The fourth force is your company and its resources

The choice of thermoforming equipment for a startup and an existing thermoforming production is not the same. 

Mature thermoforming production has its tech processes, procedures, and production setup, and its goal is to embed the new equipment in the existed production system. 

While a startup has to choose equipment and build a production system around their new equipment. 

We are moving forward with Peter’s coffee lid project; in previous articles, Peter has already analyzed 3 of 4 forces (the market, the competitors, and the suppliers). Now it is time to focus on the last but not least force – Peter’s company and its resources. 

The analysis of the fourth force is about your resources and constraints.

In Peter’s case production system already exists; they have an engineering department, and processes and procedures are settled, but they are all about making paper cups and not thermoforming products. So they know how to choose equipment and launch a new product but lack processing skills. 

You can certainly start with the fourth force as it sets the limitation for your decision. The disadvantage of starting with the Fourth force is that it narrows the window of possibilities – while the goal is to find the best possible option. 

Human resources.

When we speak about thermoformer purchase projects, human resources are often split into two teams:

• the Project team chooses equipment and passes the equipment to 
• the Production team operates equipment later.

And here we face a system conflict: once these two teams are not the same people, responsibility is passed through the project stages. As a result, no one is in charge, and if something goes wrong, each one says – this is not my fault. I have received a project like this. 

The core of both teams (project and operation) must be the same people. At least your production manager and process engineer must be your project team members. 

Considering this fact, Peter’s company has decided that after the project is launched, Peter will be in charge of it for the next 3-5 years. This fact will help a lot in the future. External plastics processing engineer has joined the project team to help Peter.

Does the production team affect equipment choice?

Thermoforming is a complicated technological process with a considerable role in material efficiency. Your thermoforming project will never get out of red numbers without the proper setup of operations like tool change, tool startup, and efficiency control. 

Your requirements for equipment are not the same If you have a skilled production team and a good setup of processes or if you don’t. 

Tech processes

As we have started to speak about tech processes, a good structure is the key to success. No matter how efficient your equipment is, it will never give a good result without a good setup. 

Here is a partial list of the processes you have to take care of 

1. Thermoforming tool preparation 
2. Tool installation and startup of the machine 
3. Norming of material consumption for startup 
4. Quality control procedure
5. Thermoforming machine maintenance 
6. Thermoforming tool maintenance

It doesn’t matter which equipment you choose. The setup happens after the project is finished, equipment is installed, and the supplier’s tech team has left. 

This part is critical and requires focusing. If you have an experienced team, it is okay.  But if you need to create this team and go through the process set up simultaneously, things get complicated. 

Working parallel on team and processes setup decreases the ability to stay focused and more time and expenses until both are tuned. 

It is crucial to exclude any possible complications with the equipment itself. Inexperienced companies struggle to manage process set up along with the production team training at the same time. Your team is studying equipment during the first months. If the equipment has problems you have to solve with the supplier’s help, the timing for project launch increases by 30-40%, dramatically changing the project’s payback. 

An experienced team helps you to decrease the setup time dramatically. Still, it is vital to transfer personal knowledge and skills to the procedures that all employees will study and execute. 

If you don’t have a team with the relevant background, you have to go through this process yourself or hire an expert. The expert might cost you a lot, but with months and tons of material saved, it will pay back. 

Budget and cashflow 

The last aspect of own company analysis is the project’s budget.

We will not spend much time on obvious basics. Besides the equipment itself, the budget includes a production plant:

1. Workshops for thermoforming and extrusion;
2.  Stocks for material, ready product, and waste with equipment;
3. Tooling workshop; 
4. Dressing and dining rooms;
5. Offices; 
6. Utility lines (electricity, water, and air supply). Pay attention to them – your costs will depend on these badly.

Those are processed and calculated in most cases. What else is important and might be out of focus if this is your first thermoforming production? It is the working capital. 

Even if you can reach the breakeven point in six months from the equipment startup, you need to cover your expenses during these six months. 

But remember that even six months might be too optimistic in most cases. In reality, you have to go through many things:

1. Set up your production process before you are ready to present the product to the customer. 
2. A variety of tests, some of them are long-term.
3. Changing suppliers doesn’t happen at once. Fresh suppliers get a smaller volume to prove their quality and reliability.
4. New projects for your customers might also face complications and grow slower than expected. 

So the combination of your process setup and marketing activities to load up your equipment might take 6-12 months for a new project. 

If you have four operators, they have to study the machine and find connections between parameters he adjusts and product quality. There is a saying: “Every operator must spoil 2 tons of material before he starts to understand the machine”. 

Mature companies are different – sometimes they can load up new equipment within a month, but that usually means that they were late with the increase of machine capacity. 

The saddest thing that might happen is underfunding. Some projects will never happen as there is no budget, but projects that failed because of 10% underfunding are the saddest ones. Facing cash flow problems, these projects have to decrease their expenses and costs, slow down the pace, and even let down their customers, which is the worst case. A new company that is struggling to get a reputation loses it. Falling into this vicious circle increases payback dramatically. 

Peter’s company has enough resources, and they clearly understand they will need time and money for at least six months until they will set up the production procedures. 

Their budget for the thermoforming project is 1,5 million euros, and the result of their analysis: 

Now finally, when all Four Forces are analyzed, Peter is ready to proceed with his equipment choice.