Enterprise Minnesota Magazine - August 2010

HELPING MANUFACTURERS GROW PROFITABLY

Green Savings

Lean and green can help you maximize profits and strengthen customer relationships.

BY JIM HAGLUND

After 50 years in business, Central Container Corporation has experienced its fair share of shifting economies and changing market demands. We've seen the packaging industry evolve from simple corrugated boxes to vibrant custom-made printed displays and containers in a variety of materials. And, of course, we've evolved along with it.

It's imperative to react to outside forces in order to remain competitive. But for manufacturers, it takes more than reaction to stay competitive. It also takes proaction--a continuous effort to anticipate and accommodate customers' changing wants and needs before they demand them.

Perhaps Jack Welch, former CEO of GE, summed it up best: "To improve it takes change. When the rate of change outside your organization exceeds the rate of change inside, the end is near!"

When you want to change an ocean liner's course, you don't do it in a city block. You have to plan many miles ahead. Similarly, company-wide change doesn't happen overnight. You have to plan for it and invest in it, knowing that often the payback is months or even years away.

Four years ago, we were among the first small manufacturers to hire an expert in lean and green--Ed Polin, our lean, green guru. It was an investment no different than buying a piece of equipment or hiring a new salesperson. Even so, it was difficult psychologically to quantify how a lean, green guru would benefit us, so we began tracking his progress.

Within 15 months, Ed, his team and fellow employees had helped us identify and realize $337,650 in savings via various projects, including a re-lamp of our 175,000-square-foot facility, elimination of two forklifts, renegotiated vendor expenses and the elimination of our afternoon break in exchange for an extra 10 minutes at lunch. Elimination of the afternoon break alone has saved our company an estimated $57,650 per year.

When the recession hit, things were slow. But because we had lowered our breakeven point 7 percent, we were able to keep all of our employees. In the past two years, there has been only one month in which we did not make a profit.

Green, though, provides more than tangible benefits. It's cultural. It puts our workers in good spirits because they know they're doing the right thing. It's also valuable to our customers as a cost control reference for them and for their customers. Confidence breeds confidence, and that is a very important byproduct of our lean and green efforts.

Jim Haglund is president of Central Container Corporation.

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