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Focus on profitability: a diaper manufacturing strategy for the 1990's.

Focus On Profitability: A Diaper Manufacturing Strategy For The 1990's

there are ways for disposable product companies to be profitable; once again, the author reviews the elements that separate highly efficient and profitable operations from those searching for performance improvement Profitability has been a casualty in the disposables industry as the pace of change, competitive price pressures and challenges of "growing the industry" have taken their toll in recent years. Many producers are realizing they are off track in their efforts to generate healthy margins to remain competitive or to match product innovations.

"Continued belt-tightening and more on the plate for each person," asserted one company executive. "That's how we're staying alive."

It's hard to dispute the merits of healthy belt-tightening or expanding individual responsibilities. However, for any company a manufacturing performance strategy built primarily on the premise of staying alive simply isn't enough today. Bolder vision is needed. Here's why.

The Three Scenarios

Private label producers today will find themselves in one of three business scenarios.

In the first, production performance and productivity are actually declining, perhaps brought on by rapid growth or the demands of technical change. Manufacturing costs are increasing and profitability is seriously eroding. In this case, nothing less than a "turn-around" is required.

In the second case, some improvement is occurring, but only at a pace that offsets material and labor increases or pricing pressures. Individual and department plates may be so full that new priorities stress resources, usually negatively effecting the core operation's performance. Often, new improvement opportunities are simply missed as solving crises becomes the priority of the day. Profitability is generally marginal with no improvement.

Companies in the third case are faring better. In contrast to the majority of the field, they are achieving performance levels that are improving operating margins and profitability. Yet even with these successes, quantum performance leaps elude them as they fight every inch of turf to avoid the fate of their less fortunate competitors.

Whatever the case, industry professionals worldwide are witness to the difficulties in establishing and maintaining a manufacturing strategy that will influence performance levels and capture improvement opportunities.

Capital spending on savings projects is important, but not the whole answer to better profits and productivity. Take a lesson from General Motors, which has invested literally billions while competitors still manage to hammer them silly.

Many business managers don't recognize that capital equipment additions, even with an outstanding return on investment (ROI), will not substantially influence overall plant success without corresponding investments in people and related operational systems.

Nor will the solution come from union concessions, automated process wizardry, expected reductions in pulp prices or relentless prayer.

The solution may very well come from the company's ability to focus its resources in an innovative, future-oriented direction at ongoing improvement.

"Plant focus is like nailing jello to the wall," said one operations vice president skeptically. "It's elusive and not well defined."

In fact, the ability to focus and direct the efforts of plant resources to influence results and pursue improvements on par with world class performance levels is easily defined and tangible.

In an industry where manufacturing performance often equates to business success, who wouldn't envy the disposables operation that generated the performance graphs shown in Figure 1 during its focus program?

A quick review of these impressive results reveals startling performance improvement. Waste levels were reduced nearly 45%. Diaper and sanitary napkin volumes increased 31% and 46%, respectively. Quality performance improved in the same period. Hardly Jello on the wall.

Asked to comment on the impact of his focus program, the managing director of the company whose results we are studying stated his "work team learned to systematically evaluate results, permitting timely and nearly automatic concentration of effort on goals and priorities."

And in marked contrast to the staying alive strategy, the leadership of this company boldly moved their business into the mainstream of world class producers and profitability, a position that may never be enjoyed by the "Jello Conscious" operations vice president.

So now that I've got your attention, let's look at how these results can be accomplished in nearly any operation.

The linkage required to achieve an effective focus effort must begin with the company's basic orientation and commitment to improvement--supported by a critically important management mentality (similar to that required to achieve total quality improvement). This mentality provides the calibration and "business need" to establish operational improvement--Goals. Objectives and Priorities, establishing the "bulls eye" of the focus model (Figure 2).

Although setting goals seems straightforward, many companies fail to do so within a world class frame of reference. Resisting the need to step back from day-to-day firefighting, goal setting unfortunately is accomplished within a limited scope and only succeeds in addressing staying alive priorities.

Frequently, with goals established and well communicated, management takes a deep breath, congratulates itself on how well it is moving the business ahead, and forgets to consider how the goals will be achieved in the plant. This requires two more steps.

First, the Organizational Structure, in terms of individual and department roles, must be evaluated in light of the established goals. For example, I saw one operation establish a healthy materials usage improvement goal, without a hint of who was responsible for nailing down the savings. In another, there was no responsible person or group to take a project from concept and design through actual manufacturing start-up.

The second step following the goal setting process is implementation of Results Management ... Systems. The break in these words is important and should convey the principle that performance results must be managed. In deference to the very popular bumper sticker frequently seen today, when "Results Just Happen," they're usually mediocre.

Managing results can be done efficiently with proven methods and procedures that step-up machine efficiency, slash waste levels, improve quality and motivate employees to react to details that previously were ignored.

Typically, these methods prove useful in tying actual performance to goal criteria on a recurring basis, so that time sensitive corrective action is possible. This calibration may be as short as one hour for on-shift production/waste performance or one week for cumulative goal criteria.

Some Successful Systems

Let's take a look at some selected results management systems that have proven effective in disposables operations around the world.

* Daily Operations Meetings: A high impact, brief meeting of key resources important to setting daily priorities, shift continuity and operating standards. Visual display of production, quality and waste results compared to goals sets the tone for each day.

* Efficiency Reporting: Tough standards of measurement and reporting that key on machine utilization (and losses) for all 480 minutes of a shift and the design productive capacity of equipment.

* Machine Speed Strategy: Necessary discipline and standards that establish strict operating speeds for each product and pack size. A critical component to improved efficiency and waste control.

* Pace Charts: For example, hourly on-machine production and waste targets that permit timely operator corrective actions. Pace charts can be extended to daily, weekly and monthly goal reporting, visibly demonstrating actual versus goal variances in a variety of performance areas.

* Changeover Methods: With written procedures and goals for each product size (for example, Large to Medium--3.5 hours shutdown to start-up). Also includes a designated changeover team and leader with formalized tasks and responsibilities.

*Preventive Maintenance Planning: Scheduled machine outages for preventive maintenance based on machine histories and component life analysis.

* Downtime Analysis: Accurate documentation and automated reporting of daily, weekly and monthly downtime causes, organized into a Top 10 list. Each problem category is assigned an accountable sponsor for problem resolution.

* Cost Management Systems: Including, at least, weekly materials usage variances tied to specific products and operating lines. Again, an accountable sponsor responsible for variance tracking and resolution is required to achieve improvement goals.

* Training: A plant trainer and program to continually raise operating skills. Program objectives should be tied to job action deficiencies identified in individual operators and lines, not theory.

* Human Resource Systems: A team-based approach rewarding multi-skill development and a participative philosophy that encourages employee contribution in a broad business sense.

* Technical Project Management: Formal management practices that improve technical project implementation (planning, training and start-up), thereby eliminating negative impacts of new equipment and product upgrades on production performance levels.

Plant Focus Application

The focus concept bridges the unique identity, equipment assets and cultural norms of disposables operations around the world. The reason is simple--it favors common sense, proven operational methods and procedures and state-of-the-art technical and management practices.

The teeth of the program are in Results Management systems. This combination of operational, technical, maintenance, information and human resource systems provides practical methods, measurement and calibration toward the achievement of plant goals and priorities.

However, the value of results management systems can be compromised by a poor definition of company goals and/or the organization structure and roles of the players.

Without question, the effective linkage of these three elements is what generates the powerful "focus" of company resources as the managing director previously noted.

Standing alone, each of the three has a less powerful punch. [Figure 1 and 2 Omitted]

Tom Schuler, Richard Ducote and Jay Frankenfield, of the consulting firm Schuler Ducote Frankenfield, write a series of monthly articles on Profitable Manufacturing--Using Manufacturing Leverage to Gain A Competitive Advantage in the Nonwovens Industry. These "how to" articles feature practical operations and engineering applications from their 30 years combined experience with Procter & Gamble and private label manufacturers. SDF's offices are located at 6855 Jimmy Carter Blvd., Suite 2400, Norcross, GA 30071; (404)447-9750; Fax, (404)448-7722. Reprints of earlier Nonwovens Industry columns referred to in any column are available from SDF.
COPYRIGHT 1990 Rodman Publications, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Profitable Manufacturing
Author:Schuler, Tom
Publication:Nonwovens Industry
Article Type:column
Date:Jan 1, 1990
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