P-Squared News

On July 8 we held the 3rd and last of the Survive & Thrive breakfasts in Modesto CA.  We are very grateful to those who donated their time, expertise, and venues to make the events a great success.  Applegate Johnston Construction and The Alliance donated meeting space.  Marcia Herrmann Design donated the marketing materials, and Moveable Feast Custom Catering fed the groups well.  All of these efforts assisted Next Step and P2 in accomplishing their duel goals.  Our first objective was to aid local business leaders in their efforts to strengthen their businesses during these difficult economic times.  Our second goal was to demonstrate the many ways that our two resource consulting companies can facilitate that strengthening of both people and process.

The first meeting keyed on the five things leaders could do now to prepare to thrive in the economic recovery.   The second meeting was led by Peter Herrmann and Robert Draizen of Next Step Advising who walked the leaders through a diagnostic designed to keep them vigilant about the vital health factors of business. The presentation was titled “What we can learn from successful businesses that fail”.

The final breakfast meeting centered on growing leaders and teams.  The presentation was titled “Growing the leader your company needs”.  Resources and daily disciplines were outlined that (if practiced) remove obstacle to leader and team development and create more opportunity to work on the business while working in the business.

Click here to download the powerpoint presentation from the final breakfast meeting.

In recent months the world’s best manufacturer (measured by year to year quality, market share gained, profitability, etc) has been much maligned.  As a Tundra driver and long time student of the Toyota Production System I see the recent crisis concerning acceleration issues and injuries with the long term view.  The investigations into who knew what and when, as well as how long it has taken them to respond will proceed.  For the affected families who cannot be made whole, I hope the ensuing  lawsuits will conclude with compensation and assurance that errors of this type will be prevented in future.  In the mean time the Japanese manufacturer who has transformed the way thousands of businesses produce goods and services will continue to be demonized.  But think about the way they have responded.  Can you remember a manufacturer stepping up and taking responsibility this way; shutting down production, admitting culpability and apologizing before congress??  They even went direct to the people with ads stating little more than an intention to earn our trust once again.

Among the facts is that Toyota is unpopular because they are profitable making cars in North America with a largely non-union North American work force.  Chief among the disappointments for our economy is this week’s  closure of the great experiment in Fremont CA.  The NUMMI plant, where GM and Toyota partnered to share best practices and learn how to make better cars in the US, is closing in the wake of GM’s bankruptcy.  Last Saturday Les Pickering and I both listened to the NPR story of what was and could have been learned in this plant and across the auto industry.  Whether you are a Big Three mogul or a small business owner your time will be well spent reviewing this cautionary tale.

Click here to read more about the closing of the NUMMI plant.

P2’s own David Levy recently paid a visit to Washington D.C. Here is his story in his own words:

This April I was part of a group from the FBA and AICC that went to Capitol Hill to talk about issues facing manufacturing in the US.  I had the opportunity to meet with Senator Lindsey Graham and Congressman Joe Wilson for about 30 minutes each.  I also met with the staff of Senator Jim DeMint, Congressmen James Clyburn, and John Spratt.  Despite all the hot air coming out of Washington and partisan politics, whether Republican or Democrat, I saw a genuine interest from these Congressmen about issues facing American industry.  They listened, asked good questions, and were frank about what they could support.  It’s not as bad as I thought; in fact encouraging!

Right now, a major concern of manufacturers is a legislative bill known as the Employee Free Choice Act or “Card Check Bill.”   This bill makes it much easier for union organizers to form a union but more difficult for employees to leave a union.  The bill allows quick certification of labor unions, yet requires a more thorough process for decertification.  It also brings the NLRB into the picture up front to negotiate a contract.  Not good.  Our purpose is to gain support in Washington to defeat this proposed legislation.

While this bill deals with ease of forming a labor union and restrictive bargaining, it really is about flexibility of the workforce.  While there is no rule that says unionized plants do not have the worker flexibility to implement Lean manufacturing techniques, it generally is the case.  Lean Manufacturing eliminates waste in the manufacturing process and requires a flexible and empowered workforce.  The result is a lower cost to manufacture, critical in today’s economic environment.  We do not need more structured job classifications, restrictive work rules, and wasteful collective bargaining.  Just ask Detroit if you need a more convincing argument.

To read more about Dave’s visit to DC, download the latest Board Converting News article here.

(Note: File is large, may take a minute or two to download.)

As a consultant of Lean Manufacturing I interact with multiple companies every year wanting to learn if there is something their company could work on to give them a strategic advantage in their marketplace.  During these interactions I often ask how their company uses measurement to drive improvement and more specifically, how do they measure waste?  This key question is the driving force behind Lean, since the way traditional companies measure waste is very different to the way a Lean company measures waste.
I find it very interesting when the traditional “Quality Driven” company only tracks their waste by the amount of un-sellable product it produces. While this can be a useful measurement, in itself it is not very lean.  Since raw material costs in manufacturing are usually quite high and our accounting systems are built to track the product it can sell versus raw material costs, this type of waste measurement is clearly the most common.  The problem with using this as your sole measurement of waste is that it promotes an organization to only focus on the product rather than the process that produces the product.  Lean companies believe that bad product is a symptom of a bad process.  Just like a runny nose is a symptom of a cold.  The idea is to track the causes of waste and not the symptoms.  If you focus on fixing the causes of waste then the symptoms (bad product) should go away. This is definitely a paradigm shift for most traditional companies but when used to attack the root cause it proves to be very valuable.  In my experience, most companies see a minimum of a 10% reduction in waste over the first year by tracking and attacking the causes of waste and not their symptoms.

If you’d like to learn more about waste measurement and the classifications of Lean waste please contact scottheilmann@psquaredusa.com

We recently performed a rapid plant assessment (RPA) for a manufacturing company that needed a clearer direction and better understanding of areas of opportunity within their company.  While most the senior staff was already aware of some key opportunities within the organization, they lacked the vision and discipline of how to get there quickly and efficiently. Since time and resources were limited, this company decided on asking our team, P-Squared to aid in assisting with the prioritization and implementation of their next group of continual improvement projects.

Why did this company choose P-Squared?
In one word, it’s experience.  The Psquared Team is well trained in using the Rapid Plant Assessment, developed by Eugene Goodsen of the University of Michigan. Combine that with the fact that the Psquared team visits more than 50 manufacturing plants a year and has worked on numerous manufacturing improvement projects, it’s easy to see why. Furthermore it’s the structure and reporting system that the Psquared team uses.  The RPA is a very clear and easy to follow scoring system based on 11 categories measuring 121 different attributes of a company.  Assessments usually take three full days yet have little disruption on the production floor.  At the end of the week the team reports out their initial findings to the managing staff with a full report to follow.  The report delivers individual findings within each category and gives recommendations on which areas to address first.  The report concludes with a low hanging fruit - high impact section as well as recommended areas in which your company might look at hiring outside resources.

So if you are a company looking for a low impact high return organizational assessment, an RPA by P-Squared is the way to go. Contact Whitney at (425) 922-6436 if you are interested.

The attached article give two examples and results of Lean Implementation on a Koppers Rotary Diecutter and a Martin Flexo Folder Gluer. The results of the implementation were better organization, shorter setup times, and improved competitiveness. You can read the article here.

P Squared’s own Victor Pinto was interviewed recently by “Brazil Business” magazine. You can read the article below.

1. Which the importance of Brazil in the North American market for corrugated exports?
As is already known, Brazil is one of the most important producers in the world of paper for the manufacture of corrugated boxes. However, only a very small portion of this raw material is used in North America. North America is dominated by US, Canadian, and European suppliers. The majority of the corrugated boxes from Brazil that enter the North American market are in the form of packages for products manufactured in Brazil, such as produce packaging.

2. Where is Brazil in relation to the sector of corrugated packaging?
Brazil is recognized as one of the leading manufacturers and consumers of corrugated boxes. The position of Brazil in the global arena for corrugated manufacturing is rapidly improving and is the top producer of corrugated in Latin America, followed by Mexico, Argentina and Chile. As the economy in Brazil improves, its market participation in corrugated will also improve.

3. How Brazil can to have a better participation in the exportation area?
Brazil will improve its participation with the continued growth of its manufacturing base and produce industry. Equally important is the growth of its paper supply available to the export market. The major integrated companies of Brazil have recognized this and are making large investments to improve both in capacity and in the quality of their product.

4. Do some norms exist in North American that facilitates the import of products in corrugated boxes?
The standards for corrugated box packaging in North America are established by a combination of user requirements, industry initiatives, and individual marketing entrepreneurship. Of course, these standards are mostly driven by the large consumers of boxes such as the major warehouse stores, distributors, and goods producers. Manufacturers of corrugated boxes, through their involvement in local, national, and international corrugated industry trade associations and the associations of their customer base are given access to these new standards as they are being developed. I would encourage any Brazilian corrugated box manufacturer who is selling boxes destined for the export market to participate in the meetings and committees of the international trade associations of our industry such as ACCCSA, TAPPI, FBA, AICC, and FEFCO.

5. The United States prevent to imports of products that use isopor packings or wood and/or plastic?
The United States remains a relatively open market as compared to others for the import of any type of packaging. However, any large buyer or user of corrugated packaging, such as Walmart or FedEx, can impose restrictions on the type of packaging it requires, and the market is free to meet or reject these demands. Industry trade associations frequently assist their members to create, modify, and understand new requirements from their customer base. A recent example of the assistance provided by a trade association is the Corrugated Packaging Alliance (CPA) helping set a new standard for box manufacturers selling to the produce industry known as the Corrugated Common Footprint (CCF). The corrugated industry trade associations are working with manufacturers in their respective regions to ensure that corrugated continues to be the material of choice for packaging.

6. How is the market for corrugated in the world?
The market for corrugated boxes is continuing to expand driven by growth in developing countries especially China. In mature markets such as North America, the trends are towards more sophisticated packaging with high graphics, multiple packaging materials, contract packaging, and other concepts to reduce cost in the supply chain. Corrugated box manufacturers now realize that it is important to understand the business of their customers and help them alleviate bottlenecks within their supply chains. This may mean the need to supply smaller quantities more often, provide quick changing graphics to meet brand or seasonal requirements, and service multiple regional, national, or international locations with the same standard.

7. What is the growth forecast of the corrugated sector?
The forecast for growth of the corrugated boxes is relatively low but stable in North America as compared to Brazil and other developing countries. As the economies of Brazil and other emerging nations improve, the internal consumption of corrugated boxes will increase. The corrugated box industry in Brazil can be expected to grow on average about twice as fast as the North
American market.

8. Do trade associations such as ACCCSA help in the stimulation of the corrugated sector?
As with any trade association such as ACCCSA or TAPPI, the stimulation for growth by the manufacturers of corrugated packaging is in the creation of new standards, improvement in productivity and capabilities, usage of new technologies, and ultimately the reduction of cost within the complete supply chain. Corrugated Synergies International and its sister company P² are in the forefront to help small and medium sized independent corrugated box manufacturers in different parts of the world understand this new global market. By utilizing our purchasing strength in raw material, operational expertise, and synergistic relationships across the industry we enable these independent manufacturers to compete on a global basis.

9. Does the case of Walmart (box substituting shelves) represent a market trend?
The trend of marketing-based packaging that has been credited to Walmart is continuing to grow and represents the fastest growth segment in the North American corrugated box industry. By using boxes as the marketing medium, the products on the shelf are easier to sell. This fact has helped spur growth of high graphics in the North American and other markets where Walmart and other mega-store retailers are strong participants. In addition to this, these large chain stores now represent the largest retailers of food previously dominated by supermarkets. This is causing a change in the presentation and requirements of packaging for the produce and meat industries.

10. Do you have world-wide statistics of the sector such as revenues, production levels, and total employment? In case you do not have this, where we can obtain this information?
We do not have these statistics but they can be obtained through the International Corrugated Case Association (www.iccanet.org).

11. How do you see the potential of the Brazilian market in relation to the world?
Brazil is blessed with abundant fiber resources for the production of paper. It is also a growing market for corrugated packaging, especially in the produce industry. The opportunity exists for Brazil to continue to expand its worldwide market share in paper while meeting its internal demands. Likewise, small and medium corrugated box producers must continue to evolve and integrate themselves in the global marketplace. These independent producers should equip themselves with the technology and operational expertise that will permit them to compete against the larger integrated companies.

12. Is the use of corrugated boxes for the sector of fruits, vegetables and meats growing in the world? What is the participation that Brazil can have in these markets?
Brazil continues to grow its produce (fruits and vegetables) and meat sectors. This will be an important stimulant in the demand for corrugated boxes now and in the future. Although Brazil’s participation in the world market for these sectors is growing each day, there is a large internal demand that will limit the availability of these goods for export. The export growth in these sectors will be driven by the capacity available for the produce and meat producers of Brazil.

13. Which new technologies are advancing in of the corrugated sector?
To ultimately reduce their supply chain costs, Walmart together with the US Department of Defense has placed requirements for RFID Tags on all packaging for tracking purposes. This technology will continue to evolve and change the marketplace. Other advances in the corrugated box industry are related to quality and productivity such as high board line machines, inspection sensors to inspect each box manufactured for registration and tone, quick change capabilities, and infeed and outfeed automation through robotics. Although some of these advances are costly due to the capital requirements, the producers of corrugated packaging that can meet these new demands will be at the forefront of the market. Most manufacturers are also evaluating their internal operations to reduce costs in their value stream. Concepts such as lean manufacturing are being embraced by the progressive companies in our sector.

14. How do you see the future of the corrugated sector?
The future of the corrugated box industry is bright. In North America, the large integrated companies are refocusing their operations and eliminating excess capacity which is positive for the industry as a whole. There are good opportunities for the small and medium independent companies to continue to gain market share by providing better service through a combination of
design innovations, application of new technologies, and low cost production within the complete value stream.

15. Could you briefly speak on your career?
Victor H. Pinto is a graduate of Texas A&M University, College Station, Texas USA with a Bachelor and Master of Science in Mechanical Engineering. Mr. Pinto has over 16 years of experience in the corrugated box and folding carton industries and is a Regional Board Member for the Technical Association of the Pulp and Paper Industries (TAPPI). For most of his career, Mr. Pinto has worked for domestic and European-based equipment manufacturers in field engineering, research and development, design, marketing, and sales. Mr. Pinto has also worked in private consulting in training plant personnel to improve production and maintenance, and analyzing existing processes and practices to streamline operations for his clients. Mr. Pinto is employed by Corrugated Synergies International (CSI) as Vice President of Development and its sister company P² as a Senior Consultant. CSI/P² is a management company that utilizes its excellence in operations plus end-user and supplier relationships to synergize the strength
of its associated members.

The TV show The Biggest Loser starts, develops, and ends with a series of weigh-ins.  They are embarrassing, but they provide data to direct and motivate the journey.  Lean Assessment is a weigh-in that shows where the company is now, and helps to develop a vision and a plan for improvement.

Download our article about Lean Benchmarking here.

I am interested to hear your thoughts, comments, and questions about the Rapid Plant Assessment.  I am also anxious to hear your thoughts on the cultural assessment that is tied to profitability. Please comment below.

Although I’ve screened and selected top performing leaders for 20+ years it was only recently that P2 started offering the service publicly.  Our approach was to take the guesswork out of performance prediction by studying top performing leaders and identifying there common abilities and traits.  So as we find a wide range of people with diverse personalities and styles we are able to spot those that can lead healthy and profitable change.

Download and read the article here.

I’m interested in your experiences and methods of finding and keeping good leaders. Please comment below.

I wrote this article (download and read it here) as I started to see how pervasive the wait and see mentality had become.  There are massive changes in the marketplace occurring and the point of the piece is that small business will either do what they do best (risk and adapt) in these times or they will act like big bidness (wait and see).  I am encouraging all of our customers to do what we are doing in our own company; use the time caused by the slow down to build the strength of your process and your team.  Then when the smoke clears you can come out ready.  Someone said there are three kinds of people: some people make things happen, other people see things happening, most people say “what happened?”.  Hey wait, somebody else said “there are 3 kinds of people: those who can do math, and those who cannot”.

I am interested in your yeahs and yeahbuts about this article.  If you owned the company what would you do? If you do own the company what are you doing to thrive after you survive the current troubles? Please comment below.