Gordon Lankton’s Innovation Management at Nypro Company

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Introduction

Founded in 1955, Nypro is a plastics manufacturing company that provides services to a wide range of consumers including packaging and consumer companies, the electronic industry, and healthcare industry. Nypro is the world leading manufacturer of precision custom injection molded plastic parts (Christensen and Voorheis, p.1). Gordon Lankton joined Nypro in 1962 as a general manager and is currently the chairman of the Nypro Inc. board.

Apart from being the general manager, he is also the co-owner of the multi-million dollar company. He owned the company and saw it grow into a billion dollar company. Later on, he sold his stocks to employees through Nypro’s Employee Stock Ownership Plan otherwise known as ESOP, making Nypro one of America’s largest companies that are owned by employees.

Since his entrance to Nypro Inc., Gordon Lankton has led the company through a remarkable growth from a small plastic injection molding company to its current state as a large multi-national plastic molding company (p.1). Lankton came up with a strategy that was successful in ensuring Nypro’s innovative development and operational management. Nypro has thus set a case example of innovation in practice. With this brief introduction, the remaining part of this paper is, therefore, a discussion of Nypro’s case presented in the format of question and answer.

What was Gordon Lankton’s strategy for Nypro’s growth? How did the change in strategy affect the customer base?

An engineer by profession, Lankton’s focus for Nypro was to develop the company into a large scale plastic molding company and hence make it different from most plastic injection molding companies at that time. Gordon Lankon’s strategy was, therefore, to develop a superior technology. To achieve this Lankton focused on large scale molding tenders from demanding and technologically progressive customers (p.1). This meant that customers with small scale and less demanding jobs would have to be filtered out of Nypro’s customer list. As a result, Nypro’s customer base dropped from 700 to 50 between 1980- 1995 (p.2).

The 50 customers were large multinationals. Despite, the apparent large drop in customers, Nypro’s revenues increased during the same period owing to Lankton’s production strategy. Focusing on large scale jobs meant higher pays and reduced costs resulting from economies of large scale production.

What was Lankton’s key input in his formula for success? What did he feel would happen if growth stagnated?

Lankton was well aware of the challenge he would face while executing his success strategy for Nypro. In this regard, he maintained the view that “maintaining a vigorous growth rate was not just the result of a successfully executed strategy” (p.2). This view became a key input in his success strategy as he was aware that his strategy may not be successfully executed, but still the company had to find other ways of maintaining a vigorous growth rate.

He worried that a stagnation of growth might be disastrous to the company as this would cause the most entrepreneurial and best employees to leave the company. He stated: “Innovative people like to go out and become entrepreneurs on their own….When growth slows, we get nervous because the entrepreneurial-types won’t see opportunities here and will look elsewhere’’ (p. 2).

What was Nypro’s operational strategy? What was their mission statement?

Nypro used the involvement of employees as an operational strategy. Employees were motivated to work hard and be more productive through the use of incentives. Employee evaluation was one of the strategies employed by Lankton to enhance competition among the workers. Employees who exhibited competence in whatever sector they had been assigned were allowed to purchase the company’s stocks.

Apart from this, outstanding employees were also rewarded by appearing in Nypro’s corporate reports and newsletters. These types of reinforcement and emphasis on performance led to gruesome competition among employees resulting in quality the company’s growth and customer satisfaction. In return, the company gained as a result production of work as every employee aimed at outdoing his/her colleague.

This strategy guaranteed of satisfied customers who kept coming for their services and products. Nypro also focused on a small range of customers, that is, companies that brought in higher revenues. This was a strategy meant to cut down on costs by eliminating the lower-revenue producing clients. It also ensured that they had just enough consumers whom they could pay attention to hence develop a business relationship. Nypro highly insists on standardization of products. They want to ensure that their customers get the same quality products every single time they make a purchase.

Nypro’s mission statement was to become a world class innovative plastic company that provides the highest quality products and at the same time take into consideration the needs of its employees, customers, and the general public.

Why did Nypro settle on focused factories with 20 – 24 machines in each plant?

Nypro settled on focused factories with 20-24 machines in each plant because economically economies of scale were exhausted at this level (p. 3). Any addition of machines past this level would not be economical to the company. Besides, Nypro did not want over-crowded plants. Nypro’s management wanted their workers to have ample room to operate the machines as well as work with each other. That is why every plant was to have no more than 24 machines. These machines were state of the art as they did not want to be outdone by their competitors who were also investing in highly developed machines.

How did Nypro manage its customer relationships?

Customers played a significant role in the transformation of Nypro into its current state multi-billion global corporation. It was, therefore, important for the company to maintain positive customer relationships. Nypro achieved this by developing product development and process improvement focused teams (p. 4). There were different teams, each headed by a program manager, addressing different customer-specific project.

The teams comprised a mix of professionals each with different expertise hence providing room for consultation and thus improved quality of project. These experts were expected to meet the customers’ requirements by producing quality goods. Nypro stepped in and subsidized the costs of molds in cases where the customer was unable to meet the cost. Basically, Nypro nurtured business relationships with its major customers especially in cases where the companies and industries were located close to each other.

In addition, Nypro made it a priority to produce quality goods. This ensured that its customers kept doing business with them as they were satisfied with the company’s services. This was even made easier when it decided to focus on customers who produced higher revenue. This was because it was becoming expensive to satisfy both the big companies and the smaller ones as Nypro itself was still a small corporation.

What were the types of teams Nypro used and what were their different roles and responsibilities?

The two main teams common at Nypro were Product Development and Continuous Improvement teams. Nypro used different product development teams, a strategy that was aimed at enhancing competition among the workers and eventually would result in the production of quality products and provision of better services. These teams were to compete with other teams either within the same plant or other plants.

The product management teams were charged with the responsibility of developing new products for the company and became non-operational once a new product is developed. This paved way for Continuous Improvement team. This team was in charge of production of the item till it reached the market phase. Continuous improvement teams were also tasked with the responsibilities of ensuring that: the company realizes its goal of producing products that are commercially successful; improving the company’s revenue; and acquiring long-term contracts with their customers.

What was Nypro’s scope for innovation? Why?

Nypro’s scope for innovation was wide ranging from technological transformation to marketing and factory layout. The driving force for innovation was competition. Nypro’s management believed that innovation was triggered by competition. Competition was thus enhanced through the formation of teams, which were to compete against other teams in the same plant or in different plants. Nypro’s innovation success is said to have been as a result of the inter-rivalry between its workers. This competitive spirit originated from Gordon Lankton and was farther enhanced by the company’s location strategy.

Performance results showing which teams in the company were the best in terms of performance were distributed to all the plants. Teams from the other plants would then visit the leading plant with the winning team in order for them to learn their processes and come up with ways of incorporating their innovations into their own plant. The plants with the underperforming teams would as a result be motivated to work harder so that they could rise up the competition ladder. Competition as the scope of innovation was focused on because it encouraged workers to think of new ways of outsmarting their colleagues while at the same time providing quality services and goods.

How did the Continuous Improvement team get developed in Nypro and how did management eventually standardize it throughout the company?

The Continuous Improvement team was part of the new product development project. While the product development team endeavored to come up with new products, the continuous improvement team was to work out strategies for the new product until it gets to the market. This team was developed to take over the production team. They were supposed to produce the already developed goods to a standard that was marketable and acceptable. They also had the tasks of ensuring that the revenues coming into the company improved and acquiring long-term contracts with their consumers. This team was modeled after Gordon Lankton himself because he was a highly competitive man.

This team was standardized by management through the company’s commitment to high performance. Thus, it was necessary for the rest of the employees to adopt the same characteristics so that the company could continue growing and being successful.

What is your evaluation of Nypro’s visual Factory system?

Visual Factory creates a visual illustration to be linked to the requirements of production, product options and instruction with the aim of reducing human error. That is, information and data is passed across through means that are not complex hence reducing time wastage. Visual methods, for example, charts, convey information enhancing easy access to those who require it. General information about the plant is posted in a centrally located area where the information is easily accessible by every worker. Information delivered is meant to alert, inform and motivate the company’s workers. This also allows the company to realize their potential, reduce errors, and communicate so as to provide quality and standardize services and products.

My evaluation of Nypro’s visual factory is that it is effective and productive and the outcomes are a proof. Nypro’s visual factory system fits the exact description above. Nypro has grown and continues to grow due to its willingness to adapt to structures that contribute to its success like the implementation of the visual factory. Visual factory has also contributed to the smooth running of the company despite the fact that it is owned by its employees.

What did Implementation of Nypro’s MRP2 system do for them?

MRP2 refers to manufacturing resource planning and it is a method applied in companies to assist in the effective planning when it comes to the company’s resources. The system deals with the issue of planning, that is, both financially and operation-wise. The system is also capable of answering “what-if” questions. The MRP2 system is not entirely a software program, human skills are also required.

Implementation of this system by Nypro resulted in the application of a company management concept that focuses on productive use of human resources. The system also proved essential in handling Nypro’s inventories, improving the company’s scheduling, and fostering productive relationships with their customers and suppliers. Implementation of MRP2 also had remarkable financial effect on Nypro. The system enhanced accuracy in the recording of inventory, reduced working capital, and tremendously improved cash flow as a result of quicker delivery of their products. Furthermore, the implementation of MRP2 has improved quality of products and the design control.

As Nypro’s competition caught up with improved processes, what was Nypro’s new competitive strategy and how did they achieve it?

The molding business is easily penetrable, hence, creating new competition for Nypro every passing day. But as Nypro’s competitors caught up with them, the company did not see this as a threat, but as an opportunity to grow. Therefore, Nypro decided to go through a technological overhaul whereby machines had to be upgraded and a new approach to molding had to be formulated. This would in turn enable the company to increase the quality of molds and at the same time reduce cycle times. Besides that, employees were also to receive training on how to create molds of high quality.

Installation of the upgraded machines was done in stages so as to allow for a smooth transition. Operator training on how each machine functions was carried out including training on preventive maintenance procedures. The innovation led to the production of a superior molder known as the Novaplast machine.

Apart from developing new technology to deal with competition, Lankton still utilized his ‘progress through conflict’ approach, which aimed at enhancing competition among the company’s workers and the results were remarkable. This strategy has ensured that the company’s labor force is ever competitive expressed through the quality of their work. In return, Nypro continues to produce high quality plastic products that can successfully compete in the market.

What were the issues Nypro had to resolve regarding the new NovaPlast machine?

As had been mentioned in the previous response, NovaPlast machine was developed as a way of counterchecking competition since it was more sophisticated and less costly. The machine would thus allow the company to produce high quality products at a much reduced cost. The NovaPlast machine is faster than the Nestal modeling machines. NovaPlast enables operators to change molds in less than a minute while the Nestal machine took a few hours.

However, integration of these machines in Nypro plants was an issue. The company had many options to choose from. The first option was to establish a new plant where only the NovaPlast machines would be used as this would allow for the utilization of engineering efficiency. Thus, the plant would focus on the developed properties of the new machine. Across the plants distribution of the new machines was the second option. This option was more favorable as it resembled Nypro’s strategy of encouraging innovation through team competition across the different plants. The last options focused using one of the already existing plants as an experimental ground and hence test their success before disseminating them to other plants.

The decision made had to be wise as it was not supposed to interfere with the company’s productivity in any way. Hence, Lankton faced a big dilemma as he had to choose between innovation and company’s production.

Taking into consideration the issues stated in question 13 and all of the information you gained from the case regarding Lankton’s strategies, Nypro’s team approach, their focused factory set up, their internal team competition and their focus on growth, which of the three options or any combination of the three options presented in the case would you choose to introduce the NovaPlast machine into the company? Explain your reasoning for your choice.

Taking into consideration all the factors discussed in this paper, I would choose the second option. That is, distributing a few machines to every plant across the world.

This option seems the most applicable given the company’s strategy. Not only does the company’s core belief of competition remain applicable, but it also gives the workers an equal playing field making the competition fair. This would eliminate the case of one plant being more technology savvy than the rest of the plants. It would enhance innovation at a higher level due to the improvement in terms of technology.

Remember, Lankton’s strategy was innovation through competition. Let each plant have a share of the new technology and find their own way of integrating the two machines depending on the needs of the plant. This would also give room for a review on each plant’s experience, information that would be very useful when implementing new technologies in the future.

Work Cited

Christensen, Clayton M. and Voorheis, Rebecca. “Managing Innovation at Nypro, Inc. (A).” Harvard Business School, 1998. Print.

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