Managing Innovation at Nypro, Inc.

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Introduction

Nypro Inc. is a plastic injection molding company which was established in 1955 as Nypro products cooperation and the performance of the company was average, similar to other companies in the plastic injection molding industry. Only when Gordon Lankton joined the company as general manager in 1962 did the company improve in performance and sales.

Nypro Inc.’s Competitive Edge

In comparison to other companies, Nypro has numerous competitive advantages that have made the company unique. Nypro has fostered internal competition rather than external competition to perpetuate growth and innovation, basically this means that Nypro competes within its self rather than with other companies.

The competition is also broad in its implementation beginning within each of the 21 Nypro plants. Employees in these plants are subdivided into teams, and these teams are assigned a similar project to work on (Voorheis 1998).

Members of the most successful team are then rewarded through the stock program depending on their consistent performance. Additionally, aggressive competition has been nurtured between all of Nypro’s 21 plants to encourage innovation. Performance statistics are collected on a quarterly basis and the performance results of all plants are distributed to all plants. The successful procedures of the best plants are emphasized together with the failures of the plant that performed worst.

This way, plants have the opportunity to learn from each other and implement successful procedures while avoiding errors committed by other plants. A good example is the Burlington North Carolina plant which used dedicated hoses to supply different viscous plastic to each machine reducing on impurities and cleaning costs; soon after, every Nypro plant was copying the innovation and using dedicated hoses (Voorheis 1998).

Nypro’s strategy

Nypro has been able to formulate an intricate yet successful strategy to govern how organizational procedures, manufacturing, sales and product developments are managed. The first step into crafting the strategy was the selection of prime locations for their plants. Plants are located in metropolitan environments where their products are readily accessible to clients. In addition, these plants specialize in the manufacturing of custom injection plastics that are of high demand in their locale.

For example the plant in Illinois specializes in providing for the healthcare industry in northern Chicago while the Oregon plant serves the needs of Hewlett-Packard. The clientele base was also shrunk by focusing on corporate clients rather than individual clients. In reference to the internal organization of the plants, each plant had its own board of directors rather than a centralized form of leadership for all plants (Voorheis 1998).

The board of directors is selected from different plants, with every member of the board coming from different departments of different plants. In so doing, the board is composed of a variety of individuals with vast experiences ranging in all aspects that pertain to the interests of Nypro (Clayton, 1999).

In product development, development teams are set up comprising of Nypro engineers and the client firm’s engineers; the responsibility of these teams is to conceptualize the product and recommend cost effective processes for production. Once through, the development teams are disbanded and Continuous Improvement teams set in place to analyze manufacturing, procurement of materials and marketing. Once the product is released to the market, a business review committee is set up to follow up on the success of the product.

Knowledge management

Nypro has shown exceptional information and knowledge management, a strong reason to the success of this company. Even though they encourage internal friendly competition, vital information on successful processes and failed processes has to be shared.

The quarterly performance reports was not enough to ensure the consistent flow of information and therefore the Manufacturing Resource Planning (MRP2) software systems were integrated into Nypro to ensure there was proper knowledge management between all plants. The software provided a platform where all plants and their customers could communicate on the production planning of particular products and share data regarding different production models.

Additionally, knowledge management can be demonstrated by the integration of different individuals from diverse plants who are successful in various departments, to form a board of directors for each plant. It is therefore evident that a board of directors has a vast wealth of knowledge from a cross section of the company and they are responsible for propelling growth by incorporating their expertise (Voorheis 1998).

Strategy development

The de facto strategy at Nypro during its initial years was similar to other existing molding companies in that they focused on small scale customers such as individuals and small companies to supply them with custom injected plastics.

However, with the introduction of the strategic planning process, Nypro took on large scale customers with demanding technologically progressive jobs. This approach saw the number of Nypro”s customers drop drastically but the remaining clients were large multi-national companies and as a consequence, the revenue per customer rose by more than 500%.

With the high demand that came with the customers also came the need for a larger workforce and new manufacturing technology. The de facto strategy can be considered as redundant in that it did not produce significant results or apply a different approach to production. In comparison, the strategic planning process was highly efficient and progressive and it led to the expansion of Nypro and the increase in revenue.

Recommendation

At the end of the case, it is recommend that Lankton also considers the manufacturing of custom injection plastics for individuals and small scale companies; this means that Lankton can expand on the current workforce to include a department for small-scale production to carter for these small scale companies (Clayton, 1999). This department can receive two NovaPlast molders and function effectively both in production and sales, bearing in mind the prime locations and goodwill the company has.

References

Clayton, M.C. (1999).Innovation and the general manager. California: rwin/McGraw-Hill.

Voorheis, R. (1998). Managing Innovation at Nypro, Inc. (A). Harvard Business School Journal 9:696-061.

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