Benchmarking Via the Shopping-Cart or As Is to To Be
Many organizations brag about their benchmarking efforts and how good they are at it. I once worked for a large paper company, and a lot of our spending was for packaging materials involved in the making of toilet tissue and paper towels. I was involved in materials management, plant scheduling, and packaging engineering at the time. Fortunately, all the people involved in these operations reported to me. We were also very fortunate that the plant manager had a materials background and was open to suggestions from us. At first, we went out and tried to get information from various paper institutes, but we found this data to be unwieldy, expensive, and not up-to-date.
Then we just decided to use the shopping cart. We went out to various supermarkets and stores and purchased as many of our competitor’s products as we could. We basically dissected them and the materials that they used, looking to see what they had done differently than we had. They were using cheaper materials but had suffered no disconcerting quality drops. Over the years, we had not kept up with the advances in materials. In addition, the process to get new materials approved was unwieldy and required corporate approval. This discouraged almost all the plants from taking risks in the materials area.
In other words the As Is was our materials that we used in our products and the To Be was our competition’s materials that they used in their products.
We put a matrix together of us versus all the competitors and all the materials. We also showed the estimated cost differential and savings on a one-year basis if we in fact adapted the most cost-effective material of our competitors. We were just striving for our competition’s To Be state! We could not believe the numbers, and we were shaking when we presented the matrix to our plant manager. Lucky for us, he brought it up at a staff meeting, and told all the department heads that they were to cooperate with our materials trials and experiments. He also told us to not ask permission from corporate for the trials and to just do them; sort of a Just Do its type project. If any flak developed, he would run air cover for us.
I was fortunate to have an extremely enthusiastic people working for me. In addition, we got superb cooperation from our shop-floor staff. They knew our materials inside out. They were all very familiar with the As Is state! People are competitive, and when they heard that our competitors had made it work, their personal pride took over, and they wanted to make it work. It helped when we showed them the competitor’s product and the materials that they were using. Thyme literally tore them apart and examined them. Then they knew that this was not just us making up a plan and trying to achieve some impossible goals. They participated in the brainstorming to get to the To Be.
We assembled a trial plan, started intense packaging-supplier visits, took shop-floor people along with us to talk with our suppliers, and asked further advice on changing over to the new materials. Our suppliers were extremely cooperative in making suggestions. Many of them were in the plant on the shop floor when we ran the trials. They could see firsthand any issues we had, and they made suggestions on how we could improve the tests. We were stunned at how rapid and successful the trials were. We knew the brainstorming had paid off.
Many of the materials specifications (As Is) had been in force for years and had not been updated, challenged, or changed. Let me give you an example—one that will make you just shake your head. Many of our corrugated boxes for toilet tissue products were placed in two-, three-, or four-color cases. Our marketing people had free reign to decide how many colors they wanted on their cases. All of the cases had barcodes on them, and when they went by our production counter reader or scanner, the reader counted them as one case.
Obviously, it’s vitally important to have an accurate production count. Unfortunately, the red barcodes were extremely difficult for the reader to read, and often they were skipped or sent to an off-count conveyor. Bottom line, it hurt our production-count accuracy.
We also knew that the only person who usually even saw the case that our product was in was the stocker in the store—not our final customers. The cases were usually cut up, bundled, and recycled. Our plant manager soon convinced marketing that a one-color black case would be the cheaper, more efficient strategy. We were very lucky to have a plant manager, enthusiastic shop floor personnel and cooperative suppliers who understood materials, and supported our use of Kaizen tools.
In the first year, we saved over $20 million dollars.