QRM News

20
Aug

Article in Packaging World Showcases Outstanding Results Achieved By QRM Center Member Company Nicolet Plastics

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An article on the Packaging World website showcases the amazing results achieved by a QRM Center member company.

The article, titled “How to Achieve Lead Time Reduction,” written by the editor, Pat Reynolds, opens with the statements, “Quick Response Manufacturing (QRM) is what every manufacturer dreams of. Here’s how one manufacturer of plastic parts and components, from disposable packaging to high-end medical parts for MRI equipment, is using QRM to achieve significant lead-time reduction.”

The article continues to explain that:

It started in 2009, when Nicolet Plastics of Mountain, Wisconsin, observed that the major multi-national firms were increasingly moving their high-volume, minimally complex molded business offshore to avoid rising costs at home.The company also observed that although the high-volume business was leaving, the low- to moderate-volume business was not. Management recognized the marketplace’s focus on long-run production optimization offered an untapped opportunity in the low- to moderate-volume market. To remain competitive, the firm elected to exploit its strength in excellence at complexity and turn market weaknesses into opportunities. It began looking for manufacturing philosophies that supported the needs of short-run, complex-part customers. That is when Nicolet Plastics discovered a solution right in its own backyard.

As stated in the article, Nicolet Plastics decided to join the Center for Quick Response Manufacturing (QRM), a partnership between manufacturing industry and the University of Wisconsin. QRM provides principles and tools to enable the reduction of lead time in all aspects of a company’s operation, embracing a relentless emphasis on time reduction that has a long-term impact on every aspect of the company. The QRM Center was founded by Professor Rajan Suri, and is currently led by Professor Ananth Krishnamurthy, both from the department of Industrial and Systems Engineering.

The main goals that Nicolet Plastics set for its QRM program included:

  • Reduce total order-to-delivery time of parts by 70% (from 21 days to 7 days)
  • Develop a cross-trained workforce for flexibility, including the creation of a cross-functional quick response office cell
  • Reduce changeover time by 50 percent on all key equipment

The company started by shelving existing job titles and redefining the cross-functional skills required for an ideal shift on the production floor. Then, Nicolet Plastics evaluated its employees through written and practical testing to determine competency levels and established training necessary to create an ideal shift. A credentialing program was established in-house and employees were rewarded for technical abilities and willingness to learn new skills. New pay ranges were defined for each skill level, so as employees progressed in their ability to handle more complex issues, value to the company increased and so did wages. 

The second initiative was to reduce setup times to enable Nicolet Plastics to reduce batch sizes. This was essential for the company to be able to handle low-volume customers and maintain its productivity. Nicolet plastics also used QRM techniques to separate long-run jobs and prevent short jobs from getting backlogged behind a long-running job.

Finally, in keeping with QRM principles, Nicolet Plastics made sure that the improvement program was not confined to the production floor but also impacted the front office to ensure that customer service was also done the QRM way. Using QRM concepts, the company created a Quick Response Office Cell (Q-ROC) with a team of cross-trained staff that could complete all the office operations required for an order and thus, significantly improve responsiveness to customers.

Nicolet Plastics of Mountain, Wisconsin, a QRM Center member, was recently featured in an article published on Packaging World’s website. Above, the company's management team, from left to right: Doug Baril, Vice President of Engineering Services, Bob MacIntosh, President/CEO, Ann Kroll, Human Resources Manager and Joyce Warnacut, Chief Financial Officer.

The article explains how QRM has clearly differentiated Nicolet Plastics from other molders. Despite the documented benefits of time-based competition, the injection molding industry has been very slow to adopt a time-based model. A quicker responsiveness to the customer gives them not only what they want, when they want it, but at quantities that allow them to lower inventories and improve cash flow. Nicolet Plastics has added many clients because it has been able to develop partnerships based on the value it delivers, not the price it charges. By saving its customers an invaluable week of time in production, Nicolet Plastics’ clients can get projects to market faster and gain market share ahead of the competition.

Within three years, Nicolet has already achieved significant results. Lead time has been reduced by seven days (halfway to goal). Finished goods inventory turns have increased from 11 to 25. An improved working capital position (from lower inventory) has enabled debt pay-down. The financial results—margins, cash flow and revenue—have all followed. 

According to Joyce Warnacut, Chief Financial Officer, “We initiated our QRM effort in 2010, and in fact, earnings have improved since. The most impressive impact of QRM has been on Nicolet Plastics’ earnings before interest and taxes (EBIT).  The EBIT for 2012 alone was roughly equal to the EBIT for the 10-year period from 2000 through 2009 combined!”

Nicolet Plastics’ achievements have already received significant recognition:

  • In the ninth annual Manufacturing Leadership 100 Awards (“ML 100 Awards”), presented in May 2013 by the Manufacturing Leadership Council, part of Frost & Sullivan, Nicolet Plastics was selected as the top manufacturer among companies with annual revenues of under $1 billion. Nicolet was selected as the Small Manufacturer of the Year “for its success in reinventing itself as an ultra-responsive provider of low- and moderate-volume parts in the face of rising global competition using a system called Quick Response Manufacturing to improve every part of the company.”
  • Nicolet Plastics was the recipient of the 2012 New North Workplace Excellence Award. The New North is a nonprofit, regional marketing and economic development organization fostering collaboration among private and public sector leaders throughout the 18 counties of Northeast Wisconsin. Its Workplace Excellence Award recognizes organizations in the 18-county area that improve their competitive advantage through people practices, leading to successful business results.

The company was also a finalist for the Wisconsin Manufacturer of the Year award in two categories: Workplace Development and Manufacturing Excellence.

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