Spoiling Profits: How to Reduce Rework and Reruns
How do you reduce total instances of spoilage (rework/unplanned waste) even while sales are growing? During last June’s CI Ready! virtual event Steve Kirk and Kathy Osterberg (vice president of operations and quality manager, respectively) revealed how their company, ENPOINTE (formerly GLS / NEXT Precision Marketing), did it. Remarkably, during a 13-year span the marketing technology and printing company was able to reduce spoilage instances by over 400%. Spoilage has been under 1% as a percentage of sales for the last five years and is still trending downward (0.77% in 2020).
Kirk and Osterberg stressed that having a system to reduce mistakes is vital for long-term survival. Putting a system in place, however, takes dedication, perseverance, resources, and acceptance that accumulating small improvements makes a big difference over time. If done smartly, a system focused on spoilage reduction will create accountability within the workforce and alter behaviors.
The effort to decrease spoilage began with tracking spoilage dollars in a basic spreadsheet each month. Over time, it became apparent that the information needed to be more visually appealing, easier to interpret, and updated more frequently (weekly versus monthly). Goals were established, along with a color-coding scheme: green indicated goals were met, red meant underperformance, and yellow was neutral. The number of occurrences were added, and finally so too was the spoilage percentage (% of sales). Prior year comparison numbers were eventually included, and the yearly goal made more pronounced. Over time, other changes were made, such as using the company’s enterprise resource planning (ERP) system to issue a daily report so that instances of spoilage were reported on within 48 hours.
As the information gathering and reporting system improved, ENPOINTE began producing spoilage reports for each department manager. It then took the bold step of deciding to track every spoilage instance regardless of amount (the company had previously focused on instances above $500). Kirk and Osterberg point to that decision as important, since many more improvement ideas and solutions were put in place and dealing with small issues can eliminate the causes of major spoilage in the future.
The push for greater accountability and problem solving led to formalizing the process of meeting with employees to identify the root cause of mistakes and institute countermeasures. That information is put into a company database allowing for the effectiveness of countermeasures to be checked. A new approval process required that, depending on the dollar amount of a spoilage occurrence, a manager or executive approve the conclusions reached.
As the positive impact of these efforts became clear, the company doubled down on its continuous improvement mindset by creating 4 x 8 ft. improvement boards (displaying safety, quality, delivery, and cost information) in each department. Those metrics are tracked and updated daily by each department. Standard operating procedures (SOPs) were reevaluated and put into a new format, with the importance of each process explained. Work areas are using the Lean concept of 6S (sort, straighten, shine, standardize, sustain, safety) to be organized, clean, and make problems visible.
Keeping spoilage under 1% is now the only acceptable goal for ENPOINTE. Its culture has evolved so that employees recognize the importance of minimizing spoilage, get timely feedback on performance, and know they are expected to contribute to improving processes to avoid future mistakes. You can read more about the company’s approach to spoilage reduction here.
2021 Continuous Improvement Conference
The 2021 Continuous Improvement Conference (Aug. 22-24 in Columbus, Ohio) is the only industry event focused on helping printing and converting companies achieve operational excellence and Lean leadership. Attendees directly link reduced costs, lowered waste, and increased profit margins to ideas gained from conference presentations and networking. To learn more about the event, visit ci.printing.org.
Every company should be looking for practical ways to reduce operational costs, speed throughput, and boost customer experience and satisfaction. PRINTING United Alliance’s CI Ready! virtual conference event (April 19–22) features four sessions presented over four days that focus on foundational principles and tools for implementing a continuous improvement program. To learn more, click here.