Fast, Fluid and Flexible at Nicolet Plastics
by Dianna Brodine
Profile Spring 2011
Nicolet Plastics thrives on a level of manufacturing complexity that has stopped other injection molders in their tracks. With 62 employees, drawn from three neighboring communities in Northeast Wisconsin with populations under 1,000, Nicolet has excelled at evaluating and building employee skill levels, responding to project challenges with agility and serving its customers with Total Product SolutionsTM that run the gamut from product development to inventory management. Its a unique environment that functions under an unusual manufacturing concept and soon, other molders may be following the example set by Bob MacIntosh and the Nicolet Plastics team.
Succeeding with High Complexity
Nicolet Plastics, Inc. (NPI) was established in 1986 in Mountain, Wisconsin, a small community located in the middle of the Chequamegon-Nicolet National Forest. Nicolet, an ISO 9001:2008- certified company, serves its customer base from a 41,000 square-foot production facility, focusing on complex industrial and medical components and assemblies.
NPIs Total Product Solutions approach provides product design and development, tooling design and development, offshore tooling coordination, injection molding, tooling maintenance, part decorating, insert molding, secondary machining and assembly, point-of-use delivery and vendor-managed inventory. This concept changed the company focus from making parts to solving problems for its customer base. Nicolet specialized in low- to moderate-volume molded parts, but over time this created an incredibly complex manufacturing environment. The Plante & Moran complexity score at Nicolet was off the charts, and the leadership team knew change was critical.
We were trying to figure out where we stood in regards to our peers in the industry, and it became painfully clear that complexity was in abundance. We had to make a choice either create a niche by reducing our customer base to a more conservative number of customers, materials and tools or figure out a way to direct the complexity to be both manageable and profitable, said MacIntosh.
The Method in the Madness: Quick Response Manufacturing
Almost two years ago Nicolet Plastics made a decision to embrace the concepts of Quick Response Manufacturing (QRM) developed by Rajan Suri at the Quick Response Manufacturing Center at the University of Wisconsin. QRM is designed to focus on time, which leads to shorter lead times, which leads to lower inventory levels, higher margins, improved working capital position, more competitive pricing and lower overall cost throughout the business. QRM also addresses complexity by defining strategic variability and dysfunctional variability. Under QRM concepts, strategic variability (large number of options, custom-engineered products) can be exploited for competitive advantage. Dysfunctional variability (excessive inventory, ineffective systems, rework) must be eliminated. The intent was to endorse QRM as the cornerstone of Nicolets market focus, in order to capture better control of the complexity and establish a niche in the molding market for low- to moderate-volume parts.
I sent my quality manager and an operational staff member to one of the first seminars on QRM, said MacIntosh. They didnt think it would apply to plastics, but I was still intrigued and looked into it for myself. Nicolet had always prided itself on being responsive to its customers fast, fluid and flexible. MacIntosh thought his employees would be able to get their arms around the complexity and make it work for them, rather than against them.
Nicolet started by creating more flexibility within its personnel. Were located 75 miles north of Green Bay, in the Nicolet National Forest. Its beautiful here and our area has many things to offer, but one of the things it doesnt have is a large population of trained employees, explained MacIntosh. We had to deal with the skills we had there.
The first thing to go was the old way of looking at production. Traditional floor management would require a mold hanger, materials handler, production technicians, process technicians, a supervisor and another manager for each shift. The team at Nicolet Plastics decided to redefine floor management by defining the talents required for an ideal shift, ignoring job titles and other employee categories in favor of staffing based on the skills needed to run the production floor. The first time the management team asked for input on necessary skills from the workforce, the response was, Well, we need a mold hanger, a materials handler , laughed MacIntosh. We had to redefine the parameters and force employees to think in a new direction.
Nicolet Plastics built a skills matrix, including both soft skills (interpersonal, ability to work in team environment) and hard skills (technical ability to start a press, do a mold change, understand quality levels and measurements). Once the skills were defined, the next step was to evaluate the employees in terms of their skill levels. Written and practical testing were done to determine competency levels. From here, Nicolet could see what training would be needed to staff the ideal shift.
When evaluating the skill sets found on the floor, Nicolet immediately saw crossover. A staff member previously defined as an operator also might be able to put on water lines or clean out a hopper, skills that crossed over into materials handling or process technician duties. If we have each employee focusing on the higher end of his skill range, we have a cross functional pollination of the workforce that allows us to be more nimble, explained MacIntosh. Employees were rewarded for their technical abilities and their willingness to learn new skills, participating in a credentialing program to grow their individual production and process-related skills. This program was developed in-house to support the QRM initiative. New pay ranges were defined for each skill level, so as employees progressed in their ability to handle more complex issues, their value to the company increased and so did their wage.
With fewer than two years invested in QRM, Nicolet Plastics is beginning to see significant results. We saw some results last summer where we would have, by our measurement of last shot to first shot, presses that were down eight hours between changeovers, MacIntosh said. With employees handling as many as 90-100 mold changes per week, the changeover inefficiency was significantly reducing running time. Were now averaging just shy of two hours, and our goal for this year is 45 minutes. Production efficiencies also have been realized. Previously averaging 52-56 hours per shift per day of production on 16 presses, Nicolet has seen production averages as high as 70 hours per shift. Nicolet now is experimenting with running two 12-hour shifts and has seen as much as 152 hours of production time out of a single 12-hour shift.
Willing to Have the Tough Conversations
Resin pricing volatility has challenged the profitability margins for many a molder over the past two to three years. Nicolet Plastics launched a program to help itself and its customers better manage that volatility. We went through the difficult process of breaking out the costs associated with each customer and each part, said MacIntosh. We broke out the resin component, packaging affiliation and inserts. The part breakout had shown that not only were the resin increases challenging profitability, but Nicolet also discovered that it had not priced some parts correctly. That was a rude awakening, stated MacIntosh. Some of those part prices had been priced below profit levels for over 10 years.
The evaluation established a baseline that Nicolet could then take to its customers. MacIntosh admitted that sitting down with the customer the first time through wasnt easy, since most customers were looking at pricing increases. Those were difficult conversations, he said. The first year was the most difficult and gaining the trust of our major customers took some time. Nicolet provides its customers with quarterly updates and adjustments, and some customers are provided annual updates if the market remains within the agreed upon range. Customers have seen prices move in both directions and that has added credibility to the program. We believe we have a methodology that, as the volatility in the market either increases or recedes, allows us to make adjustments as we go forward.
Initially, Nicolet lost a few parts to competitors, but MacIntosh pointed out that some of those parts have since come back. Weve always said that we wont compete on price, he explained. Our customers respect the value proposition and the transparency that we bring to the table.
Bringing it Together and Watching it Succeed
March marked the twenty fifth year in business for Nicolet, an anniversary the company plans to commemorate with a celebration and open house. As the company observes its silver anniversary, Nicolet is looking to add additional skill sets to give the company the ability to take on larger, more complex projects, such as a business development position, additional engineering capacity and enrolling two employees in RJGs Master Molder courses.
Nicolet has been marketed as fast, fluid and flexible, and QRM has been the tool that delivered concepts to improve in all areas. The recession survival in 2009 was in large part due to the adoption of QRM. Nicolet squeezed more than $200,000 out of finished goods inventory and the companys flexibility improved when Nicolets culture realized that supporting long runs also would reduce flexibility and lengthen response time.
When looking to the future, MacIntosh has decided to take his companys strengths to those potential customers that might be seeking a fast, fluid and flexible partner. A recent operational assessment by a Manufacturers Association of Plastic Processors (MAPP) partner suggested that marketing should be a focus for improvement. As a result, Nicolet Plastics is looking to separate itself from the crowd by working with a marketing consulting firm. MacIntosh explained, As you continue to evolve, you need to decide who you are, where you want to go and what youre staffed with. Bringing it all together and watching it succeed is fun, but continuing to test yourself is good, too.
Nicolet Plastics is succeeding on more than one level. That same operational assessment scored Nicolet as one of the strongest operations within the MAPP organization, ranking among the top three by excelling in data assessment, long-term planning and cultural transformation, among other key criteria. For MacIntosh, however, growing the business is not as important as the responsibility he feels to the employees who staff the company and to the community in which it resides. Businesses only go in two directions they grow or they decline. What this business means to this community is too important to see it flounder, stated MacIntosh. We work hard with our people to make them more successful, and that is pretty rewarding for all of us.