Giant steps

WS Packaging Group is using lean business tools to drive profitability and capture new business as it expands into a truly global player. Danielle Jerschefske reports

WS Packaging has grown steadily into one of North America’s largest label and packaging suppliers. The company offers a wide array of package printing options across 21 manufacturing facilities in the US and Mexico. It uses an extensive range of printing techniques, complex constructions, innovative materials, and a wide variety of finishing and packaging systems to propel brands to the next level.

A key factor in the company’s success has been the WS Packaging Impact Business System (IBS), which has significantly reduced inventory and freed up significant working capital, building the group’s ability to grow by acquisition.

IBS was launched internally in August 2010, when the company appointed Rex Lane as its new CEO following the retirement of longtime leader and son of the founder, Terry Fulwiler. Lane brings to the label and packaging business 15 years’ experience in lean implementation at major suppliers to Fortune 500 companies.

‘The Impact Business Model was put in place to ensure systemic long-term growth,’ Lane tells L&L. ‘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 in annual revenue, WS Packaging will find growth organically and through acquisitions using IBS as a core business proposition, says Lane, ‘There’s lots of opportunity right here in the US and IBS is a way to set expectations for what we want to accomplish. We are looking for a breakthrough, for a significant improvement.’

Pull and Replenish

Inefficient inventory management is one of the most prominent ‘sins’ in the label converting industry and has become a point of focus for converters in the wake of the great recession. This is particularly the case as brand owners move to cut costs by shifting inventory management responsibilities to suppliers. 

WS Packaging has partnered with key clients to share production and inventory data, and implemented a ‘Pull and Replenishment’ system to deliver ‘x’ amount of labels in a given time frame while improving lead times. Although some clients were initially harder to persuade, the real benefits of on-time delivery and cost savings are now being realized. Internally, the change has seen reduced work in progress (WIP) and reduced cash tied up in materials inventory. 

The software interface is WebFlex, a customer-facing online label management system which allows clients to place, track and trace orders, and organize graphic files in one place. WebFlex allows for the secure loading of files and gives an entire project team remote access for development, approval and production. The system also includes a Roll Calculator tool that automatically calculates the number of labels on a roll simply by entering label size, type of material, and roll diameter.

One user of WebFlex is Gilchrist & Soames, a personal care product supplier to luxury hotels, which has to manage a myriad of SKUs. WebFlex has greatly improved the brand’s label management process and reduced inventory and stock obsolescence, while helping ensure the accuracy of text and image. All of this directly impacts their bottom line.

Another customer that regularly orders industrial drum labels also found savings by reducing obsolescence with the Pull and Replenish system. In this case, WS Packaging evaluated each SKU to deliver the labels from the nearest production site.

‘Customers have been amazed at what Impact can do for them and the response has converted into new business,’ enthuses Lane. Currently two thirds of sales quotes are for new business. As of June 2012, WS Packaging achieved its best new business conversion ever. By August 2011 working capital had increased 10 fold. Clearly, IBS is a strategy which drives real impact in process and agility.

Driving from Top Down

Earl Jewett is chief Impact business system officer, responsible for embedding the process in the WS Packaging Group and identifying the talent 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.’

The focus with IBS is on three to five initiatives a year, supported by monthly reviews and quarterly CEO Kaizen events focusing on a specific facility. Every employee is engaged in finding waste in current processes, with geographical co-ordination undertaken by three regional IBS leaders. IBS boot camps bring together leaders at the GM level, and sales-focused IBS events are held for the converter’s 50-plus reps.

Rex Lane explains, ‘The organization has adapted well and is full of knowledgeable people with the confidence to change any nonbeliever’s mind. Our people understand the growth opportunity, job security and profit sharing rewards found in the model.’

Best practice

A key metric of IBS is standardization of best manufacturing processes across all disciplines from press operator and pre-press specialist to office employee. New investment has enhanced productivity – for example with fast changeover presses – and given shop floor employees more time to focus on identifying and eliminating waste.

WS Packaging has been a pioneer in sustainability, recognized by the TLMI with an Environmental Award for Process Improvement in 2004. Lane says, ‘With environmental consciousness comes cost savings, revenue and differentiation from the competition.’

The company was one of the first converters to obtain TLMI LIFE certification, a labels-specific Environmental Management System (EMS) based on ISO 14001. ’ We need to be as green as we can be and TLMI’s Project LIFE is a tool that can do that,’ says Lane.

M&A

WS Packaging has expanded rapidly under Lane’s leadership, and the financial strength and confidence delivered by the IBS regime has been a significant factor.

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

Acquisitions are sought which increase geographic spread, achieve market diversification or add new technology. As an example, in mid-2012, WS Packaging purchased Boelter Industries in Minnesota for its in-line folding carton expertise. The flexographic carton equipment at Boelter complements the sheetfed offset facility in Wisconsin. Already the division sells the entire WS Packaging portfolio, and business is growing.

Likewise, Consolidated Products in Tennessee was acquired for its compliance labeling capabilities and the latest acquisition, Business Graphics Printing, brings expertise in offset printed product information booklets.

‘There is a lot of opportunity for acquisitive growth in label and packaging operations with 10 million USD to 50 million USD in annual revenue,’ points out Jay Tomcheck, president and CFO. ‘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.’

Expanding capabilities

WS Packaging recently announced a move into flexible packaging, where 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. This builds on the company’s expertise in the shrink sleeve film market developed after the acquisition of SenecaSalem in 2007.

The converter sees opportunity outside of the domestic market, and already has an operation in Monterrey, Mexico. ‘We have big customers that want to consolidate their supplier base,’ says Lane. ‘Now that we have our stride with our growth initiatives, we are in the position to give them preferred global support.’ The company has as a first step enlisted translation services from KJ International to support multi-language label production.

So Lane’s strategy has been a clear success in effectively managing supply chain complexity, bringing value to its own and customers’ business, and involving employees at all levels in improving process and workflow. Concludes Lane, ‘Impact is a business solution that makes WS Packaging more powerful and attractive.’ Using these tools he predicts the company will one day be a billion-dollar supplier.

Pictured: Gilchrist & Soames uses WS Packaging ‘WebFlex’ front end to manage its label portfolio

This article was published in Labels & Labeling issue 6, 2012