Meaning
Pricing models in high volume manufacturing adjust the unit cost based on the ongoing scrap and yield performance of the production run. Under continuous yield piece price mechanics, the buyer and the moulder agree on a dynamic pricing structure that reflects actual raw material conversion rates and process efficiency. This arrangement moves away from fixed piece prices by linking payments directly to the yield of acceptable parts.
Economic Calculation
Material utilization and cycle efficiency are recalculated at specified intervals to determine the unit price of the parts. By using continuous yield piece price mechanics, the moulder is compensated for the actual polymer consumed, including the runner scrap that cannot be recycled as regrind. This approach provides a clear representation of the variable cost of production.
Operational Impact
Production runs of complex, thin walled parts benefit from this pricing structure because it incentivizes both parties to optimize the process. When the yield rises above the agreed benchmark, the piece price decreases, benefiting the buyer. Conversely, if the yield drops due to material variability, the moulder is protected from sudden losses.
Sourcing Risk
Unplanned downtime and high scrap rates are shared risks that must be managed through clear contract terms. Because continuous yield piece price mechanics rely on real time data, both organizations must agree on how to audit and verify the production records. This contract structure prevents disputes over material price fluctuations and ensures a collaborative approach to continuous process improvement during the life of the tool, reducing the likelihood of supply chain disruptions.
