Nine Dwarves Make One Giant

Competing With Conglomerates by Cooperating-

Nine small and medium-sized enterprises came together to form Moldzone in 2004, each contributing a different technology.

DNC Zone, the steering company, is in charge of receiving orders and designing. The other eight companies each take on roles such as cutting, heat treating, shaping, and assembling depending on what they are most skilled in.

Although the manufactured products are sold under a single Moldzone brand, a company named Moldzone does not exist. It is a “temporary” company in that the nine companies that form it remain as separate corporations, only cooperating when their skills are needed.

The biggest strength of this production method is that it rewards the companies a chance to concentrate on their core competence.

Small molding companies had to receive orders from larger companies separately depending on their role in the production process. Such small company owners were busy winning orders from bigger companies by day and meeting the deadline on the production by night.

Ahn Jae-eok, the representative of Seonghwan Tech, a company in charge of precision manufacturing, says, “I am just happy that we can concentrate on our strengths. Before, despite plenty of work to do, I could not earn more than two million won a month. There was not much profit after deducting machinery and labor costs.”

Sales Multiply by Six in Only Two Years-

Perhaps the most rewarding result is that these small companies were able to gain the customers’ trust by standardizing their production methods.

Every procedure from designing to assembling takes place on the Internet, allowing the companies to quickly respond to their customers’ needs. Companies could lower cost price and meet deadlines in 60 days on average, down from 90 days.

Moldzone’s new method has led to surprising business achievements. After Moldzone was formed, sales jumped from 2.5 billion won to 15 billion won.

Lee Chang-ho, the CEO of DNC Zone, says that the sales goal this year is to reach 25 billion won by building a professional manufacturing factory in Hwaseong City, Gyeonggi Province.

Splitting the profits fairly is a complicated process, but Moldzone was able to solve this problem through an “e-manufacturing” system. This software accurately calculates the contribution in every single manufacturing step.

Lee Seok-woo, the leader of Digital Production Processing Team of Korea Institute of Industrial Technology, who developed this program, says that this system can be utilized in manufacturing that involves cooperation between companies because it calculates cost price, order prices, and costs according to each production procedure.

Department of Mechanical Engineering Professor Lee Tae-eop of Korea Advanced Institute of Science and Technology says that Moldzone is a good business model for domestic small and medium-sized companies as it illustrates that separate companies can work together like one company.

Chang-Won Kim changkim@donga.com