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Jack’s Plastic Welding INC
115 S
Phone
Fax
Email Design dept: info@jpwinc.com
Email Accounts payable/receivable: shop@jpwinc.com
Jack's Plastic
Welding Inc
HOW WE DO BUSINESS
PLEASE NOTE: We do not allow customers to work in our shop on product development.
We currently use the most advanced design software available. We expect that our customers will take the time to work through the interactive part of the process. Customers who enter this process must become familiar with the use of Edrawings program so we can communicate more effectively. Please go to this web site to see how Edrawings work. http://www.jpwinc.com/edrawings.html
INTRODUCTION
This Document
characterizes the way we like to do business at JPW inc. This policy has evolved because of our need
to organize and document the way a product is produced. We are confident that you will agree that this product
management policy helps our company
produce products in a quality conscious efficient manner. Customer needs are of primary
importance. For this reason, we welcome
any written comments on this policy.
CUSTOMER
CLASSIFICATIONS
Customers come in
three types. Standard product customers
want a standard product. Customized standard product customers, want standard products with slight
modifications. New (prototype) product
customers want an entirely new and unique design.
STANDARD PRODUCT
CUSTOMERS
Standard products
customers can see the price on the price list and purchase form that list at
that price. Our price levels are
Distributor, Rep, Dealer, Outfitter, and Retail. Customers are qualified, and then purchase at
one of those price levels.
CUSTOMIZED STANDARD
PRODUCT CUSTOMERS
Customized standard
product customers pay a premium for customized products. This depends on the quantity and the amount
of customization. Customized products
must be tracked for the individual customer, so there is an associated
administrative cost involved.
Customized standard products that can not be run inside a standard
production run, carry a further premium price. A
typical custom charge may include the cost for 1 item that can not be placed in
a production run because of the size or the extent of the modifications. As the quantity of these items goes up, the
cost of custom work goes down per unit, because the item becomes a production
run in itself.
This leaves only design changes and administrative costs to produce
those design changes. We call this a
customized production run. When a
standardized product is highly customized, or unfamiliar materials are
requested, we require
our customer to sign off on the design
changes. We may require a limited
production run to smooth out the processes before a firm price can be set. The price of a limited production run will
be determined through our prototype pricing policy.
This type of customer is establishing new markets
for products that we build. Our product
may be a whole unit, or simply a component of the entire product. New product
customers have a great potential for income off of a product that we help
develop with our technology. In the
initial phase, we simply function as the developer of the product. New product customers are the focus of this
document
PROTO TYPE
DEVELOPMENT PHILOSOPHY
During proto type
development there may or may not be an established market for the project that
we are working on. This is not important
to us. We do not own the idea, and we
only wish to produce a proto type that can be tested before moving to the next
step. Often there is no next step. Therefore we do not produce proto types
because it will provide us with a new product line. We do not own this product. The potential for profit from this product is
based on these issues: 1 The relative cost
of the product in the market (perceived value),
2 efficient production of the
product, 3 Control of the quality of the
product through the design, production and materials selection process. We intend to maximize the potential of a
product through effective administration of the last two ideas.
It is fair to assume
that the quality of a prototype is not the same as a production model. Customers are required to pay for prototypes
regardless of the quality produced.
After the prototype is produced, we may have to admit that it is not
possible for us to achieve the quality that a customer needs to effectively
sell the product in his market. This is
a decision that can be made after the prototype is evaluated by the customer
and by Jack’s Plastic Welding inc. together.
JPW inc does not assume to have any knowledge about the market
potential of the product. Proto types
are often built to test market potential.
Efficient production
of the product is not an issue in the proto type stage. Focusing on efficient production of a product
in this stage of the process is counter productive to the outcome of the final
product. Proto types often have minor
flaws, are over built, and there may be materials or processes that are better suited
for the first production run. Therefore
there can be a lot of design changes and associated administrative cost
associated with a proto type. During
prototype development JPW documents the process and the materials that are
used. We will suggest changes to be
incorporated in a second proto type, a limited production run, or a standard
production run. This cost of process
development is included in the proto type cost.
We expect our prototype customers to pay us for the first prototype and
the associated administration costs we have in developing the procedures for
this prototype.
DETERMINING IF JPW IS
THE RIGHT COMPANY
Here are the steps we
take to determine if we can produce your product.
1 We qualify the customer. We are not interested in marketing you
product. We are not interested in
purchasing your patent. We are
interested in producing quality components for new markets. If the company fits with our business plan,
we will move to the next step.
2 Talk briefly about the product purpose
so that we can get a feel for what it is about, and if it is the kind of
product that our technology can produce efficiently, or if we can develop a
prototype. Potential customers often
feel uneasy about this step. Rest
assured. We have many projects that we
wish to complete, and we are not interested in stealing any ideas. We want to be open, so that the process can
quickly move forward.
3 Often potential customers require that
we sign a non disclosure agreement. We
resist doing this. Most of the
techniques that we use are in the public domain. They are processes that apply to other
products. If we develop a new technique
for welding, we want to be able to use it on products not related to your
product. We need to have information
about your project before we can effectively design it. We are not interested in marketing your
product. We reserve the right to use
techniques derived on your project to construct other products in the
future.
4 Give a budgetary estimate of the cost
of a project to see if it fits into the customers expectations and market
plans. A typical budgetary estimate for
this phase of a project is the estimated production and administrative cost multiplied
by 3.
5 On the acceptance of the budgetary
estimate, the customer will decide if the project is to be built on an hourly
rate, or from a firm estimate.
6 A plan for payment of services will be
arranged.
PROTO TYPE PRICING
HOURLY BILLING
Hourly billing
includes all administrative cost, and all production costs at a $120.00 per
hour rate. There will be company
employees who will work on the job specifically until it is complete. Our staff works a 40 hour normal work week. Our customers with standing orders for
products always have priority for production time. Our standard product line is very
seasonal. If it is a rush job, our
employees may be willing to work overtime.
We may have to charge extra if we put employees on overtime status to
finish a prototype project. This will be
done on a case by case basis.
ESTIMATED BILLING
Estimated billing is
a firm bid. It includes all
administrative cost and production costs estimated at a $ 120.00 per hour
rate. The nature of estimation leads us
to estimate high for our service and it is often less costly to produce at an
hourly rate. It is extremely difficult
to estimate the time that it takes to revise production plans. The more complex a project is, the more
difficult it becomes to give a firm estimate.
To arrive at a firm estimate we will establish a preliminary production
procedure, estimate the labor cost for each step of the procedure, triple the labor cost to cover administrative
costs, procedural development, and changes.
Add the estimated administrative costs of design and the estimating
process. Customers are expected to pay for the estimation of a firm bid even if
the project stops there. Therefore it is
wise to do a budgetary estimate on complex projects before moving to this step.
At the completion of the firm bid there is a production plan in place. This production plan usually changes after
the first item is produced.
A firm bid gives a
ceiling that can be charged for a project.
If that price is grossly over estimated, we will reduce the price, and
split the cost savings with the customer.
If we underestimated, we will absorb the cost.
BUDGETARY ESTIMATES
Budgetary estimates
can usually be given in a short time, and include the cost of a project inside
a ball park. The size of the ball park
will also be given. The size of the ball
park gets larger with the complexity of the project. For example a project may have a budgetary
estimate of $2500.00
Plus or minus $750.00. This estimate
usually takes only 10 minutes or less, but because of the work load we may not
be able to get it to you the same day. Budgetary estimates are free of
charge. Their purpose is to determine if
the project is feasible within a development budget. A typical budgetary
estimate for a project is the estimated production and administrative cost
multiplied by 3.
PROCEDURE DEVELOPMENT
If a proto type is
not very complex, we can give a production price based on the information that
we gathered during the proto type phase of a project. If the proto type is very complex, we will
have to perform one or more limited production runs to determine the production
cost.
In the proto type
phase, we develop an initial production procedure. We also develop patters and working drawings,
or we amend working drawings that are supplied to us. These procedures and drawings are nearly
always amended to better fit the customers needs after
the first proto type.
When a limited
production run is performed, employees are required to scrutinize the
production process closely. Production
procedures and drawings undergo another phase of development.
After the limited
production run is performed, a firm price can be set for the product. Changes to a product, by the customer are
considered to be a change order. These
changes must be documented, and procedures established for those changes. Our customers are expected to sign designs
and production documents that indicate those changes. The cost to implement these changes will be
billed at our hourly rate.
We anticipate changes
in procedure and techniques used to produce products more efficiently, and we include the cost
of these changes in the cost that we determine after the time study on the
first prototype, or after a limited production run.
At the completion of
this process a system for producing a product is in place. These system are
never perfect or final. Jack’s Plastic Welding Inc employees
strive to improve products with new
processes and materials, stimulating the evolution of your product and our industry as a
whole.
Development of a new
product can be a lot of work. However
the rewards are substantial. It is our
hope that this policy settles some concerns a new customer may have, and provides
a blueprint for problem solving.
Sincerely,
E. Jack Kloepfer
President Jack’s Plastic Welding Inc.
Document acceptance
Please read and sign the following form. This will enable us to build your prototype.
1
I have read and understand
the information in this document.
2
I authorize a 50% deposit,
and I will establish terms of payment for this product before production
begins.
3
I personally guarantee the
balance of payment for this product.
4
I understand that I will be
responsible for any attorney, court, or collection fees associated in the
collection of any outstanding balances owed to Jack’s Plastic Welding Inc.
5
Acceptance of this document
does not constitute an offer by Jack’s Plastic Welding Inc. to build your
prototype.
Prototype customer’s
signature____________________________________