Industrial Experimental Technologies, LLC
3199 Lapeer Rd.
Auburn Hills, MI 48326
P 248 371 8000
F 248 371 9088

Scenario 1

ABC Company is a startup developing a new limited production commercial vehicle. Their expectation is to sell approximately 10,000 – 15,000 units in the first year of production. ABC’s CEO wants to initially produce prototype tooling to ensure the finished design is flawless. The plan is to invest in production tooling after the design is verified post prototyping stage.  However, there are several inherent causes for uncertainty for ABC Company:

1)    ABC just seized its 2nd round of funding from its angel investors but is unsure about whether or not it will receive the larger 3rd round due to time constraints.

2)    ABC requires the 3rd round of funding in order to produce both prototype and production tooling before generating any sales.

3)    Competition has increased in the marketplace and ABC unsure if it will reach the originally forecasted sales volumes.

4)    There may be unexpected changes to the design that are found only after production units have been released.

Soft tooling would solve all of ABC’s causes for uncertainty. They would be able to start manufacturing in a shorter amount of time right out of the gate. ABC could keep their up-front costs low prior to the receipt of orders. Through the built-in prototype phase, ABC could also perfect design issues even after fully assembled vehicles have been released to its customers.