IMB Project
Summary:
The aim of the project is to plan the production and introduction of a new product using a concurrent engineering approach. The product require a detail business plan and a cost analysis for 3 years.
Introduction of IMB ( Instant Multitasking Blender) product
A blender is designed to blend all types of food into liquids to make smoothies, soups, and even salad dressings. This can complement and promote the consumption of nutritious food and its demand is probably going to be high in this coming year.
The Oster 6878-042 Core 16 speed blender is an ideal blender that achieved a successful sale rate (figure 1). It has a powerful 450 watts motor and retails at £47.62 on Amazon (on-line retailer). This Oster model has an excellent high sale rating not only in the America, but also in the UK market.
The main objective of this project is to improve the design,reduce the manufacturing costs of this model and produce a business plan and cost analysis for 3 years.
I called the new product as IMB, which stands for Instant Multitasking Blender Product)
WHY IMB Product?
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Retail at an affordable price (£64.99)
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Produce a higher blending power output (600 Watts)
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The work can be done in less than 30 seconds.
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It can be fitted into any family kitchen as it heights is less than 17 inches (43.18 centimeters).
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An essential tool to promote healthy lifestyles.
Figure 1. Oster 6878-042 Core 16 speed blender
Source: US Amazon
Technical Specification
3. Cost analysis
3.1 Product Prime manufacturing cost
Product Prime manufacturing cost = Material costs + Purchased Completed Item costs +Direct labour costs
Note: Purchased Completed Item Costs will also include all the costs from subcontractors to produce parts required and to build prototype.
The prime manufacturing cost to produce a complete product is £33.63. The IMB will retail at£64.99
End of year 1 = £420,400.0
End of year 2 = £732,800.0
End of year 3 = £1,061,500.0
Refer to Cost analysis tables for more comprehensive breakdown
3.2 Capital Investment Costs
In order to meet capital investment costs, it is expected that a one-off private investment of £50,000.00 will be achieved.
3.3 Product distribution costs
Product distribution costs = travel and vehicle expenses
End of 1st year = £5,700.0 End of 2nd year = £6,000.0 End of 3rd year=£8,400.0
3.4 Selling price
Through the website: £64.99 per unit
Wholesale to other companies:
20% discount on orders ≥ 2 000 units: £50.99/unit
30% discount on orders ≥ 3 500 units: £44.99/unit
3.5 Estimated Annual Quantity
Year 1: It would take 3 months to receive materials from overseas suppliers due to the long delivery process from abroad. Therefore, materials will be bought on the 1st, 4th, 7th and 10th month every year, which will cost £162 400 units for this year. Any leftover materials will be stored in the warehouse for the next month’s manufacturing.
A total of 12,500 units will be sold in the first year, distributed from the 3rd to the 12th month.
Year 2: The Company will expand the factory with the new machinery and warehouse. Therefore, a total of £203,800 for materials, which will be bought on the 1st, 4th, 7th and 10th month of this year. The retail price will stay the same.
A total of 30,000 units will be sold with the total income of in this year. This can be distributed to The United State' market.
Year 3: Following the successful sale rating in the second year, the company will expand slowly. A total of 54,000 units will be sold in this year with the total income of £3,511,559.75
3.6 Project net profit:
Net profit = Total income – Total Expenditures
End of 1st year = -£58,646.49
End of 2nd year =£181,720.13
End of 3rd year =£1,013,082.93
3.7 Estimated Payback period
Bank loan = £50,000.00
Length of loan before payback commence =15 months
Payback = £2777.77 per month starts from 7th month in the first year for 10 months (till the 4th month of year 2).
The rest of the loan will be paid on the 5th month of year 2. (£22,222.3).
Figure 5 : Filler Cap
Figure16 : Cost analysis for year 1
Figure17 : Cost analysis for year 2
Figure18 : Cost analysis for year 3
Figure 2: IMP components
Figure 3: Blade Assembly components
Figure 4: The parts list of IMB product
1. Part lists
2. Design, materials and process manufacture selection of each part
3. The drawing design of each components
BUSINESS MODEL
1. Design of the manufacturing facilities
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The IMB Company has its headquarters in Crawley, West Sussex, England
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The place is 45 km south of capital of the UK, and is also close to Gatwick airport and only a short distance from the south coast. This provides strong and reliable transport links as well as being fairly central when it comes to distribution of the product.
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Crawley is a lower rent location, when compared to central London where properties come at a premium.
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Unfortunately, a potential issue when setting up in Crawley is that the crime rate is relatively high so extra budges for security are needed.
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This venture will require two warehouses: one for manufacturing, testing and assembly the product, and one for the storage of materials and manufactured goods prior to their distribution for sale.
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It will also require an office space for the research and development team, the sales team and the customer support team working.
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In the manufacturing warehouse will need an Injection Molding machine and CNC mini engraving machine
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A total of £33,600 is needed to purchase the Injection Molding machine, CNC mini engraving, tools, safety guard, and equipment facilities (office desk, chairs, computers,...) in the first year.
2. Market
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The product also has the slogan: The Quality Instant Multitasking Blender, which is abbreviated as IMB. The name is short, memorable and highlights the features.
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The product is fully e-marked and for domestic use only.
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Distribution and marketing will be carried out in cooperation with different Supermarkets such as Waitrose, Morrisons, Asda, and Boots, so that the product will reach the maximum number of potential customers.
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An additional on-line sales will be set up using the Company’s own website together with on-line retailers such as Amazon and Ebay.
Figure 5 : Filler Cap
Figure 14 : Coupling
Figure 6 : Blender base
Figure 7 : Bottome base
Figure 8 :Container
Figure 9 :Switch
Figure 13 : Cover
Figure 10 : Blade
Figure 12 : Bottom Blade housing
Figure 11 : Bearing holder
Figure 15: The logo of the product
October, 2015 - November, 2016
