Paper Converting Case Study

Foreign competition is targeting their high volume accounts. Their clients are reducing lead times, resisting firm orders, and penalizing late shipments. Their local suppliers are crying foul as demands on them are changing. Their offshore suppliers want payment and commitments early. Their product has a large percentage of material cost. The business is seasonal, causing the hourly workforce to jump from zero to a high of 700, mostly unskilled.

This Northeastern paper converting plant has been successful to date by trying to predict market preferences and by building a portion of annual volume to stock before the production season becomes really hectic. Now, the corporate office has challenged them to increase their return on investment dramatically, while growing. With the ever-present threat of offshore procurement replacing local production, the resources provided were an ERP system and the Perforex telephone number.

Their plan is to become a more flexible organization and to:

• Significantly reduce straight time direct labor costs, in addition to eliminating overtime that occurs every weekend in peak season.
• Increase line efficiency between 20-30 percent.
• Reduce investment in inventory.
• Increase customer service levels.
• Reduce employee turnover.

A Perforex ExGAP Project™ was initiated and planned as a two-phase endeavor.

While there were many improvement opportunities, Phase 1 efforts were focused on the plant shop-floor. Using performance tracking, targets, reporting systems and action planning, Perforex assisted key plant personnel in better understanding their manufacturing processes and real machine capabilities.

In Phase I cost reduction and targeted efficiency improvement targets were exceeded. Overall manufacturing efficiency increased 8 percent, production per person per hour increased 12 percent, and with reductions in overtime expense, $500,000 in direct labor cost was saved. Equally important was making strong inroads in bringing a tighter operating discipline to the previously chaotic seasonal scramble.

In Phase II shop floor execution was solidified, systems and disciplines were expanded upstream into warehousing and planning, and business / management processes were developed and implemented in the maintenance department. Only when all integrated areas are performing can the true potential of the plant be realized. Advanced management system training for supervisors was also delivered to help firmly implant a "performance culture".