Keeping Companies Stocked

January 01, 2006

By Brian Salgado,
Manufacturing Today.

The corporate world’s shift from paper filings to electronic archives could have spelled doom for an office supplies manufacturer like Esselte.

“The advent of the computer and other electronics caused a change in the position of products,” says Gary Brooks, Esselte's President & CEO.

“People no longer have tons of files in the office. You print it, use it and discard it. You file less, but the need to stay organized is greater.”

So Esselte shifted its focus alongside the new demands of the marketplace and began marketing products that followed the trends.

“The trend is to get away from long-term filing and do more short-term organization,” Brooks says. “We are providing the products to meet the changing dynamics.

“If you look at the market, there has been a big shift from clientele using our products in the large office environment into more of a mobile or home office, or a niche marketplace. We heard the voice of our customers and we understand their needs, so we developed the products to meet the new trends.”

Esselte says it is one of the leading global office supplies manufacturers in the world, with 30,000 different office products in more than 120 countries.

In 1913, 13 separate Swedish businesses joined together to form SLT. Through acquisitions, the company grew and its core activities soon included everything from bookbinding and paper manufacturing to the printing of stationery, playing cards, maps, forms and printing securities, according to Esselte.

In the early 1960s, SLT had a number of competing operations and products, and in 1964 dramatic structural change began. Esselte says divisions with similar activities were merged and any incompatible operations disposed of.

In 1970, the group changed its name to Esselte, and embarked on a series of 50 acquisitions over the next 20 years. During that time the company grew substantially.

During the 1990s, the company made the decision to divest numerous businesses and rationalize its product line to concentrate on several major categories.

In July 2002, Esselte was acquired by J.W. Childs, a U.S.-based equity investment firm. It then embarked on a strategy of utilizing lean management to improve effectiveness and flexibility; an increased focus on innovation to combat the changing habits of workers worldwide; and defending and building some of the strongest brands in the office products category.

Today, the company has annual sales of $1 billion and employs more than 6,000 people through subsidiaries in 33 countries. Esselte’s products fall into three categories: filing, workspace and creative.

The company says filing products make up Esselte’s largest category in terms of revenue. It claims to be the world leader in this sector, with a global market share of 20 percent.

Filing products include hanging folders, manila and colored folders, presentation products and concertina files. These products are marketed under the Leitz, Pendaflex and Esselte brands.

Esselte says its workspace products include all accessories and devices used on and around the desktop, as well as for mobile use. Marketed under the Leitz and Esselte brands, the products include staplers, perforators, lamination machines, waste bins, computer bags and accessories.

The Esselte creative division, led by Xyron, is a prominent player in a number of rapidly growing craft-specific and creative markets. Products available from this craft and hobbyist leader include four-in-one machines, sticker makers, hand-held adhesive application products and magnet tape and related products.

“We have a recognizable brand in the marketplace and a legacy of providing innovative solutions,” Brooks says. “We are vertically integrated in our operations and offer a broad breadth of products.”

Brooks says Esselte’s customers are broad based at the end-market, but its channel partners are retailers, office supply superstores and wholesale dealers. “At the end-market, people are looking for features, benefits and solutions from the things that will make their organization more productive and organized,” Brooks says. “Our channel partners are looking for on-time delivery, replenishment systems and innovative products that will capture the consumers so they will want to buy more or spend more money.”

Esselte has its world headquarters in Stamford, Conn., and its Esselte Americas headquarters in Melville, N.Y. The company also has manufacturing plants in California, Illinois, Missouri, Canada and Mexico, as well as a much larger group of factories located in Europe and Asia.

The company has subsidiaries in 33 countries throughout North and South America, Europe and Asia. Esselte says Europe accounts for 55 percent of its revenue, the United States and Canada contribute 40 percent, with the remainder coming from Latin America and Asia Pacific.

Esselte says Asia is an area with significant growth potential. That is why the company is concentrating on developing its existing regional resources, including people and assets in Hong Kong, China, Japan, Australia and New Zealand.

Esselte has managed to keep ahead of trends through innovation. The company demonstrated its commitment to innovation in August with the appointment of Sean Fernandez as senior vice president and chief innovation officer.

As the chief innovation officer, Fernandez works in conjunction with Esselte’s operating divisions and marketing department to define, prioritize, develop and commercialize new product opportunities, according to a statement made by Esselte.

Getting Lean
Esselte is in the middle of a transition to a complete lean manufacturing process at its North American plants. The company has been utilizing lean techniques since 2002, when it was acquired by J.W. Childs, and Brooks says Esselte is just getting started.

“Don’t claim success too early,” he says. “A lot of companies have a kaizen event and have a major breakthrough and think they are successful. In reality it is the first step in the journey.”

For a number of its floor processes, Esselte takes rolls of paper for its paper products to one end of the line and the completed project comes out through the other end of the line. Because of its lean techniques, Esselte has quick changeovers that allow it to make every product every day.

The company is moving toward a one-piece flow and cellular system to improve quality, flexibility and on-time delivery.

“The ability to see defects is immediate, and it allows engineering and quality assurance teams to address quality right away,” Brooks says. “One-piece flow makes quality very visible, and when the line is down, lights, bells and whistles get the attention of the team to address it immediately.”

Esselte continues to run kaizen events to improve the productivity of its plants, according to Brooks, which usually last one week.

“Our kaizen is geared toward the cycle time of the process,” Brooks says. “We take waste and unnecessary steps out of the processes. At the end of the day, we come out with 60 to 100 percent improvement.”

The company is also creating a pull system based on its customers’ needs. Brooks says the company sets inventory target levels in its warehouses. When customer orders send a signal to the plant to replenish the inventory, it triggers a pull system with suppliers of raw materials based solely on customer demand. When Esselte started its lean journey, it kept its progress internal before asking suppliers to help, Brooks says. As the company made progress with its own systems, it started bringing suppliers on board. But Esselte is still working its way to getting all its suppliers online.

“We haven’t yet gone out and forced suppliers to do lean and kaizen to help our cause,” Brooks says. “But it is important to get our house in order before asking suppliers to participate. We have good suppliers doing the same thing, so we try to have single-source suppliers when we can.”

In 2004, Esselte increased efficiency and decreased waste in the production of its Twin Pocket Folio after numerous kaizen events trimmed down the manufacturing process.

Chris Curran, director of public relations for Esselte, says the sales of Twin Pocket Folios have increased consistently since, and the company is making a better-quality product through the new production process.

“Furthermore, we have the flexibility to respond to extra orders or changing customer preferences should back-to-school sales of our customers run well since there are no long overseas shipments,” Curran says.

Experienced Advice
Through his experience with Esselte’s lean venture, Brooks says hiring the best and most experienced consultant is the best way to get started in lean manufacturing.

“What’s most important when venturing on your lean journey is seeking professional advice,” he says. “Find professional lean practitioners, listen, create a network and don’t try to recreate the wheel.”

He also says a company’s personnel are the most valuable asset for a lean transition.

“Understand the most important ingredient in the whole adventure is the people you have in the company,” Brooks says. “Everyone has mostly the same equipment, and the buildings are just bricks and mortar. Use lean as a philosophy and not just as the program of the month.”

Brooks is proud of the way Esselte employees have responded to the changes instituted at the manufacturing plants that have gone lean.

“Our people are willing to adapt to change,” Brooks says. “We are asking people traditionally working on one machine their whole career to run three or four different machines. Adaptability to change is important to us.”

Brooks joined Esselte Americas as president in March 2005, and became Esselte's President & CEO in December 2005. He has 30 years of industry experience, and is a proven lean business practitioner driving lean principles from the factory to the customer and through the entire enterprise.