Mold Zone, Alternative
Option for SMEs'Survival
Nine SMEs have a combined six-fold
increase in sales
Machines at six plastic molding factory buildings of the "Mold Zone"in Mujinae-dong, Siheung City, southeast of Seoul, are humming with metal-carving noises these days. The scene strikes a sharp contrast to their counterparts in the Seoul Digital Industrial Complex, known formerly as Guro Industrial Estate, that have remained idle after they were driven out of the market by cheaper Chinese labor. The molding industry is an industrial field of requiring some precision technology, but the industry has become marginalized since the late 1990s when 5,000-odd small-scale, insignificant firms have sprung up.
However, the Mold Zone is an exception. In reality, the Mold Zone is a Virtual Enterprise, comprising of nine SMEs with their own different technological expertise. Take a look at the Mold Zone, a case in point of e-Manufacturing management experts regard as an alternative option for SMEs'survival.
Playing a central role in the collaboration is DNC Zone, which is responsible for landing orders and design, and the remaining tasks of the molding process, including carving, heat treatment, filing and assembling, are assigned to eight other companies. Products are put on the market under the same brand "Mold Zone,"but the company "Mold Zone"is nonexistent. The member companies, independent entities, work together under a collaboration program for each project, so the strong point of the Mold Zone Collaboration Program is for each company to concentrate its energy on its assigned task. The existing small molding companies normally have to win orders on the separate processes from bigger molding enterprises. Small molding company owners have to struggle for landing orders during daytime and work for meeting the needs of the delivery during nighttime.
Ahn Jae-uk, CEO of Sunghwan Tech, responsible for precision fabrication in the Mole Zone Collaboration Program, said, "We are happy to be indulged in doing things we can do well. In the past, we have done many things, but we could manage to rake in a petty 2 million won per month except machinery purchase cost and wages due to slim profit margins."Unlike the way small, mean molding companies are managed poorly, the Mold Zone members have succeeded in standardizing the molding process, an essential factor for gaining confidence from customers.
All processes range from design to fabrication and assembling are managed via cyberspace to rapidly respond to the needs of buyers. Sharing diverse equipment and manpower at the same place has led to a drop in unit prices and shortening of the delivery time from an average of 90 days to 60 days.
The Mold Zone Collaboration Program has paid off. The nine companies amounted to 2.5 billion in combined sales before joining the program, but saw their sales posting a six-fold soar to 15 billion won last year.
DNC Zone President Lee Chang-ho said, "The Mold Zone aims to post 25 billion won in sales during this year by building a second Mold Zone, a combination of mid- and large-size molding factories in Hwaseong, Gyeonggi Province."The proceeds of the Mold Zone Collaboration Program that could be a thorny issue for the participating companies are solved easily through e-Manufacturing software.
Lee Seok-woo, chief of fabrication process team at the Korea Institute of Industrial Technology (KITECH), the developer of the e-Manufacturing software system, said "Information about unit prices, bid prices and cost of each process are disclosed, so the system can be applied to any manufacturing sector where collaboration is needed among companies.
Prof. Lee Tae-eog, of industrial engineering at Korea Advanced Institute of Science and Technology (KAIST), said, "The Mold Zone takes the form of a virtual enterprise in which member companies work like a unified entity via cyberspace, and it can be a good model designed to help domestic SMEs secure an edge." nw