Business Workshop Report 8
BUSINESS WORKSHOP REPORT
British Plastics Federation
THE BUSINESS WORKSHOPS
The Business Workshops are supported by the DTI as part of the Partnership in Plastics (PIP) Programme. The Programme is designed to improve the competitiveness of the UK plastics processing industry by building links between major customers and small to medium enterprises (SMEs). The focus of the Business Workshops is on informing the SMEs of the changing needs of major customers and the means of meeting these needs.
tp activity toys ltd. is the leading UK manufacturer of outdoor activity toys. Since 1959, tp has built a reputation for innovation and development, growth of 10-20% per year proves that it is possible to grow by manufacturing in the UK. As the inventors of the commercial climbing frame and ‘hula-hoops’ the company uses ‘global sourcing’ but is committed to manufacturing in the UK whilst exporting throughout the world.
Toys have two disparate purchasers - adults finance the purchase and have inputs in the areas of safety and ‘value for money’ but children have a significant input through the ‘nag’ factor and their demands for style and peer group pressure. As well as attracting both purchasers, entry to the market means meeting key product safety criteria (Toy Safety Requirements, EN71 and EN1176) and establishing the product viability in terms of cost, differentiation, style and the elusive ‘fun factor’.
There are considerable cost pressures from overseas suppliers and from retail chain consolidation. The toy industry is also facing increasing legislation (safety, packaging, manufacturing) and rising litigation associated with consumer expectations of safety, durability and maintenance. Exporters and importers also face inevitable exchange rate fluctuations. These pressures affect tp as pressures to reduce prices and to seek differentiation by continuous innovation.
Customer consolidation and larger customers also means demands for exclusivity and special products.
Any company with limited internal resources needs effective partners for new product development (NPD) and tp actively works with partners to jointly develop products. In markets where great developments lead to significant sales, joint development agreements can lead to success for both partners. tp provides expert knowledge of the toy market and the NPD partner provides the technology required for success.
Partner relationships are the key to success and good relationships are built on good communications and fulfilled promises. Other essential requirements are flexibility, responsiveness, discretion and loyalty. tp places a high importance on early honesty - telling the truth quickly allows action to be taken - concealing problems only puts off the day of reckoning! A partnership based on trust and understanding is the foundation for rapid progress.
As the source of technical expertise, the partner must have basic manufacturing and assembly competency. It is also important to understand the toy market, where safety and quality are basic needs and partners must conform to EN71 for products and materials and have an established and auditable quality system.
Partners can add extra value to the partnership by being pro-active in providing ideas, innovations and cross-fertilisation from other industries and technologies. This comes from knowing other sources for related products and services to add further value to the development process.
The ability to provide in-house support for design and prototyping and the new essential of e-technology exchange adds extra value to any partnership as does exclusivity of technology, design or tooling. In an industry where NPD has about a 10% ‘hit rate’ the added value of partnership is vital to success.
Selecting the NPD product
The days of waiting for quotation requests and working to order call-offs are fast fading. Successful, proactive suppliers find potential customers and propose new developments. As toy specialists, tp has a schedule of potential toy projects awaiting development and there is always a need for partners. Proactive suppliers work with sector specialists, gain new business and reap the rewards.
EFFECTIVE AND EFFICIENT
Effective NPD needs strategic product planning and realism in both timing and expectations. In a sector where the product development cycle is generally less than 12 months and 50% of the sales are made in a 3-month period (April to June), realistic timings are imperative and shorter unrealistic timings do not win business. The rapid NPD cycle needs effective decision-making as the process ‘goes around the loop’ of improvement. Equally important is the need to know when to stop and when to persevere. Limited resources mean focusing on what will work quickly and effectively and removing any emotional content from the decision making process.
Historically tp has owned the design and tooling but progressively the partnership approach means that the producer is the designer, toolmaker and manufacturer with tp having distribution exclusivity for agreed geographical areas. This is a logical outcome of the partnership approach for both partners.
A challenge in any development is the transfer to full production and post commercialisation improvement. This demands rapid ‘right first time’ modifications and improvements.
Production after development is based on a maximum lead-time of 4 weeks and this requires information on scheduling and capacity and assumes a consistent quality within tolerance. Partnership assumes an immediate response to serious issues with a prompt response to other issues to maintain schedule conformance.
The evidence of getting the product right can be best seen in a returns rate of as low as 1%. In this market, the product is largely ‘self-assembly’ and the quality of the instructions is as important as the quality of manufacture! In all cases prompt and effective handling of with complaints is vital in customer relations.
The technology requirements for all sectors are changing as new technologies become more widely available, e.g. the need to be able to provide quotations from 3D solid model files and to provide cost effective fully functional prototypes is associated with the rise in general capability in this area. In a sector where safety is paramount there is a vital need for very careful attention to finishing operations, especially for sharp edges on blow mouldings. There is also a rising demand for more moulders with two shot machines for special product developments.
A major concern is the treatment of tooling costs and the effect of sales volumes. For large, low volume products the treatment of tooling costs can determine the project viability. The new partnerships can give shared risk and shared rewards.
The competition from Far Eastern toolmakers and producers is widely reported but is not without significant concerns. Whilst good quality products can be found at attractive prices, the development process can be hard work, travelling is time consuming and costly and more importantly, it is not easy to reject a 40’ container of products.
tp have found that local development is most successful when using innovation using advanced automated processes. Local manufacturers in the UK are still a preferred and secure source for
"Partnership is about delivering more than just components”
Mark Young - tp activity toys ltd.
EXAMPLES OF PLASTICS IN TOYS
Mechanical and educational toys
THE KEY LESSONS
Despite slowing birth-rates, the market is growing with increasing disposable income and demographic changes. Children are now a distinct market sector with substantial control of large amounts of disposable funds. Toys will remain a significant market for plastics for the foreseeable future.
The PiP Programme consists of a range of activities including:
The Business Workshops are part-sponsored by Norwich Union Insurance. Contact: Jon Stevens (020 7662 2127 or firstname.lastname@example.org).
Note: Any opinions expressed in this Business Workshop Report represent those of the author and not necessarily those of the BPF, DTi or tp activity toys ltd. Produced for the PiP Programme by Tangram Technology Ltd. (email@example.com)
For further information about the PiP Programme contact:
The British Plastics Federation
This Business Workshop Report is based on the results of a PiP Business Workshop held in November 2000. The customer viewpoint at the Workshop was presented by Mr. Mark Young of tp activity toys ltd.
All logos and trademarks acknowledged. The assistance of tp activity toys ltd. in the provision of artwork and logos is gratefully acknowledged.