Fit and Lean

WS Packaging Group is driving profitability and capturing new business under the leadership of experienced out-of-industry Lean experts. Danielle Jerschefske reports

 

WS Packaging has steadily grown into one of North America’s largest label and packaging suppliers with its business model of single source to completion.

 

The company offers a wide array of printing and flexible packaging options across 21 manufacturing facilities in the US and Mexico. It uses an extensive range of printing techniques, complex constructions, innovative materials, and wide variety of finishing and packaging systems to propel brands to the next level.

 

Now, in addition to a well-balanced platform as a one-stop-shop, the company is using the new WS Packaging Impact Business System (IBS), which places lean manufacturing at the core of the business to drive speed of execution from the top down to the shop floor. The outcome for WS Packaging has been a reduction in inventory, significant improvement in working capital gains and, therefore, the flexibility and financial confidence to grow acquisitively.

 

IBS was launched internally in August 2010 when the company appointed Rex Lane as its new chief executive officer, following the retirement of its longstanding leader and son of the founder, Terry Fulwiler. Once improved revenues, profit margins and cash flow were achieved, the company began talking about its evolution with customers.

 

‘IBS is in place to ensure systemic long-term growth,’ says Lane. ‘We will drive innovation and change through Lean tools in every aspect of the business. Already we have found it to be a successful point of differentiation. Now it’s about convincing the customer base that the Impact model is unique and sustainable.’

 

At nearly a half billion dollars in annual revenue, WS Packaging will continue to find growth organically and through acquisitions using IBS as a core business proposition.

 

Lane brings the label and packaging business 15 years’ experience in Lean implementation at numerous big business suppliers to Fortune 500 companies. Beyond label and packaging solutions, he says that ‘with IBS, we are able to offer business solutions.’

 

Kaizen projects and outcome analysis found working capital to be a great opportunity where efficiencies could be made to generate significant positive cash flow. Inventory management is one of the most prominent “sins” in the converting industry and has become a particularly volatile point within converter business models in the wake of the "Great Recession". As brand owners moved to reduce cost, inventory management often became a necessary “service” to retain business.

However, Lane highlights the propensity for a weakened cash flow found in a poorly executed inventory model. Therefore WS Packaging has aligned itself more closely with its suppliers and customers. It has partnered with key clients to share usage data and inventory models, and implemented a data-driven Pull & Replenishment system to deliver x amount of labels in x amount of time while improving lead times.

 

It took some consulting and proven results to persuade clients at first. Now the adjustment has given adaptive clients such benefits as on-time delivery and cost savings. Internally the change has reduced work-in-progress (WIP) and freed up funds by reducing cash tied up in materials inventory.

 

WS Packaging went through rigorous transactional process improvement (TPI) projects to acutely find more turnaround inefficiencies in the exchange of information between each step of the process. ‘There’s lots of opportunity right here in the US. IBS is a way to set expectations for what we want to accomplish. We are looking for a breakthrough, for a significant improvement.’

 

Once a breakthrough in working capital was achieved, the gap was supported with the further implementation of WebFlex, a customer-facing online label management system that allows clients to place, track and trace orders, and organize graphic files in one place.

 

Gilchrist & Soames, a personal care product supplier to luxury hotels, has a myriad of SKUs to manage and must conform to regulation requirements.

 

Label errors can have a drastically negative effect to the bottom line and the brand’s reputation. WebFlex allows for secure loading of files and has a grouping feature to allow an entire project team remote access for approval, development and production phases. The system also includes a Roll Calculator Tool that automatically calculates the number of labels on a roll by simply entering the label size, type of material and roll diameter.

 

WebFlex greatly improved the label management process for Gilchrist & Soames, reduced on-hand inventory resulting in less obsolescence, and ensured label accuracy while simultaneously improving their bottom line.

 

Another customer that regularly orders industrial drum labels also found savings by reducing obsolescence with the Pull & Replenish system. In this case, WS Packaging evaluated each SKU to find opportunity to split production sites if one fit best for delivery objectives.

 

‘Customers have been amazed at what Impact can do for them and the response has converted into new business,’ says Lane.

 

Currently two out of three sales quotes are for new business.

 

As of June 2012, WS Packaging achieved its best new business conversion year ever.

 

By August 2011 the gains made in working capital had increased 10 fold. Clearly, IBS is a sustainable strategy to drive real impact in process and agility.

 

Earl Jewett is chief Impact Business System officer at WS Packaging. He is responsible for driving and maintaining this rigid change in business as usual that has become the norm.

Organizational changes placed skilled Lean talents in positions to drive IBS at every level.

 

‘Innovation is both product and process, related’ Jewett says.

 

‘We focus a lot of attention in both areas because our goal is to help customers capitalize on the opportunities they’re pursuing.

 

‘We want to help them succeed, and in turn, develop a long-term partnership for mutually sustainable growth.’

 

IBS launched with strategic planning supported by a first year stretch plan. The focus is on three to five initiatives in a one-year stretch. IBS has the tools – Sandler sales methodology, SMED set up reduction, root cause countermeasure, total productive maintenance, policy deployment, 3P, 6S visual management, TPI, standard work – to employ the stretch objective plan that is constantly evolving. Processes must be sustained over time and reinforced by monthly stretch objective reviews.

 

Three regional IBS leaders help manage the differential in moving parts regionally. CEO Kaizen events take place on a quarterly basis at a specific facility and focus on four to seven specific objectives. Teams at the corporate and middle management levels embrace such events where every employee is engaged in finding waste in processes. Boot camps bring leaders together at the GM level, teaching ways to optimize IBS tools. In addition to the quarterly CEO events, each plant completes two to three large-scale Kaizen projects each month. Sales-focused events for the converter’s 50-plus reps review growth targets and marketing changes, which help make the team more comfortable with IBS.

Lane explains that the ‘organization has adapted well and is full of knowledgeable people that carry the confidence to change any nonbeliever’s mind.

 

‘Our people understand the growth opportunity, job security and profit sharing rewards found in the model.’

 

WS Packaging had embarked on Lean for four years before Lane entered as its leader. The top-down drive for improvement continues the holistic IBS plan where it counts most – costs and creeping lead times. ‘Today, 50 to 70 percent of our Kaizen activity is focused on achieving our stretch objectives because it’s all linked together and gives more purpose to what we’re doing,’ Lane notes. ‘It’s how we find breakthroughs.’

 

Standardized manufacturing processes improve production consistency. Each operator, plate maker, pre-press specialist and office employee is trained to perform tasks in the same, most efficient ways respective to their responsibilities. IBS eliminates variances and has turned quality into a high percentage consistency.

 

Rushed or last minute orders interrupt business as usual and must be addressed so that other customers are not affected and that margins are not depleted. Service and lead time management are critical to supporting such regular instances.

 

Upgrades to existing equipment have enhanced productivity and given shop floor employees more time to focus on finding true waste. Investments too have been made in new equipment, pushing out older technology in exchange for quicker changeover designs.

 

WS Packaging has been a pioneer for sustainability within the label industry, and was recognized by the TLMI with its Environmental Award for Process Improvement in 2004. ‘With environmental consciousness comes cost savings, revenue and differentiation from the competition,’ says Lane. ‘We need to be as green as we can be and TLMI’s Project LIFE is a tool that can do that.’

 

The company was also one of the first converters to obtain LIFE certification, an environmental management system (EMS) based on ISO 14001 and designed around inherent label manufacturing issues. As Lane notes: ‘In adopting such standards, WS Packaging gains more credibility and focus.’

 

The industry has seen WS Packaging expand its capabilities a number of times under Lane’s leadership. He says IBS makes the company more marketable in the acquisition process. It also gives it an edge in the bidding process since it knows it will be able to make up the return.

 

The IBS acquisition diligence process entails a 100-day post-close action plan including a “Diligence Day” – 60 days before the transaction is finalized – when the new division begins to quote business.

 

In this way the new business contributes to the bottom line from day one.

 

Jay Tomcheck, president and chief financial officer, says: ‘There is a lot of opportunity for acquisitive growth in label and packaging operations with US$10-50 million in annual revenue. The funnel is full. Given the nature of the market, coupled with our propensity to reinvest the cash we continue to generate, we’re confident more opportunities are likely to be announced in the near future.’

 

Following in-line set by previous management, acquisitions are sought after to increase geographic breadth, achieve market diversification or adopt enhancing technology. In mid-2012, WS Packaging purchased Boelter Industries in Minnesota for its in-line folding carton capabilities and Consolidated Products in Tennessee for its compliance labelling capabilities.

 

The flexographic equipment at Boelter Industries complements the sheet-fed offset facility in Wisconsin giving the business flexibility in pricing appropriately by process and project.

 

Already the division sells the entire WS Packaging portfolio, and business is growing. There will be no shifting of work from offset to flexography.

 

With both process capabilities WS Packaging produces cartons with catchy effects using a combination of transparent and opaque inks and special-effect varnishes printed on a wide variety of patterned prismatic and metallic papers for the most intriguing brand presentations.

 

The most recent acquisition of Business Graphics Printing brings the company offset production expertise in product literature booklets, a critical component in end-use applications with strict regulatory requirements for product information.

 

There’s currently a good volume of flexible packaging and pouch companies for sale in North America. Only recently has the converter announced its broadened offering of flexible packaging materials and capabilities. It can produce custom paper-pouching materials for dry foods and more, as well as complex film constructions with performance barriers for food, pet food and liquids.

 

The company has been active in the shrink-sleeve market since its acquisition of SenecaSalem in 2007 and sees great opportunity to expand further into flexible packaging based on this skill-base as long as the business can effectively maintain costs, achieve market growth, become experts and expand internal capabilities.

 

The converter sees opportunity outside of the region. ‘We haven’t made a move yet,’ Lane says. ‘But we will with a client.’

 

Mexico, where there is already an operation in Monterrey, is an obvious opportunity for logistics, business model and supply chain similarities in meeting local and national needs.

 

Other regions include Asia and Latin America.

 

‘We have big customers that want to consolidate their supplier base. Now that we have our stride with our growth initiatives, we are in the position to give them preferred global support.’

 

In the meantime, the company has enlisted translation services from KJ International to support accurate Multilanguage label production.

 

WS Packaging’s IBS is designed to take the packaging and label industry where it’s never been. The program – far more than a strategy – empowers associates to communicate more easily and it drives improvement and ownership down to the cell level. At the same time it effectively manages supply chain complexity, bringing value to its business and its customers’ business beyond label production.

 

‘Impact is a business solution that makes WS Packaging more powerful and attractive,’ concludes Lane. He predicts the company will one day be a billion-dollar supplier that will have the systems in place to maintain its groundings and expand accordingly.

 

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