Does anyone charge for annual layouts?

beaser3

Involved In Discussions
#1
Hi,

We are an injection molder and about 80% of our customer base is automotive. Most of our automotive customers require annual PPAP's that include a full dimensional layout on 1, 3 or 5 pieces per cavity. We estimate the total inspection time to be approx. 13,000 hours per year. The need to perform the inspection is stated in out customer manuals.

To date, we have done the inspections free of charge but we are not able to keep up and we will need to outsource some of the inspections which will end up being very costly. Unfortunately inspection criteria and charges were not negotiated up front so we are considering going back to customers and letting them know we will need to start charging. Are others doing the annual layouts free of charge? Has anyone had to go back and renegotiate? Is it common to negotiate these costs at the start of a project?

Thanks in advance for any input.
 
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Golfman25

Trusted Information Resource
#2
I am seeing more and more charges for ppaps and such. Go ahead and let them know you'll be instituting a charge. See what they say.
 

Ninja

Looking for Reality
Trusted Information Resource
#3
...or build it into the anticipated, projected or historical per piece price...

Though my experience with auto is that they will chafe at $0.001 per piece, but have no issue with a $1MM one-off charge.
 

Marc

Hunkered Down for the Duration
Staff member
Admin
#4
I have seen it as a built-in cost for a contract.

Note that I have seen a contract for a price per piece which failed because the customer anticipated a certain number of pieces per year but ended up needing less than 60% of their projected need. Because of this the supplier's cost per piece was much higher than anticipated.

Consider this aspect when quoting piece price, especially if it is a customer specific item.
 

Golfman25

Trusted Information Resource
#6
I have seen it as a built-in cost for a contract.

Note that I have seen a contract for a price per piece which failed because the customer anticipated a certain number of pieces per year but ended up needing less than 60% of their projected need. Because of this the supplier's cost per piece was much higher than anticipated.

Consider this aspect when quoting piece price, especially if it is a customer specific item.
Yes. If you do this you need some buyout protection if volumes don't materialize.
 

Jim Wynne

Staff member
Admin
#7
In the automotive world, all else being roughly equal, contracts are awarded based on price. Change the price (or try to) and you can find yourself losing the business. Everything is negotiable in the beginning, and one way to avoid extra work is to bullet out the individual costs in the initial quote. You present the customer with a menu, in other words, that specifies the costs for things like checking aids (CMM fixtures, e.g.), lab testing and yes, annual layouts. The customer can then choose the "extras" that they want.

Of course, that doesn't help if you underestimate the costs for those things.
 
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