Nypro is engaged in the Plastic Injections Molding Industry. It manufactures injection molder of precision plastic parts in a global network of 21 plants. As part of its strategy, each plant presents the same capabilities based on the needs of its clients which are global companies with worldwide sourcing needs. This "Managing Innovation at Nypro, Inc. (A)" case study discusses how Nypro's products and processes are managed across all their plants.
Clayton M. Christensen; Rebecca Voorheis
Harvard Business Review (696061-PDF-ENG)
September 22, 1995
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Case answers for Managing Innovation at Nypro, Inc. (A)
Summary of the “Managing Innovation at Nypro, Inc. (A)” case study
PLASTIC MOLDING INDUSTRY
Nypro is part of the Plastic Injections Molding Industry, which is a fragmented competitive industry. The plastics molding industry possesses almost insignificant entry barriers, low differentiation, and several smaller producers serving a niche, and offering low value-add to the industry. This is because any person trained as a molder who could afford a molding machine could set up a business.
With technological and process emulation, how then does a company excel and differentiate, especially considering the low entry barriers and the inability to significantly differentiate? The answer is to innovate and become an industry leader and to remain on the industry’s cutting edge.
Nypro was founded as Nylon Products Corporation in 1955. In 1995, Nypro was 5th largest plastics molder in the U.S. Nypro’s customer base is divided into three main categories- consumer/industrial (about 32.2 % of sales), health care (about 46.7% of sales) and electronics (about 21.1% of sales).
Nypro’s Business Model was making of precision custom injection molded plastic parts. Nypro’s financial statements display a Net profit (before taxes) at an average of 17% whereas before-tax profits averaged only 4% in the industry. Nypro was a pioneer in creating differentiating processes, technologies, and culture in their organization.
In terms of organization structure, Nypro strategically set up medium-sized production plants geographically close to its major customers. This created some economies in terms of transportation costs and gave the customer a much more local interface with the company.
Nypro followed the model of an Operating Board in its plants which allowed for maximum participation and engagement. The Board consisted of operational managers from other plants that kept information flowing freely through the organization. Nypro encouraged competition and intrapreneurship among its own plants. This encouraged creativity and idea generation to increase competitiveness in the marketplace. One important aspect is that the Stockholders chose the Board Of Directors which ensured complete transparency.
One exception to their decentralization strategy was the “sales”. Sales were completely centralized. Nypro did not except all the orders. The orders went through strict scrutiny and only a select few orders were selected. Randy Barko was at the center of this sales operations.
Nypro has been known for its innovations. Innovations at Nypro include…