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Great expectations

Jan 1, 2006 12:00 AM


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Pressroom

Many graphic arts CEOs don’t spend much time worrying about manufacturing, reasoning “If it ain’t broke, don’t fix it.” But in many plants, the manufacturing is broke and it does need fixing because it isn’t producing the results a company needs to be competitive and profitable. Merely producing jobs correctly and delivering them on time isn’t good enough. Beyond being efficient, you’ve also got to be profitable. After all, if you’re not producing work profitably, what’s the point?

Most CEOs have a vague idea of their companies’ production standards and an even fuzzier sense of how their plant is meeting those standards. This blind spot probably can be attributed to unrelenting pressures to get the work out and move on to the next job. Nonetheless, it’s a destructive oversight, because ignorance of a company’s actual results compromises the entire organization’s performance.

How the profit leaders do it
Virtually all successful plants share one trait: Their CEOs have set clear performance standards and equally clear expectations that those standards will be met. The CEOs know what’s going on and their involvement goes beyond merely ensuring jobs are delivered on time. If you want profit-leading manufacturing results:

  • Set clear performance standards.
  • Measure performance carefully.
  • Provide feedback and follow up on problem areas.
  • Continually squeeze costs and time out of your operations.
  • Remove obstacles to effective operations.
  • Pay close attention or the details will kill you and your profits!
Superior performance starts with setting superior standards and seeing to it that they are achieved. Outstanding CEOs establish performance standards by creating a production plan with high productivity standards—considerably higher than other companies’. These leaders also help their employees understand that the performance expectations aren’t wishful thinking, but requirements.

Highly effective CEOs simplify their processes to achieve faster throughput. They’re standardizing their processes so that everyday rush jobs don’t require special intervention. They don’t compromise on keeping delivery promises or meeting quality standards. These CEOs evaluate results vs. the plan and do something to improve the results. They ensure that all employees understand the results and are committed to making the required improvements.

Consider your own situation. Do you really know what’s going on in your plant? How long does an average six-color makeready really take? How many net sheets per hour does your biggest press actually produce? What about your press operators—do you know the difference between your best and worst crews? What explains the difference? Is the worst crew truly hopeless or can the performance gap be bridged?

Almost any management information system (MIS) can help you answer these questions. Whether you rely on customized daily or weekly hot lists (see "Daily, weekly & monthly numbers" below) or the standard reports your MIS generates, you have to apply this information.

Danger signs
Most printers worry too much about the cost sheets for individual jobs. A certain amount of job-to-job variation is normal and acceptable. Nonetheless, overall production averages do mean a lot. When you compare performance and/or estimating standards for a large number of jobs with your company’s actual performance, the resulting average tells you what’s really going on in the plant. An oddball job’s impact is smoothed away.

A substantial and consistent divergence between actual and estimated times indicates your process or plans are out of control. It means you can’t schedule accurately—the plant will either run behind or production people will build slack time into the schedule to protect against predictable delays, because things take longer than they should.

Profit leading CEOs don’t fool themselves. They see to it that their production standards closely match their performance. They’re not lowering their standards; they’re insisting on improved performance.

It’s your job to determine what’s causing the divergence between actual performance and your production standards. Is it poor plant performance, unrealistic standards, or both? Whatever the standards, you must ensure there’s consistency between your planned performance and your actual results.

Variations from crew to crew
In most plants, different people are doing the same things but with very different results—or at very different rates of productivity. This always bears closer examination and typically offers a major opportunity to improve productivity.

Granted, inexperienced employees will produce less than veteran employees will. Studying the difference will help you identify who needs further training. A regular evaluation process will further ensure that newer staffers are getting the help they need and that they have the right stuff to do the job once they are fully trained.

Top performing CEOs know that sizable variations in output signify one of three things:

  • A lack of standards.
  • Improvised processes.
  • Training or talent issues.
Profit-leading companies don’t tolerate sizable performance differences between crews. These companies have procedures in place to ensure that standards are well understood, as well as a genuine plan for performance improvement, ongoing feedback on progress made and an evaluation process to ensure that everyone is on the right track.

This is where ongoing interaction with your plant manager makes a difference. Opportunities for improvement often are obscured in the rush to produce the day’s jobs, so it’s important to take the time to discuss things patiently and persistently, without being distracted by minute-to-minute scheduling questions.

Getting the manufacturing results you need
The best-managed manufacturing operations have a kind of joyous calm to them. Everyone knows what’s expected of him or her, they have the equipment required to do their jobs and nothing seems to be standing in their way.

There’s no shouting, because things are going as they’re supposed to. There’s no fear, because no threats are made—or required—when management understands the performance standards and is realistic about the limitations of performing under real-life conditions. There’s an ongoing focus on high levels of performance and on continuing process and results improvement.

CEOs rarely spend excessive time in the plant, and I’m not encouraging you to start. But you should know how important it is to wring every possible drop of performance out of your plant. And unless your plant is very unusual, opportunities to improve performance are everywhere.



Daily, weekly & monthly numbers
Information isn’t just financial. In fact, the most important information for knowing what’s going on in your business is from operations. Those are the facts that drive your results. Ultimately, it all shows up in the financial statements, but it’s the operating information that will explain the underlying causes behind the numbers.

Here are 10 “magic numbers” that can be assembled into short hot lists. The items are easy to understand, and the information is easy to gather. In fact, most companies are generating most of the numbers already, but they’re lost in a mass of e-mails, Excel files or forgotten binders.

Daily items
These tell you how you should feel about yesterday’s results. Obviously, the trend over a week or more is much more crucial, but these numbers should be glanced at daily.

1. Dollar value of quotes. If most of your work is quoted, the dollar value of quotes is your single best early warning signal for shifting sales volume.

2. Dollar value of orders entered. As turnaround times get shorter, plants can run out of work quickly. Therefore, it’s crucial to closely track the value of orders entered, because it can offer insight into likely sales over the next few weeks.

3. Dollar value of labor input to work-in-process. This is the single most important indicator of plant “busy-ness” because it converts all the hours worked into an expected dollar value.

4. Net availability under line of credit—plus aged receivables. For fully leveraged companies, cash is generated through formula-driven lines of credit and through collection of receivables. If you’re a fully financed company, you can’t let too many days go by without keeping close tabs on these numbers, along with projected shipments.

5. Dollar value of shipments and billing. Obviously, jobs have to be shipped and billed to turn into sales. It’s surprising how slowly most companies prepare their billing, which impairs their ability to get an early handle on the month’s sales. It also hurts loan availability and collections in a major way.

Weekly items These items might take a little more time to become significant, but they must be evaluated carefully when they show a change.

6. Percent chargeable time in major cost centers. If you want a quick look at how much plant labor is spent carrying out chargeable tasks, this is just what you need. But the percentages can be misleading if there’s not enough work. This is because crews often will find ways to make a day’s work fill the available time. Our experience has shown that most companies can generate at least 20 percent more work in the same number of hours just by having enough work on a consistent basis. That’s why we recommend tracking efficiency as well, because taking two hours for a makeready that’s planned for one hour won’t yield any more income.

7. Predicted sales volume for the current month. Most printers get to the final week of the month before they come to grips with what their sales really will be. Why? Because they don’t have solid sales projections and don’t do timely updates of their projections. Most likely, they don’t have much confidence in sales projections to begin with.

Monthly items
Here are three monthly items that are crucial for understanding results and evaluating the near future.

8. Actual vs. estimated costs in major cost centers. This is the starting point in understanding whether the plant is producing according to standards. It also will highlight areas in which your quoting and production standards might need to be adjusted. It’s the acid test for finding whether there might be some hidden capacity lurking behind slow running speeds, and it gives you a solid sense of how effectively your manufacturing is being supervised.

9. Total value-added for the month. This is the only end-of-month item included in this action list because it’s simply the best way of predicting monthly profits after the month’s billing is complete. It’s a much better predictor than sales volume, because pricing shifts, large buyouts or changes in product mix can skew sales and overstate the amount of money available to pay your highly fixed operating costs. If you want to understand your company’s financial results, compare monthly profits with monthly value-added. That will provide 90 percent of the answer.

10. Sales projections for next month and beyond. By mid-month, you should have revised projections for the following month. The numbers will shift as jobs are delayed or lost, but focusing on future work is a proven way to have useful conversations with key accounts and prospects. You’ll be surprised at how helpful the process of projecting sales can be in building a more effective sales management process. It will take a few months to build projecting skills and experience, but it’ll pay big dividends for you and for your salespeople.



Setting new press expectations
How do you ensure you’re maximizing productivity on your new press? We asked some leading vendors to tell us about their training efforts.
—Katherine O’Brien, editor, AMERICAN PRINTER

MAN Roland’s (Westmont, IL) PowerPrinters program helps operators get comfortable with their companies’ new press technology. Training typically consists of a week of hands-on and classroom instruction at MAN Roland’s Technology Center followed by onsite training at the customer’s plant.

“Getting press speeds up is the most important [aspect],” says Hal Stratton, MAN Roland’s director of new technologies. “Operators have to get used to the feeling and experience of printing at higher press speeds.”

PowerPrinters participants run multiple stocks to get the experience of press performance under various conditions. They also pack blankets, load plates, coat some jobs, and use MAN’s closed-loop color solution ColorPilot to evaluate press sheets.

Stratton says press operators generally are receptive to innovations that eliminate manual labor, such as automatic plate loaders, but often are skeptical that computers can equal or surpass their skill when it comes to setting ink keys or maintaining color.

“They may not want to use some of the new tools, because they think they can do it better,” explains Stratton. “Management has to set the expectations for using the new technologies—setting ink keys, creating/presetting jobs and the press via the printnet/PECOM system, closed-loop color, and so on. It might take a while before operators say, ‘Yeah, the technologies are excellent tools to make me more productive.’ Once they get to that point, they become the biggest proponents of what [automation] can do.”

Komori’s (Rolling Meadows, IL) efforts to improve customer productivity include ease of use (presses are labeled in English rather than with potentially ambiguous pictograms), and a high degree of press automation and training before, during and after press installation.

Doug Schardt, Komori’s product manager, says training must extend beyond the press operator. “Management must know what the press can do,” he says. “We’re not teaching them to run the press, but they need to know the scope of what’s possible.”

Schardt also stresses eliminating the potential for human error. “Train your people and then track the data,” he says. “Don’t rely on human interpretation for data collection.” Schardt says employees don’t intentionally fudge operations information, but often will fix a press problem and forget to record the downtime. An automatic data collection system, such as the Komori Management System, in concert with a management information system, can ensure you’re getting accurate feedback.

Mitsubishi’s Litho Center (Lincolnshire, IL) offers monthly training sessions. “Ideally, the day the new press hits the printing company’s door, press operators are in Lincolnshire receiving instruction,” says Mitch Dudek, Mitsubishi’s director of business development. “During the second and third weeks of installation, they’re back home working with an on-site trainer and applying skills they learned in class.”

Each five-day course consists of a technical overview, explanation of safety procedures and discussion of parts and maintenance procedures necessary to achieve continued productivity. Operational training includes makeready procedures, automated running systems and wash-up. Follow-up onsite training at the time of installation allows press operators to reinforce what they’ve learned.

With models ranging from 20 to 81 inches, KBA (Williston, VT) offers the widest range of presses. Rated at 18,000 sph, KBA’s 41-inch Rapida 105 also is among the fastest. Eric Frank, KBA’s vice president of marketing, says the company’s goal is to help customers “take their presses to this new limit so they can benefit, either with more jobs or less overtime.”

KBA combines instruction at its U.S. headquarters with onsite customer training. Running live jobs at the Vermont training center helps customers understand how to maintain quality and press speed. But according to Heiner Grossman, KBA’s national service manager, “the best training takes place at the customer’s plant, where we have factory-trained technicians working on [the customer’s actual] applications.”

Beyond basic press operation, KBA offers new application training. “We can help customers enter new markets, such as packaging, and printing on plastics, styrene and lightweight stocks,” says Frank.



New demo center and service program
“Every new product—software or hardware—Heidelberg sells is accompanied with a training package,” says Larry Kroll, vice president of print media relations for Heidelberg. “Software typically is instructed in the classroom. Hardware is instructed at the customer site following the installation. This holds true for prepress, press and postpress equipment, as well as packaging.”

In 2005, Heidelberg unveiled its 33,000-sq.-ft. Print Media Demonstration Center (PMDC) at its Kennesaw, GA, headquarters. The PMDC operates in conjunction with Heidelberg’s Print Media Academy to offer hands-on tutorials for a full range of prepress, press, and postpress equipment and workflow solutions. In addition to operator training, the center also hosts special seminars—recent events highlighted UV printing, Prinect Color Solutions and an overview of the Speedmaster XL 105, Heidelberg’s 62-ton, 18,000-sph press. Heidelberg also lets industry groups, such as trade association affiliates, use the facility for their events.

Service program can boost uptime
Announced at PRINT 05, Heidelberg’s systemservice 36plus program helps reduce unplanned press downtime while improving overall efficiency. Systemservice 36plus extends service coverage for a period of 36 months with the purchase of a new press. Customers get full coverage of all repair services and parts for 36 months, as well as intelligent support services and a periodical Heidelberg inspection. Benefits include:

  • Support services can resolve up to 70 percent of troubleshooting issues without on-site service.
  • Extended service coverage for 36 months.
  • Periodical 10-month inspections, which serve as a fitness check for the press.
See www.us.heidelberg.com.

—Katherine O’Brien, editor, AMERICAN PRINTER

Rosen in December
Bob Rosen’s recent AMERICAN PRINTER articles include “The 8 habits of highly successful CEOs,” December 2005; and “Will you survive in ’05?” December 2004. He’s also the author of “The Graphic Arts CEO,” a book/CD package citing specific examples from Rosen’s work with more than 500 graphic arts firms, including more than 160 profit leaders. The CD offers customizable forms and financial models. “The Graphic Arts CEO” costs $159; to order, see www.napl.org.


Rosen is president of R.H. Rosen Associates (Pittstown, NJ) a consulting firm that specializes solely in the graphic arts. Contact him at RRosen@RHRosen.com.