If he didn't get the mold until it was debugged and running well, I'm stumped as to why he's wanting you to increase the price so much. Unless they messed up their cycle time estimate. Or maybe they missed the resin needing a drier or the glass filler and they worry about injection unit wear. I'm kinda stumped.
Does he buy the resin? Maybe he isn't or didn't get the resin pricing he expected so that's where he's losing money. Again you need to think long and hard about your next move. He can always give you the mold back if you push too hard and then you'll have to scramble to find someone else to mold them.
I was the little company for many years looking for that mold that could pay all the bills and put us on the map. We never found it and I eventually got hired into automotive molding from custom molding.
Rick n

[Suhas]

Good Points by Rick. Thanks.
I think you should flat out ask him about why he is increasing the price? I know you say cycle time but there could be other reasons. May be he was getting too much rejects and kept taking the hit because you have other jobs there and/or he made OK money. Just ask him and they will tell you why. If he is a good honest molder then he will be open and frank.
By the way, there is never a good way to estimate cycle times.
Suhas

[JayDub]

It happens.
Sales engineer wants the commission so he makes an optimistic estimate of cycle time. That time gets on the routing, and hence into the standard cost of the part. Manufacturing develops a reliable process with a significantly longer cycle time. A year later costs get reviewed and suddenly the bean-counters want to know why this job always runs with a variance. Standard cost gets updated, now there’s no margin on the product so the bean-counters jump on the sales manager’s back … and that’s where you are today.

[brentb]

It happens.
Sales engineer wants the commission so he makes an optimistic estimate of cycle time. That time gets on the routing, and hence into the standard cost of the part. Manufacturing develops a reliable process with a significantly longer cycle time. A year later costs get reviewed and suddenly the bean-counters want to know why this job always runs with a variance. Standard cost gets updated, now there’s no margin on the product so the bean-counters jump on the sales manager’s back … and that’s where you are today.

You da Man JayDub!

[Brisli]

you said the design was changed to make it suitable for injection molding, was that before the quoted part price? are there thick sections to this part? gf pcb should have fairly good dimensional stability. sounds to me like he just missed it, not your fault. ive seen quotes so far off it isn't even funny. had one job that had a hot runner, quoted with 25% regrind, the job ran less than 2% scrap, needless to say we lost on that job. it is unfortunate when these things happen, someone always gets hurt but a valuable life lesson.