One-On-One With Valpak's David Fox
Industry consolidation, economic uncertainties, soaring costs for raw materials and energy and many other forces are changing our industry at the speed of thought. At NPES' 75th Annual Conference, November 15-17 in St. Pete Beach, FL, participants will have an opportunity to learn firsthand how one progressive print organization managed to overcome these challenges. Read on for this preview of how, by developing strategic partnerships with industry manufacturers and service providers, the Valpak Manufacturing Center in St. Petersburg, FL has become a showcase of automated print production--and has managed to hold the line on costs for its customers, increased its productivity and morphed its employees into a skilled workforce for tomorrow. Valpak is one of North America's leading direct marketers with $260 million in annual revenue and about 1,200 employees in Pinellas County. Valpak reaches more than 45 million unique addresses each month in the United States and Canada and is owned by Largo-based Cox Target Media. Q. What factors were involved in choosing St. Petersburg, FL as the location for your facility?
We studied a number of locations, but in the end, our biggest driver was that we wanted to stay near our existing production facility in Largo, FL to preserve as much of that workforce as possible. We also wanted to be near our corporate headquarters in Largo so we could be close to hundreds of employees who work in support positions such as graphics, customer service, marketing and franchise operations. After all, we were founded here (in Clearwater in 1968) and have a long history here in this community. We are celebrating our 40th year in business this year. Plus, our employment base in this area is pretty strong and a good place to find the type of workforce we needed.
Q. What's been the biggest obstacle in putting into service new equipment and processes?
Not surprisingly, there's more than one. The first was getting the equipment stabilized, which took longer than we expected. That was one of the biggest, if not the biggest obstacle we experienced. We bought what I would say are 'off the shelf components', which we then configured in a unique way. So, when you look at the equipment we have here on the floor, there are elements of a press common in the marketplace but, again, configured and integrated in unique ways. In fact, for most areas of the plant this holds true. Bearing this in mind, as we started to bring the plant up, whether it was the equipment or level of integration, it just took longer than we thought.
Another obstacle was the challenge surrounding workforce training. We had a lot of people to train; many of them came over from our existing Largo facility--but the way we run the business here is completely different from the way we ran the business in that operation. So, training our employees on the new equipment, new computer systems and new business processes was a huge challenge-- while simultaneously working through the start up of the equipment and also dealing with the many things that were changing along the way throughout the process.
The final challenge was the overall integration--not so much the technical/computer integration, but more the process integration-- which tied back to our people. For instance, they had to learn not to intervene to correct things as they might have in the past. If they saw a piece of material in the wrong spot, they had to learn not to pick it up off a conveyor and put it somewhere else, since the computer wouldn't know they moved it and then the real problems began. This was a training element that we had to learn and, generally speaking, we had to learn it the hard way.
Another hurdle we had during this transition was continuing to run the business at two other plants while maintaining production volume at the same pace-- 45million envelopes out the door every month. So, as we were ramping up production, we were running three different plants at one time--a huge challenge. One more challenge, one of those facilities was our plant in Elm City, NC. We were planning to shut that plant down, but didn't want to put 400+ people out of work. Fortunately, we were able to work out a deal with another company that bought the building, purchased the equipment and employed the workforce. Because that area had already been hit hard with other plant closings, textiles... automobile... what we didn't want to do was lay off Valpak employees for three months and then ask them to come back.
As we were ramping down the volume at that plant and ramping up the other plants' volume, we were also retraining that workforce to produce the new product. So, literally, when a group finished our product, the next week they began working on the new company's product--and it wasn't a slow transition at all since the new company was eager to ramp up to full production quickly. So the overall migration of work was tricky--an added factor we had to manage as part of the overall transition. The fact that we were able to preserve those jobs and keep our employees working throughout the transition was a real home run.
Q. What technology that you have recently incorporated into your workflow has had the greatest impact on productivity?
Probably the biggest one is auto-transfer; that's the functionality on the press that essentially allows us to produce product in run lengths of 10,000 and not shut the presses down between changeovers. In a traditional press environment, you would shut the press down for a 10 to 20 minute changeover and then start it back up. Here, where we have a run length of 10,000 impressions that lasts 15 minutes, we can't afford to shut the press down every 15 minutes for 15 minutes; but this technology allows us to keep the presses running, minimize waste and maximize utilization of the equipment.
Sunday is our day for maintenance to keep the equipment in optimal running condition. Although we do have mechanical breakdowns during the week, they're generally short. Our goal is to keep unplanned downtime to no more than a two-hour window, and these failures are getting fewer and farther between.
Q. What steps have you taken to help transition and train your employees as they adapt to thinking in new ways and working with new equipment and new processes?
As we announced the change to this new environment, we knew we wanted to bring a large portion of our existing workforce from Largo over to this new plant. First, we spent a great deal of time training our employees on improving their skills; teaching English to our non-English speaking employees, since that was critical in the new work environment. Also, in addition to basic skills training for the new environment, we trained them on Lean Manufacturing methodologies, what we call our overall 'operating philosophy', cell manufacturing, preventive maintenance concepts--all the different basics that were not equipmentspecific. We began this training with our existing workforce in the two to three years leading up to the transition.
When we arrived at the transition point, the first thing we did was take key positions--whether maintenance or press or collation-- and send them off to the equipment manufacturers' sites to get very detailed, specific hands-on training. These individuals became our 'advance teams'. While most of that training occurred at manufacturers' sites, some were trained here later during installations. For our advance teams, who became our 'trainers', we provided a 'train-the-trainer' program and methodology to enable them to instruct the next wave of employees. This plan continued all the way through the migration. Next, we documented our business process and provided detailed work instructions complete with pictures and diagrams for the entire workforce, as a ready resource for how to do their jobs.
Q. How have you integrated the increased costs of raw materials and energy into the pricing for your customers?
We are a franchise business. Our pricing to our dealers has not changed because of the new plant. In fact, our pricing has been very consistent over the past five to seven years. While there are huge efficiencies that we will gain in years to come, the immediate impact has not affected our prices. Part of the overall goal in building this facility was not a defensive move, but rather an attempt to get out in front and insulate our customers from potential price increases. At the time, it was more the thinking that healthcare costs were going to grow out of control, but so far whether it's been raw materials, or energy, we've been able to insulate our customers from cost-related increases.
It's interesting to note that prior to 2002, the primary growth engine for our company was sending out more envelopes. Rather than 10 times a year, the goal would be 12 times a year, which our production processes handled quite well. However, since the early 2000s, our growth engine for the company shifted to more of a let's put more pieces in the envelopes that we do send out. That allowed us to take advantage of 'free space' in the envelope without significantly increasing (postal) costs. The problem was the manufacturing processes we were using began to break down as we pushed 40 to 50 pieces in the envelope. It didn't work and we became more and more inefficient as we added more pieces to the envelope. A big driver for the new plant was determining how to add more pieces to the envelope without growing costs (adding a huge head count) significantly.
It all began as a material movement project. We were handling the printed coupons in our facility eight to 10 times going from staging area to warehouse to collation--and we were printing in large runs, but had products sitting around on pallets. The great thing about the new process is that we will not touch the printed coupon in-house--the first time it's ever touched is by the consumer at their mailbox. So we've gained great efficiencies in moving product around our facility and now it is produced in one continuous throughput.
Q. How has the transition to new equipment and new processes impacted your total employment count?
Our new facility essentially doubles the capacity we had at the two old plants and can be produced with a manufacturing workforce of about 500.
Q. With GRAPH EXPO in Chicago later this month, and PRINT on tap for next September, it's timely to ask what role these shows played in the past in the development of the VMC--and what role they will play in its future?
We absolutely utilized the show for a lot of our early 'intelligence' work. This project began during the summer of 2002 when three of us at Valpak were pulled from our 'day jobs' to consider how we could manufacture our products differently. One of the first things we did was travel the tradeshow and conference circuit. We attended GRAPH EXPO later that year as well as other events (we went to Chicago a lot, mostly in the winter!), as we tried to get a feeling for what technologies were out there. After meeting many of the equipment manufacturers, we visited those who were using the equipment to find out what worked well and what didn't. We knew early on that we needed to identify good partners with whom we could develop solid relationships and ended up selecting our partners from among the companies and contacts we made during our fact-finding phase.
Once a year, we brought the top level executives from our partner companies down for a couple day meeting so that they could get to know their peers at the other companies involved in our project. This helped them to better understand their role and the big picture.
On a monthly basis, in-house we gained buy-in through design sessions where we worked through the details together-- with our technical people working side-by-side with the technical experts from our partner companies. Through the process, they developed not only business relationships but personal connection, which served the entire process well as we grappled with how to overcome the challenges and changes that arose along the way. While we are still focused on the migration and getting our new facility to full operation (projected for early 2009), we plan to attend PRINT 09 to make sure that we stay in touch with where the technology is going and stay on that leading edge.
David Fox is the Vice President of Manufacturing at Valpak, where he is responsible for overseeing all manufacturing operations. He joined Valpak in 1996 and served in a number of IT roles including Director of Management Information Systems (MIS). From 2003 through 2006, he was one of the key Project Directors on Valpak's ProductionWay (PW) initiative, helping lead the PWteam in the planning, design, construction and systems integration of the new facility in St. Petersburg.
