Articles

Job Costing: Know Your Costs, Know Your Profits

August 21, 2010

by: Mark Porter, Diemanic MIS

There is a simple equation in business that must be followed:

PROFIT = SALES – COSTS

If a business doesn’t know its costs, then how can it know its profits? In good economic times, companies must know their costs to maximize profitability. In tough economic times, they must know their costs to survive.

These days, understanding true costs is more important than ever. As competitors constantly lower prices to keep work in their plant, they put downward pressure on your prices. It can be difficult to know when to say, “No” and walk away from a job.

The simple truth is that if a business is not using job costing to determine the true costs for each job, then it will never know when a job doesn’t make sense from a cost standpoint. This affects overall profit. If the profit made from each of last year’s jobs was graphed, we would likely see a graph similar to the one below. Because the true costs of each job were not understood, the business simply took each job that was won. As a result, these jobs fall above and below the profitability line.

If the costs had been understood at the time of estimating the jobs, the orders that had no chance of being produced profitably could have been walked away from and more of the jobs would have fallen above the profit line. Job costing can help identify the type of work that can be done profitably, so the sales and production efforts can be focused on that type of work.

Job costing needs to encompass three areas:
1. Calculating the true costs.
2. Applying costs to the estimating process.
3. Monitoring and analyzing the costs on a continuous basis.

Calculating the True Costs

Costs associated with any job-oriented manufacturing business, of which the binding and finishing industries are members, require the monitoring of direct labor, direct materials, and the application of overhead costs (both factory and administrative). The direct labor and material are easy to calculate, but the overheads must be applied based on accounting principles associated with the direct labor hours or Activity Based Costing. Without accurate hourly rates that ensure all overhead costs have been encompassed, then job costing will be useless. Hourly rates can be calculated using either budgeted hourly rate software or an accountant. These hourly rates are not static. Adding or deleting a piece of equipment, adding a new shift, or changing the employee benefit package all can require a recalculation of hourly rates.

The job costing system also needs accurate production standards. Information such as run speeds and makeready times must reflect the times required to perform specific tasks. Most operators of bindery and finishing companies have a good handle on this information. With accurate cost rates for machines and speeds and times for processes, the costing system is ready for use (see Table 1).

Applying Costs to the Estimating Process

Estimating and selling are two different processes. This is probably the most misunderstood concept in the binding and finishing industries. Most companies use “sell” rates to produce estimates, rather than using costs and then marking up the estimate to reflect selling conditions. The advantage of using true costs in an estimate is that the business knows at the estimate stage if the job will make or lose money.

If the estimate states that it will cost $100 to produce this job, but also wants a 20 percent markup, the sell price is $120. This puts a business in a position to make a more educated selling decision if the customer says another company will do the job for $95. The business does not have to walk away from the job, but at least it knows it is paying $5 for the privilege of doing the work and that there’s no profit on the horizon (see Table 2).

Monitoring and Analyzing Costs on a Continuous Basis

Cost and production standards must be monitored and analyzed on a continuous basis. It is vital that businesses ensure that standards used for estimating accurately reflect the standards being achieved on the shop floor. It is of no value to estimate a machine as producing 5,000 pieces per hour if it is actually only achieving 4,000/hr – that loses money before the job comes through the door. Conversely, if a business is estimating at 4,000/hr and actually obtaining 5,000/hr on the shop floor, jobs are being lost that could be produced profitably.

To continually monitor costs, staff must record the time and materials used in the production of each job. This has several advantages. At the end of each job, an actual v. estimate comparison can be run that will show any differences in cost or production between the way the job was estimated and the way it actually ran. Any variances should be investigated and analyzed to determine if it is a change that needs to be accounted for or a one-time occurrence.

Time can be collected via time sheets or shop floor data collection devices. The shop floor data collection devices have many benefits over the time sheets, but either method will work. Businesses must track every minute of each employee’s day – both chargeable and non- chargeable time.

There are many other benefits of collecting data for job costing, especially in the current economic conditions. Monitoring the time and material usage of all employees brings an increased level of accountability to the shop floor. Accountability leads to increased profitability and decreased waste. If a business has $2 million dollars in labor and material being processed in its plant each year, even a cost reduction of 5 percent can result in $100,000 savings.

The information collected can be used in other formats as well. Productivity can be analyzed to determine average speeds and makereadies. Average speeds being obtained by individual employees can be tracked, as can chargeable and non-chargeable times. If an employee has only 60 percent chargeable time, his role may need to be evaluated. A solid job costing system is critical in good times and essential in tough economic times.

Mark Porter is president of Dienamic MIS Software, Inc. Dienamic offers a wide variety of software products and services designed specifically for trade binderies and print finishers. Dienamic can offer full systems, including estimating/management information/e- commerce and individual software tools such as delivery management, die management, foil management, and budgeted hourly rates. For more information, call (800) 461-8114 or visit www.dienamicmis.com.

Advantage Book Binding: 25 Years Young

August 21, 2010

by Dianna Brodine, The Binding Edge

Advantage Book Binding Inc. founder and CEO Jerry Nocar is a true American success story. Recently inducted into the Binding Industries Association (BIA) Hall of Fame, Nocar started working in the bindery business as a teenager. He began by sweeping floors (a job his mother got him when he left school before finishing the eleventh grade) and worked his way up, running the equipment and eventually moving into sales. Nocar’s work ethic, charisma, and high energy powered his success in the industry, helping him create relationships that would prove invaluable when, in 1985, he opened Advantage Book Binding in Glen Burnie, Md.

These days, Nocar and his wife, Chris, are enjoying the semi-retired life while their daughter, Christine, and her husband, Christopher Webbert, run the binding business. With a young management team and a dedication to quality, on-time production, Advantage has positioned itself for a strong future in the traditional book binding business.

A Silver Anniversary

Celebrating its 25th year in business in 2010, Advantage Book Binding still follows the mission set by Jerry Nocar when he opened shop: “We do a quality book on time.” With 40 employees operating from the original 36,000 sq. ft. building, the bindery’s primary capabilities include case binding, perfect binding, and mechanical binding. “While we have stayed true to our mission, we also have made numerous changes to our business philosophy over the years to be more flexible to meet our customer needs,” explained Chris Webbert, president. These changes include adding new services to the bindery’s existing product lines. For instance, Advantage added PUR glue to its adhesion capabilities, adding three new product lines for its customers. “Listening to our customer needs over the years has helped us grow our business, investing in new equipment that has expanded our capabilities and product lines,” said Webbert. The company also has the ability to provide Smyth sewing, wire-o, drilling, tipping, stamping and embossing, folding, cutting, diecutting, and shrink wrapping. A fully automated dust jacket machine simplifies hardcover book production.

Advantage Book Binding services commercial printers, digital printers, book printers, and publishers, with the book market as its biggest niche. 75 to 80 percent of its work is focused on the local market, but Advantage also competes nationally in the softcover and mechanical binding markets. These days, approximately 40 percent of its total business is in hardback book production, creating art books, legal manuals, and high-quality coffee table books. “We’ll produce anywhere from one to one million books,” Webber stated. “We’re doing a lot more short run digital or custom books, but the average run size is going down so we have to be ready to do 50 books or 500,000.” With trim sizes ranging from 3×5″ to 12×15″, Advantage prides itself on its flexibility, quick changeovers, and ability to adapt for difficult jobs.

“Kindle” is a Bad Word

With research firm Forester predicting that e-reader sales in 2010 will exceed 6.6 million devices and Amazon.com reporting that ebook sales have outpaced hardcovers, the book industry is obviously facing a challenge. Webbert has been watching the trend. “Kindle is a very bad word in our family,” Webbert laughed. While Webbert acknowledges the need for e-readers for people who travel a lot or who are avid readers who go through several books at a time, he also believes there’s room for both methods of book publication. “There’s no doubt about it – the industry is shrinking,” said Webbert. “Technology is going to affect us, but I think ink and paper books are going to be here for a long time, especially for certain product lines.”

Pointing to the marketing and advertising industries, where email, direct mail, radio, television, and the internet all coexist, Webbert believes casebound binding still makes sense for businesses that approach it wisely. “The market is shrinking and the business is changing, so if we don’t change with it and make the right decisions, then we’re not going to be here either,” he explained. “However, we are positioned very well because of the decisions we’ve made over the years.”

In addition to the threat from electronic media, print also has been attacked by those urging environmental consciousness. Advantage Bookbinding has partnered with the Printing & Graphics Association MidAtlantic (PGAMA) and other print and design partners in the Print Grows Trees educational campaign. Advantage has bound more than 2,500 books that have been used to promote the truth that print on paper actually helps to grow trees, keeping forests from being sold for development. (Read the message from Kerry Stackpole, president of PGAMA, on page 9).

In fact, at Advantage, the emotional attachment that people have for bound books has provided additional opportunities for business. “We’re doing a lot of repairs for Bibles on a local level,” said Webbert. “Over the years, families have journaled events and put so many notes into the family Bible that there’s an attachment to it. They are willing to spend the money to repair the book. That’s a market I never thought we’d get into, but we listened to our customers to find out what they wanted.”

Adjusting to a Changing Business Model

Lean economic times, digital book production, and short runs have impacted casebound binderies. At Advantage Book Binding, the company has responded by becoming more open-minded toward the small run custom work that it might not have quoted in years past.That type of work has helped compliment our sales during the tough months, Webbert explained. “It’s also made us better at listening to the customer’s needs and exploring ways in which we can get the job done, as opposed to saying ‘no, we don’t do this service.'”

As a result, Webbert feels that his company is evolving into a marketing service provider for its customers. “Five years ago, PIA (Printing Industries of America) was telling us to find a niche, but now with the economy, we need to figure out how to grow sales. The whole model is changing,” he said. At Advantage, the company is taking on projects that it wouldn’t have entertained five years ago.” The key is making sure that the work we’re entertaining is work our customers want us to do. If we have a solid relationship with a customer, we’ll figure out a way to get the job done. In recent months, Advantage has taken on a fulfillment role for certain customers and also has created custom boxes for customers wanting an impressive presentation.

To ensure profitability, Advantage has invested in a customized software package that will allow its management team to make better decisions when evaluating the production costs for new projects. The team also has committed to implement lean manufacturing. “These management decisions will continue to help our employees become more involved with the processes in the plant,” said Webbert. “Our customers and company will benefit.”

Young Management Team

Advantage Book Binding’s leadership has a positive outlook and believes it will be servicing the printing and book industry for many years to come. “We are well-positioned for the future with a young management team. Our youth is one of the reasons we’re going to be doing this for quite some time – we have to! We want to build our business to sustain both us and our customers over the years,” said Webbert.

The bindery feels fortunate to have a very healthy customer base in an industry that is struggling with the tough economic conditions, handpicking its customers and servicing them well. A willingness to re-invest in the business with the newest equipment and best automation plays a critical role in maintaining those relationships. Fiscally conservative, Advantage evaluates each purchase in terms of return on investment. “We will not buy something if we can’t afford it or we cannot justify the ROI,” Webbert explained. “At the same time, if it makes sense for our customers and allows us to meet their needs, then we try to move forward. Our “sell” to potential customers is that we listen, communicate effectively, understand their expectations, and try to exceed them.” For Advantage Book Binding, its dedication to doing what it says it will is its biggest selling point.

Webbert also is aware that there aren’t as many resources for traditional hardcover book production as there had been in years past. “Because of the economy, there’s been a reduction in the number of casebinders, but there’s been a reduction of pretty much everybody in our industry,” he said. “We have a lot of competition in this area, but I don’t think there are many people who will get into casebinding fresh because it’s heavily material- and labor-intensive. Margins can be tough.” The bottom line, according to Webbert, is that the fittest will survive. With the company celebrating its silver anniversary this year and a management team ready to adjust as business models for the binding industry evolve, the potential for gold is bright!

Where are they now? A Look Back…and Forward…with Three Former Spotlight Companies

May 1, 2010

by Dianna Brodine

In each issue of The Binding Edge, a bindery or loose leaf manufacturer is placed in the “spotlight,” providing an inside look at its history, capabilities, and goals. In this issue, the magazine revisits three of those former Binding Spotlight companies to see what changes have occurred and how the companies have reacted to one of the most challenging periods in the industry’s history. Triggered by a depressed economy, consolidations among printers, and an increasingly demanding customer base, binding and loose leaf have faced faster turnaround times and shorter run lengths. Rickard Bindery, Universal Bookbindery and Trends Presentation Products have weathered the storm. Although the challenges aren’t completely behind them, all are optimistic about the future.

Rickard Bindery

Since 1900, Rickard Bindery has been a part of the Chicago landscape. Opened as Rickard Circular Folding Company by Fay Rickard, the company has a long history of technological advancement. In 1922, with Fay’s guidance, the Faydon Sealing Machine Company developed and patented an automatic tabbing and sealing unit and in 1945, Fay developed what is believed to be the first mechanical gate fold attachment. The company has remained family-owned, passing from Fay to his son Les, and then to Les’ son, Jack. Jack is still president of Rickard Bindery, a position he has held since 1966, and his son, Kevin, is currently vice president of operations.

The bindery keeps its focus on its core competency – folding paper. It has no mechanical binding, perfect binding, or case binding capabilities, and the recent revenue environment has discouraged Rickard Bindery from expanding its service offerings. “Over the past three years, our priority has been fine-tuning the equipment we have on hand, rather than overextending ourselves financially,” explained Kevin Rickard. “With minor adjustments, our existing equipment continues to serve our market niches well.” Those “minor adjustments” include adding glue units, modifying existing folders with special purpose feeders, and adapting the pharmaceutical folders to handle thicker pieces. Rickard Bindery also added automated padding equipment more than a year ago, which has contributed to a more efficient workflow and much quicker turnaround times.

In 2006, when the company was profiled for the Fall issue, 75 employees operated the folders during three shifts each day, creating pharmaceutical inserts and instruction sheets, coupons and product inserts, and direct-to-market products, like maps. Today, those same products are being produced in three shifts by 70 employees. “Like many of our peers, we’ve adjusted the size of our company to fit the reality of changing market conditions,” said Kevin. “Specifically, we’ve reduced our bindery worker and supervisor workforce as appropriate. However, we serve the high-volume production needs of many customers and are committed to maintaining three-shift capacity.”

To counteract the impact of the economy, Rickard has made an effort to expand its geographic reach, with 70 percent of its business now coming from outside the greater Chicago metropolitan area. In addition, the bindery has developed manufacturing partnerships with select companies to reduce the amount of capital investment required to maintain its presence in less profitable business sectors. Such partnerships allow Rickard to provide resources to customers without compromising its cost structure. Perhaps most important, Rickard is placing a priority on those customers who pay their bills. “Customers who pay on time and adhere to our terms are our company’s lifeblood,” Kevin explained. “And it may be just us, but we’ve noticed the others tend to go out of business.”

Rickard Bindery believes that the markets it serves have stabilized, at least from a per-piece volume standpoint. The company expects industry consolidation to continue and that doesn’t worry Kevin: “Consolidation means that fewer companies will produce higher volumes of work. This is good news for Rickard Bindery as long as we prioritize excellent customer service and develop stronger relationships with the survivors.”

Rickard Bindery is leaner, meaner, and more customer-centric than at any time during its 110-year history. “We may not like certain trends, such as shorter runs and turnaround times, but we’ve learned to adapt,” said Kevin. “One lasting change is that we’ll never take our market position and good fortunes for granted.”

Universal Bookbindery

Universal Bookbindery, Inc., located in San Antonio, Texas, was founded in 1918 by Leo Picard and Bob Hearn. After building the business by doing school textbook rebinding, the company evolved into a manufacturer of hard and soft cover books, and then developed a line of highly decorated yearbook covers that were sold to printers and other binderies across the country. A series of acquisitions followed in the 1980s, but Leo Hearn (son of Bob Hearn) repurchased the bookbinding and loose leaf divisions in 1986. Thats when Trip Worden, Leo Hearn’s stepson, made his way back to the company. Attaining the presidency in 1996, Worden has been guiding Universal Bookbindery through the economic downturn.

Profiled in the Summer 2005 issue of The Binding Edge, Universal Bookbinding continues to specialize in medium- and large-run casebound books, with elaborate covers that could include metal appliqué, embossing, top stamping, spot graining, and antiquing. At the time of its Spotlight article, Universal Bookbindery employed 80 full-time employees. These days, the company operates with 65 employees. “Our volume was much larger in 2005, both in number of jobs and total sales dollars,” explained Worden. “The recent slowdown really didn’t affect us until winter of 2009, but now it has forced us to adjust our employment levels.” The company continued to reinvest in the business, adding a new high-speed Kolbus DA-270 casemaker and a Polar cutting system with jogger and unloader in 2008. “Each of our significant equipment and technology acquisitions has helped us be more competitive and react quicker to the market,” he said.

With volume down, Worden took the opportunity to embrace Lean Manufacturing Training. “The San Antonio Manufacturers Association has been touting the benefits of lean for a while, but the thing that made me realize it was a worthwhile process to undertake during a down time was watching our local Toyota plant,” stated Worden. The Toyota plant had been hit hard by the economy and, during the summer of 2009, the plant was idled for eight weeks. Employees were kept on with reduced hours to work through the enhanced lean manufacturing process. Worden decided the time was right. “I will tell you, it’s not easy and it’s not cheap, but I believe lean manufacturing has been a great thing for us,” he said. “We were already a well-organized, well-lit manufacturing plant. But you look at us now and look at us a year ago, and it’s a world of difference.” Focused on eliminated waste – including labor, time, and actual materials – lean manufacturing promotes a highly organized plant floor. “Lean promotes reduced spoilage and, while we can occasionally stub our toes, we have been really impressed with how well the plant floor operates,” stated Worden.

A significant change to the atmosphere at Universal Bookbindery occurred in January of 2010 when Leo Hearn passed away. Although a succession plan had been in place for 15 years and Hearn was no longer involved in the day-to-day operations, his absence has left a noticeable gap. “When he passed away, it was more of a jolt than I thought it would be,” said Worden. “With business down, it would have been nice to have him available to talk about the current challenges and solutions to those challenges.”

Worden believes that over the next five years, the companies that have made wise investments in their people, equipment, and facilities will be serving a customer base that – while probably smaller than is in place today – will be glad to have successful finishing options available to them. “It appears the market is shrinking,” said Worden, “but we do not feel it is in danger of going away. There will always be a need to print and bind the printed word, along with offering creative packaging solutions for a wide variety of users. The investments we made when times were good are a good part of why we’re still here today.”

Trends Presentation Products

Profiled in the Spring 2005 issue of The Binding Edge, Trends Presentation Products, Washington, Mo., began as Stationers Loose Leaf. Originally an archival binder supplier, Stationers had entered the commercial binder market but the advent of office superstores turned the company’s focus to custom turned-edge binders and packaging. As production lead times were cut, production runs became smaller, and service demands increased, the company attempted to look into the future. It looked as if a web-fed digital press was the answer.

Trends became the first loose leaf binder manufacturer to purchase a Xeikon web-fed digital press in 1999. The press was large format, 18.7 inches wide by 36 feet, and had duplexing capability. Expensive film, contract proofs, and printing plates were completely eliminated with this new piece of equipment. The Xeikon is still in use today, and Trends has made continual investments to keep the press up-to-date in order to maximize its digital capabilities. Graphic design programs also have been upgraded to ensure the highest quality of graphics.

Producing custom turned-edge products, including ring binders, catalog binders, post binders, slantboxes, slipcases, tote boxes, menu covers, easel binders, point-of-purchase displays, and much more, Trends still sells exclusively to resellers. “The pressures of the economy, combined with easy accessibility to the internet, have pushed many manufacturers to start selling their products direct,” said David Inman, sales manager. “We have decided against that and want to keep the loyalty and trust between our dealers a priority. We believe that still means something.” Utilizing a variety of techniques, Trends can screenprint, foil stamp, emboss, deboss, diecut, laminate, and use digital technology to customize its products.

The recent digital/on-demand printing trend seems made to order for Trends Presentation Products. “As demand for faster turnaround, just-in-time delivery, customization using variable data, and shorter runs have increased with digital printing, we feel fortunate to be in our position,” stated Inman. Trends Presentation Products has positioned itself carefully in this niche market, with more than 12 years of experience thanks to its 1999 Xeikon purchase.

At the same time, the current economy has definitely had an impact. “Like many businesses, we were forced to stop and re-think everything,” said Inman. “This included how we quoted items, deciding what products to offer, how products are delivered, and even how we answered the phones.” The company organized quick pricing methods to ensure timely turnaround for quotes and renegotiated its supplier prices, including shipping rates. Inventory levels were closely watched and Trends found creative ways to continue offering its full line of custom packaging.

“There is no question that the next five years are going to be challenging for us and for the industry, especially as social media applications increase and become a stronger way for companies to market products,” said Inman. With a soft economy and the tempered buying habits of consumers keeping pressure on price, the focus for Trends Presentation Products will be controlling costs and improving productivity. In addition, Inman believes more consolidation is inevitable for the industry and he is determined that Trends will not become one of the casualties.

“We believe in our products, service, and customers, and plan to stay optimistic,” he said. “We are operating more efficiently than we ever have before. We know what our customers want and need, and if a project is within our ability to handle it, we will do it. That hasn’t changed.”

Applying Lean Manufacturing to Binding at Duraweld Ltd.

May 1, 2010

by: Staff

For lean manufacturing to become part of a company’s culture, the majority of team members must think about continuously improving all processes – then make those ideas a reality. Below is an interview with Jamie Swan, production manager at Duraweld Ltd. in Scarborough, England, with a report on the plant’s lean improvements, which began in 2006.

Q: What triggered Duraweld to begin implementing lean manufacturing practices?
A: Four years ago, the production manager had left Duraweld due to illness. Richard Senior, the company’s managing director at the time, decided to advertise for a replacement with lean manufacturing experience. For 14 years, I had worked for a U.K. company that was part of a global group supplying the automotive industry. As a project supervisor there, I worked on the implementation of lean techniques like 5s, line balancing, standard operations, and visual management. After I was hired by Duraweld in 2006, I quickly started to implement a program of lean improvements. Richard was very supportive of the changes, and I formed a great partnership with Terry Cooke, Duraweld’s print manager at the time (and now sales manager).

Q: What goals did Duraweld set when beginning the lean manufacturing process?
A: Duraweld makes bespoke plastic stationery-protection products, including those with a range of decoration available on a tight turnaround (usually 10 days). As a result, Duraweld had a machine-utilization rate of around 50 percent and a staffing level that could easily deal with impacts. This meant that when an operator stopped making bespoke product, he was directed to make stock products based on a “gut feel” for what was required. The supervisors had a very poor view of what jobs were in the system and had become attuned to “firefighting” the workload.

I set initial goals to bring under control the waste in motion, conveyance, and overproduction that could be tackled immediately. The medium-term plan was to build a supervisor-led 5s program to drive organizational improvement throughout the plant and construct cell manufacturing units, where possible, to further reduce conveyance time. The ultimate goal was to build the whole entity of Duraweld into a synchronized system that eliminated non-value-added activity across the board.

The last goal required buy-in at every level of the business. Fortunately, the company’s dedication to integrating the core values of lean into a synchronized system took a step closer to realization with strategic investment in an ERP system and the dedication to delivering improvement by Hannah Senior and Mark Yeung, the company’s new managing directors.

Q: What were the first steps?
A: The first steps were considered to be, in lean terms, the low-hanging fruit – easy gains that would allow people to feel more in control of their workload. Our first step was to convert a “push” manufacturing flow to a “pull” process, which involved creating a visual management system that incorporates scheduling and maintenance. Kanbans also were introduced to stop overproduction. Previously, the material was issued for a job when the order was placed – even before that job was scheduled to begin. By simply changing to issuing material as a job commences meant that no work was carried out unnecessarily, taking up machine time, space in the factory, and other valuable resources.

The production schedule was handled on an Access database. Using supervisor control, the system tracked jobs through the factory using a traffic-light system: Jobs waiting were red, jobs in progress were amber, and jobs completed were green. Simple visual management techniques, such as shadow boards, make it quick and easy to interpret information about the job in hand.

The second step was to implement a 5s program that would be communicated to everyone in the business, from the managing director to the cleaner. I chose an area of the factory to become a model of excellence. Using a one-day workshop, the operators from this area were given an overview of the 5s and what we wanted to achieve by implementing 5s, then carried out a red-tag sorting exercise in the afternoon. The impact of the red-tag session was quite amazing. Duraweld had always been a relatively tidy environment, but during the first sorting session we removed a “hidden factory” of unused equipment and mess from inside the working factory.

Over the next four weeks, the same team took on the organization and cleaning of the model area. The floor was painted to define the work area, aisle space, and location of necessary items. Storage areas for quick-moving materials were set line-side, and shadow boards for essential tooling were created. We painted the floors under the machines white to assist with early warning of maintenance issues (oil or metal filings are often an early sign of wear). A labeling program ensured that items were always returned to their location and to help with waste management for recycling. Cleaning and maintenance procedures were advertised, and operators moving through the factory were likely to be asked about why they had left their work area.

Once the model area was set for maximum impact, everyone in the factory was given a tour in small groups to learn about the changes. There were nine more workshop sessions, which followed the same process. Eventually the whole factory has been transformed into a clean and organized workspace. A champion was then nominated for each of the 5s locations (we have 10 areas), who would drive the communication through the team of operators.

Two cell-manufacturing units were constructed for repeat stock products. By linking the process routes together, we were able to reduce conveyance and set-up time, build product awareness of previous/next process, and increase operator productivity. Kanban cards meant that we made only enough stock to keep supplies topped up, freeing operators to complete other work when the stocks were up to the maximum level.

Q: What challenges did Duraweld encounter during the implementation?
A: Duraweld staff responded very positively to the early changes. The workshop sessions helped to clear the path to change. Concrete goals, communicated well, usually have the desired effect. Lean manufacturing is a very simple, commonsense approach to making products, and when people realize that they can contribute, they will get involved.

There were some less enthusiastic people within the business who thought it was a revolution, rather than an evolution, or just felt that it would disappear as other incentives had. These were usually the people who felt most threatened with change or could see their role diminishing as efficiencies increased. The visual management techniques and work-area organization served to ensure that people were kept working. And by relentlessly challenging people who left their work area, the message eventually got through. Access to proper workflow schedules allowed me to limit the impact of some of the more negative people, and I could keep them busy with long-running work to ensure that their negativity didn’t spread.

Continuous communication, training, and the discipline to keep going through difficulties make a difference. Promoting positive values and creating an environment where best practice can be shared will eventually generate a momentum that makes it difficult for the dissenters not to join in. It’s a very rewarding moment when you get someone resistant to change to put forward a good suggestion and allow him or her to take the idea forward.

Q: What has Duraweld done to ensure that the lean manufacturing process will be sustained, long-term? Are there review procedures in place?
A: To achieve the next two stages of the 5s – standardize and sustain – we needed an audit and feedback system. The audit was devised to keep the areas under visual control, and five supervisors were given two audits to complete bi-monthly. I still provide the feedback to make sure that improvements in any area are communicated and adopted across the shop floor. The 5s audit scores are one of the company’s key performance indicators.

As a result of cleaning up the shop floor, Duraweld vastly improved its waste segregation and management. With a much-improved environmental policy, Duraweld achieved accreditation for ISO 14001 and pioneered the recycling of our own polypropylene manufacturing waste into print-grade material. We now recycle 100 percent of our manufacturing waste as well as much of our office and break-room waste.

In 2008 the introduction of Winman SSL, a Windows-based ERP system, allowed Duraweld to integrate electronic lean manufacturing concepts. Production Kanbans are now fully electronic, making tricky changes like seasonal stock adjustments easily manageable. Using a configurator to construct a structure for each quote, we no longer have to estimate costs manually. When the quote converts to an order – the manufacturing order is sent with one mouse click – the tracking schedule is filled with the traffic-light process flow, and the color changes from red to amber or green are generated through bar-code scanning. We also have a binder configurator on our website, where customers can create their own product; when a customer buys an item, the order instantly hits the shop floor. Duraweld is truly beginning to realize its commitment to lean manufacturing excellence across the whole business spectrum.

Q: How has lean manufacturing affected your production efficiency and profit margin?
A: Over the past four years, shop-floor staffing levels have been reduced by 37.5 percent – from 72 employees to 45 – meaning a 15 percent drop in our wage bill (even taking into account inflation, pay raises, and multiple increases to the U.K. minimum wage). Fortunately, we were able to gradually make these changes through natural wastage and by not replacing staff as they retired or moved away. Efficient staffing levels allowed us to keep the number of redundancies low when the recession hit. In addition, 49 percent of our products are now standard configured products, reducing office and administrative costs.

We also make money from our waste materials by good segregation and clean recycling processes. Process capability and control of defects in our main production product lines has just shown the best three-month period yet. In addition, visitors from other manufacturing organizations were given a presentation and tour of our facilities last February in an event organized by the UK Manufacturing Advisory Service. We are very proud of our factory and of a workforce who has responded so well to making lean practices work.

Troubled Times Demand Dynamic Supplier Relationships

May 1, 2010

by Renée A. Varella

In a challenging economy, strong supplier relationships are more crucial than ever. According to Tom Stein in an article at AllBusiness.com, a recent study showed that more than 90 percent of small- and medium-sized businesses reported that solid supplier ties saved them time and money and helped them in this difficult business environment. Here, three sources in the trade bindery industry explain how they make the most of their supplier-bindery relationships.

Think Partnership

The most effective relationships start with the idea that suppliers and binders can form mutually beneficial collaborations. “We consider ourselves partners with our customers,” said Mark Hunt, director of marketing at Standard Finishing Systems, based in Andover, Mass. “Our philosophy is to create a value proposition in which we help trade binders increase efficiency, boost profits, and lower costs. If we can do that, our customers will be successful and so will we, because they’ll come back to us for more post press solutions.”

“We think of our vendor relationships as partnerships,” agreed Mike Seidl, sales manager at Seidl’s Bindery, Inc. in Houston, Texas. “Finding a company to put your trust in when you’re in trouble and need help out isn’t always easy to come by, so we commit our loyalty to a high-quality and dependable supplier.”

Understand Expectations

According to Hunt Nichols, executive vice president and co-owner of BindTech, Inc. of Nashville, Tenn., having clear expectations of your supplier-bindery relationships can facilitate rapport and minimize misunderstandings. “We look to our vendors to provide quality products at a competitive price with on-time deliveries,” he said. “We work with vendors who stand behind their product when issues arise and respect confidentiality with regard to special products and shared client information. We look to partner with companies that can respond quickly to all requests and help us to better service our customers.”

Seidl understands that suppliers long for binderies to demonstrate purchasing loyalty. “Our suppliers want us to lift up their product by using it regularly and exclusively because we believe in its performance,” he said, “and they want us to convey that to our customers so that their name is known outside of the bindery.” In turn, he added, binderies expect suppliers to work with them in every way possible to meet customers’ expectations. “Suppliers should expect to be called on to answer performance and technical questions about their product and stand behind their product with explanation and financial liability should it fail to work as advertised.”

Nichols added that suppliers deserve to be paid promptly, to be treated fairly when problems arise, and to have an opportunity to compete on all projects that fit. “If a supplier provides superior service in all regards, it can expect that the bindery will be more likely to showcase and recommend their products to other companies and to gain market share,” he said.

Tap into Vendor Expertise

In addition to providing high-quality products and services, the best suppliers help customers solve problems and compete effectively. For example, Hunt noted that Standard Finishing’s key advantages include applications expertise and a comprehensive product line.

“We have 10 field sales managers and a support team of subject-matter experts who each have more than 20 years of experience,” he said. “Our field team is made up of veterans of the finishing space who understand the emerging technologies and know the cost pressures and tight turn times that trade binders are under.” He noted that the team takes pride in helping customers to identify the most appropriate solutions, adding, “If another company has a better way to do something, we’ll be the first ones to tell you.”

As for products, Standard Finishing sells a broad line of bindery and paper handling equipment from such suppliers as Horizon of Japan and Hunkeler of Switzerland. “Our integrated feeding and finishing solutions fill a real vacuum in the marketplace right now,” Hunt said. “We’ve worked hard to position ourselves as a source for application-appropriate solutions – whether you need hardware, integration, software, or inspection systems that do verification and tracking.”

Pay Attention to Pressures

Inevitably, there will be times when a binder wishes his suppliers better understood his challenges. “Unfortunately our industry has become very much an on-demand, ‘fast-food’ type of industry, in which speed is just as important as quality,” Seidl said, adding that binders now get days to produce projects that used to take weeks. Vendors with a basic knowledge of the machines on the bindery floor can predict what the demands for supplies will be – and expedite material to the binder, if necessary: “The biggest help from our suppliers is for their products to be on our floor the moment we need it.”

Nichols agreed that a supplier’s promptness and accuracy of information can be as important as the product provided. “The industry moves faster every day, and it takes the bindery’s plus supplier’s best joint efforts to meet customer demands,” he said. “If BindTech’s needs are met, our suppliers can count on a long-term relationship. We recognize and appreciate superior performance by both old and new suppliers.”

Seidl noted that binderies face the additional challenge of higher shipping costs now that many suppliers have reduced their number of storage facilities. “With the market today, we battle big shipping costs on material for ever-faster-moving projects that we rarely get advanced notice of on arrival,” Seidl said.

Hunt noted that top suppliers can be an asset, especially in uncertain times. “Ultimately, every binder has a different problem to solve – it might be to knock down labor costs or increase productivity,” he said. “We’re in the problem-solving business, so we’ll work with you, try to understand your needs and your pain point, and help you to succeed.”

Consider the Competition

Suppliers able to provide strategic information on the marketplace can be an invaluable resource. “Trade binderies are in a tough spot right now,” Hunt said. “There’s significant downward price pressure and runs lengths are dropping, so binders need to find their profitable niche.”

Hunt acknowledged that it can be easy for a trade bindery to look at a vendor as someone who’s just trying to sell equipment. “Some trade binders are deeply wedded to their post press equipment and sometimes ask, ‘Why should I invest in a new saddlestitcher when what I’m using has worked fine for 30 years?’ The alternative view is that the guy up the street or across town – who has highly automated systems and is able to do ultra-short runs – will creep into your market and steal business away.”

If binders don’t invest in new technologies they’re destined to be left behind: “The reality is that some binders today aren’t able to be as competitive on short-run work,” Hunt said. “Our niche is highly automated, quick-changeover equipment geared to more extreme turn times, because that is what the market demands.”

Keep Communicating

Strong bindery-supplier relationships require frank communication about needs, goals, timelines, and quality improvements. “We thrive on an open dialogue,” Hunt said, adding that some of Standard Finishing’s best solutions have come from its best customers. “We’re always looking for clever ways to help customers be more productive and competitive. That’s why we like to stay in touch, keep an open mind, and be receptive to input.”

Those same qualities also work for BindTech’s vendor relationships. “We want our suppliers to be flexible, creative, and open to ideas,” Nichols said. “Our preferred vendors can help us succeed by being able to provide products and solutions, when and where needed, to help us satisfy customer demands.”

To ride out the recession, spend some time thinking of ways to get the most from your bindery/supplier relationships. By maximize every advantage, you can survive the rough spots, embrace competitive challenges, and plan for growth.

Adhesives in the Bindery: Environmental Impact

May 1, 2010

by: Ken Kroeger, PH.D., L.D. Davis Industries, Inc.

The Cuyahoga River in Northeastern Ohio was ignited by a spark in 1969. The fact that there was so much oil-soaked debris and sludge floating on the river to sustain a fire was an environmental wake-up call for the American people. Many cite the fire as an impetus for the formation of the Environmental Protection Agency in 1970 and the passage of the Clean Water Act in 1972. These events helped lead adhesive manufacturers away from solvent-based adhesives (adhesive polymers dissolved in organic solvents) and accelerated the development of water-based adhesives that could perform similarly. In terms of reducing the environmental impact of adhesives, this has been the most significant development in adhesive technology. The blaze on the river 41 years ago has led to the situation today in which adhesives have a relatively mild impact on the environment.

In this second installment of the two-part series about adhesives in the bindery, the environmental impacts of animal glue, resin emulsion, and hot melt adhesives will be compared and contrasted. Keep in mind the overall perspective that all of the adhesives used in the bindery today have a much reduced environmental impact compared to solvent-based adhesives used in decades past. The complete lifecycle of adhesives will be considered: their manufacture from raw materials, use in the bindery, and the post-consumer recycling or disposal of bindery products.

It’s recommended that you read the first part of this series in the Winter 2010 issue of The Binding Edge since it discusses the nature and composition of these adhesives.

Animal Glues

The major raw materials used to manufacture animal glues are technical gelatin, glycerin, Epsom salt, sugars, and water. Technical gelatin is produced industrially by the chemical treatment (hydrolysis) of collagen protein contained in the hides and bones of cattle and pigs. The chemicals used are not environmentally hazardous (usually slaked lime), but gelatin production produces a large amount of waste water that must be treated to reduce the solids content. While the raising of farm animals has a large environmental impact, the main economic drivers of farm animal production are meat and leather production. Therefore, technical gelatin production is only responsible for an extremely small fraction of this environmental impact. Glycerin is produced as a byproduct of cooking oil and soap production. Epsom salt is generally obtained from mines. The sugars used to produce animal glues are produced from corn, a renewable resource. The technical gelatin and Epsom salt are generally obtained overseas, which adds to their carbon footprint.

The use of recycled materials greatly reduces the environmental impact of animal glue production. The production of pharmaceutical capsules (both hard and softgel capsules) produces a significant amount of gelatin “scrap.” This “scrap,” which contains high-quality pharmaceutical gelatin, can be recycled by using it in place of technical gelatin to produce animal glues. Through contracts with pharmaceutical companies, L.D. Davis Industries uses this “scrap” as the source of approximately 50 percent of the gelatin it uses for animal glue production. This recycling effort saves thousands of metric tons of this “scrap” from reaching landfills every year.

Animal glues are used in the bindery by applying a moderate heat to maintain the adhesive at 150°F. Animal glues generally contain no volatile organic compounds (VOCs) and clean up easily with water.

Since even dried animal glues easily disperse in water, they produce absolutely no problem for a repulping process in the recycling of bindery products. In addition, all of the major raw materials used to manufacture animal glues (gelatin, glycerin, Epsom salt, and sugars) are highly biodegradable. When a bindery product ends up in a landfill, the animal glue will biodegrade within weeks of exposure to water.

Resin Emulsions

The major raw materials used to manufacture resin emulsion adhesives are polymer emulsions, polyvinyl alcohols, and water. Most of the polymers contained in the emulsions, as well as the polyvinyl alcohols, are ultimately synthesized from acetic acid or ethylene produced in a very energy-intensive process of cracking petroleum. In addition, a large percentage of the petroleum must be shipped from the Middle East, which further increases the carbon footprint. There are no recycled materials used in manufacturing resin emulsions.

Resin emulsion adhesives are used in the bindery at ambient temperature so no heating energy is used. While resin emulsions generally contain no VOCs, they sometimes require an organic solvent for cleaning.

Since most dried resin emulsion adhesives will soften and only partially disperse in water, they produce minor problems during the repulping process. Resin emulsions are not biodegradable. While polyvinyl alcohols are biodegradable, the polymer component of the polymer emulsions is not.

Hot Melts

The major raw materials used to manufacture hot melt adhesives are the base polymer, tackifying resins, and waxes. Most of the base polymers, tackifying resins, and waxes are ultimately synthesized from petroleum using energy-intensive processes. In addition, a large percentage of the petroleum must be shipped from the Middle East, which further increases the carbon footprint. Generally, there are no recycled materials used in manufacturing hot melts.

Hot melt adhesives are used in the bindery by applying a large amount of heat to maintain the adhesive at 350°F. However, there are low-temperature hot melts designed for safety and energy efficiency that can be used as low as 250°F. Hot melts contain low or no VOCs. Since hot melts are not soluble in water, clean-up requires a wax, an organic plasticizer, or an organic solvent.

Since hot melts will not disperse in water, the presence of hot melts in bindery products seriously affects their recyclability. During the repulping process, the hot melts produce “stickies” that hamper the process. Key to the success of a repulping process is having a method to separate the “stickies” from the pulp to prevent compromising paper pulp quality. In addition, all of the raw materials used to manufacture hot melts (base polymers, tackifying resins, and waxes) are generally inert and, therefore, not biodegradable.

Conclusion

This two-part series of articles has described the history, composition, uses, and environmental impact of animal glues, resin emulsions, and hot melts used in the bindery. This second installment has compared and contrasted different aspects of the environmental impact associated with these adhesives.

The animal glue, resin emulsion, and hot melt adhesives used in the bindery today all have a much reduced environmental impact compared to solvent-based adhesives used in the past. Those solvent-based adhesives had very high VOC content, were not biodegradable and, if discarded into a landfill leaching solvents, would produce toxic soil and ground water contamination.

Animal glues are the friend of the environment. They are the adhesives of choice when high wet tack is needed and the materials to be bonded are absorbent and relatively easy to bond.

Resin emulsions are the adhesives of choice when a large amount of wet tack is not needed, the materials to be bonded are absorbent, and the materials are more difficult to bond than what animal glues can handle.

Hot melts are the adhesives of choice when excellent immediate (green) tack is needed and the materials to be bonded are more difficult to bond than what animal glues can handle.

Acknowledgement

The author would like to thank Mark Katsaros of H.B. Fuller Company for his assistance.

Dr. Ken Kroeger has been the research and development manager for L.D. Davis Industries for the past 13 years and is an adjunct professor of chemistry and physics at Wingate University. He has an undergraduate chemistry degree from the University of Dayton and a Ph.D. in chemistry from the University of Colorado at Boulder. In addition to adhesives, Dr. Kroeger has experience working in the fields of macromolecular X-ray crystallography, atmospheric chemistry, isotope separation, and explosive and pyrotechnic chemistry. L.D. Davis Industries, Inc. is an 84-year-old family-owned company manufacturing both animal glues and resin emulsion adhesives and distributing multiple lines of hot melts for the graphic arts, rigid box, packaging, and other industries. For more information, call (800) 553-3284, email Dr. Kroeger at kkroeger@lddavis.com, or visit www.lddavis.com.

Fulfillment: Measuring Your Performance

May 1, 2010

by: Tom Quinn

Are you on the leading edge of your industry? Have you incorporated mailing and/or fulfillment into your service mix? If you can answer yes to this question, did you ever wonder how your company was performing compared to your competitors in the mailing and fulfillment industry?

The printing and binding industries have been fortunate to have associations with ample resources to provide valuable comparison data to gauge the progress of your company compared to similar companies in your industry. The Mailing & Fulfillment Service Association (MFSA) also has a variety of reports and studies conducted on a regular basis to compare both operational and financial performance primarily for the mailing industry, which can be found at www.MFSAnet.org.

This article will focus on the measurement and calculation of important financial and operational parameters to measure your success in the fulfillment industry. The measurement discussion will be broken into two sections: financials and operational performance. A list of evaluation criteria also is provided.

Financials

My duties as director of fulfillment services and chief consultant have allowed me to visit as many as 20 different companies each year for the past six years. Most of these companies were printers just starting in fulfillment or new to the fulfillment industry in the past five years. Their reason for starting a fulfillment operation was to protect print volumes and to help grow the company in the future with an expanded service offering.

The following discussion of financials should be read with the understanding that a fulfillment operation within your company should yield extremely high bottom line contributions. Certainly, the contribution should be a double-digit contribution. For every dollar billed, a minimum of 10 cents should flow to the bottom line. A 10 percent contribution should be considered a minimal performance level because 20-30 percent contributions to the bottom line are still possible and being realized by efficient and progressive companies in the industry. While the printing and mailing industries are very mature with many buying decisions being made on price alone, the fulfillment industry can still be a very profitable entity. Several general observations from company visits are as follows:

1. No Financials. Most of the companies visited do not compile a monthly P&L statement for their fulfillment operation and, therefore, do not have any understanding of the contribution to the bottom line for the fulfillment industry. In a recent visit to a company, time was spent with the controller estimating a P&L for the company for the fulfillment operation. The analysis was completed in a very cursory fashion, but the costs associated with the analysis were estimated conservatively (high). This conservative approach still yielded a 20+ percent bottom line contribution, which accounted for most of the company’s annual profit in the year studied. This posed the question, “Are you making any money on print?”

The financials for a fulfillment operation are simple because there are very few cost parameters: labor, rent, utilities, system, packaging, and shipping make up the bulk of all costs. I do not suggest that the fulfillment operation should try to be fit into the financial structure or operating system designed to report on a bindery operation. The operating system for the bindery was designed to manage and measure a production operation and the fulfillment operation is a service operation. I would suggest an Excel spreadsheet with a simple P&L statement each month to measure the contribution. This statement will have the added benefit of informing fulfillment employees and management of their contribution and providing company management with the ability to establish performance and measurement goals for the future.

2. Low or No Pricing. The goal to save print and bindery volumes by adding additional services has a dual edge to it. In most cases, the client was saved as a result of adding fulfillment; however, in many cases, the industry gave away critical value-added activities. The most popular giveaway has been storage. Storage is a critical billing parameter for the fulfillment industry. The suggested method for calculating storage cost is to divide total rent and utilities by the number of pallet positions at 80 percent capacity, which will yield a billing parameter of $/pallet/month. If you are just starting your fulfillment operation, conduct a survey of storage costs. Labor pricing should be a minimum of three times the fully loaded cost of the labor category. A fulfillment pricing PowerPoint is available from the Mailing & Fulfillment Service Association to assist in better pricing of fulfillment services.

3. No Trained Sales Personnel. Very few of the sales personnel in print and bindery operations were trained to sell fulfillment. This results in either very slow or no growth of the fulfillment client base after the initial clients are satisfied. The fulfillment operation, like any other, has a minimum revenue requirement to break even. Very few fulfillment operations start with a large enough client base to become profitable immediately and will depend on future growth to achieve breakeven and the wonderful profit potentials of the operation. Incorporating fulfillment as a valuable tool in the service mix and utilizing the service as an offensive sales tool, instead of a defensive tool, will yield higher revenue and profit in the future.

Operational Performance

The operation and performance of a literature fulfillment operation is quite unique. The receipt, storage, assembly, and shipment of sales support materials and data for another company is a niche industry and part of a much larger fulfillment, distribution, and logistics industry. The literature fulfillment industry has been specifically created to support the efforts of marketing departments across the country. The key operational parameter of this industry is inventory accuracy. If you can control and master this one parameter, you are guaranteed success in the industry. Poor inventory accuracy is the primary reason for clients to move their fulfillment operations. However, there are many more operational parameters to measure the efficiency of a fulfillment operation.

MFSA conducted its first Fulfillment Benchmark Survey in 2004-2005 and again the next year. The results and the details of the study are available on the website. A new Fulfillment Benchmark Survey is due to be introduced this year and will add several operational and financial parameters, also accessible via the internet. By participating in the survey, your company will be able to compare its monthly performance to both your previous submissions and the industry as a whole. Listed below are the operational parameters to be measured in this new study. The calculation methodology for each parameter and an example calculation also are included in the formal plan, and the online site will guide you through the survey process.

These parameters provide valuable data for you in terms of understanding the success and profitability of your fulfillment operation.

1. Orders picked per hour. The average number of orders picked per person per hour.

2. Lines picked per hour. The average number of lines picked per person per hour.

3. Items (pieces) picked per hour. The average number of items picked per person per hour.

4. Order turn times. Elapsed time from receipt of order to shipment of order to determine percent same day, percent next day, and percent beyond next day.

5. Order picking accuracy. The percentage of orders picked with the correct quantities ordered.

6. Order packing accuracy/appearance. The percentage of orders that are properly packed.

7. Order shipping accuracy. The percentage of orders shipped error-free. Proper service levels used to meet need-by dates or as specified by client. Packages labeled correctly, completely, and with correct addresses. This parameter pertains to functions completed in the shipping process.

8. Order accuracy (same as fulfillment accuracy internal). The percentage of orders shipped error-free. This parameter reflects the accuracy of the entire shipping process (picking, packaging, and shipping).

9. Fulfillment accuracy (external). Number of errors reported by clients.

10. Receiving cycle time (dock to stock). Elapsed time of arrival of material through the receiving process, assignment of location entry into the inventory system, and available for useor in the case of a new item, delivery of the sample and receiver copy to the project manager and not entered into the inventory system.

11. Receiving accuracy. The percentage of items (SKUs) received correctly.

12. Inventory accuracy. The comparison of inventory system balances to actual counts; usually accomplished during cycle counting. It also can be the result of a complete physical inventory.

13. Employee turnover (voluntary and involuntary). The number of employees who have left (voluntary and involuntary) v. the number currently employed.

14. Total revenue per square foot. Total revenue for the company per income statement for the period divided by total facility space including operations, warehouse, administrative, etc.

15. Revenue per employee. Total revenue for the company per income statement for the period divided by average full-time employee equivalent (FTE) including all personnel.

16. Days sales outstanding (DSO). A measure of the average number of days that a company takes to collect revenue after a sale has been made. A low DSO number means that it takes a company fewer days to collect its accounts receivable. A high DSO number shows that a company is selling its product to customers on credit and taking longer to collect money.

17. Fulfillment revenue per pallet stored (FRPPS). Fulfillment sales revenue per pallet stored. Shows income generated by the space used. Especially meaningful when displayed by client and can be helpful in quoting new business.

18. What technology are you using? A table of user preferences and different technologies being employed in the operation of the fulfillment center.

It also should be noted that there is a wealth of data concerning the operation of a warehouse from the Warehouse Education & Research Council (WERC) and other logistics associations to measure and compare the success of your operation to others.

There is only one way to improve the operation of your company and that is with measuring your performance. Start by focusing on your P&L contribution and improving your financial performance. Then turn your focus to items 1 through 12 in the benchmark survey. Your fulfillment operation will grow and prosper as a result. I wish you good selling. n

Tom Quinn is the recently retired director of fulfillment services for the Mailing & Fulfillment Service Association (MFSA). He is now chief consultant for Q Fulfillment Solutions, Inc. in Peachtree City, Ga. Quinn can be contacted by phone at (770) 632-9253 or through email at Tom@Qfulfillmentsolutions.com.

Disaster Recovery Solutions for Business Continuity

February 1, 2010

by Dawn Warner

The first step to understanding disaster recovery (DR) and business continuity (BC) solutions is to understand the scope and definition of the word “disaster.” When defining the word disaster, people inevitably take into account only natural disasters such as hurricanes, earthquakes, or tornadoes. However, the term disaster, in regards to business continuity, is defined on a much grander scale and can involve a variety of different occurrences, natural or unnatural, internal or external, and commonly not thought of or considered as devastating to a business.

According to recent statistics, the number one source of disruption to a business, causing significant downtime and revenue loss, is a power outage. Second is a problem with computer hardware, with third and fourth listed as telecommunications and software problems, respectively.

Figure 1 shows the major causes for disaster recovery services. (1)

Disaster may be caused by carelessness, negligence, bad judgment, hurricanes, earthquakes, floods, or tornadoes. As seen in Figure 1, 72 percent of U.S. organizations have experienced significant interruption and loss of revenue caused by power outages, with 52 percent experiencing computer hardware problems. The size and scope of these events have caused business executives to rethink their business continuance strategies and consider increases in capital expenditures for disaster recovery services. If any of these events occurred and business was affected, how long would the business be able to remain out of production without suffering damaging revenue loss or causing the business to close down permanently?

Disaster planning is imperative precisely because a business likely will die if a workable disaster plan is not in place when a disaster strikes. A study of companies that suffered a catastrophic data loss found that 43 percent never reopened, 51 percent closed within two years, and only 6 percent survived. In the 1993 World Trade Center bombing, 50 percent of the businesses without a disaster recovery plan were out of business within two years. (2)

In any disaster, there are various losses to consider:

Physical facilities (destroyed buildings, work spaces, machinery, computers, inventory)
Access to facilities (condemned buildings)
Information (corrupt disk drives, damaged computers)
Access to information (no remote database access)
People (production, support, managers)

There should be two major segments to a DR plan, with one segment covering the daily “back office” business operations and the other being the “supply chain” facility operations. The plan overall should address all components needed to support the business when a disaster occurs. All areas need to be analyzed. Every physical, software, hardware, and human resource element, as well as every business process must be studied and addressed to ensure continuation in an event of a disaster.

A “supply chain” analysis is the second segment, which assists in addressing the recovery of the actual physical assets of the company. This part of the plan addresses issues such as how to handle unavailable manufacturing and storage facilities, order entry systems, shipping, and accounts payable/receivable. Businesses also must look at manufacturing operations and informational databases. The informational database should house all pertinent information relating to every aspect of business, from updated employee, customer, and supplier lists to detailed equipment and product specifications. It should cover anything and everything that pertains to the continuity of the business in case the facility is unable to be occupied.

Once the DR plan has been developed, it is extremely important to continuously review and evaluate the plan. An out-of-date plan is almost as dangerous as not having a plan at all. Today, many customers demand that their business partners have a continuity plan as part of the contract between them and that it be reviewed continuously. Any major changes, such as large employee shifts, increases in network infrastructure, or the addition of sub-units/departments, should trigger a plan review.

A DR/BC plan should encompass all aspects of a business, including supplier and customer networks. It should provide a solution that will account for and ensure the recovery of all business processes, provide an alternate workspace environment for employees, and facilitate ongoing operations within a timeframe that is consistent with the needs of the business. The monies invested now in a DR/BC plan could literally be the difference between sinking or swimming in the days and weeks after a disaster.

Footnotes
1 Rough Notes, July 2005 – Business Interruption Insurance – Death Protection for a Business.

2 Business Continuity Planning for IT Systems, University of Texas.

Disaster Recovery Checklist

Select a coordinator to develop plan objectives, a methodology and an overview.
Identify critical business processes and systems.
Formulate hardware system and end-user recovery objectives and identify critical network operations.
Assess threats such as fire, environmental contamination, physical security and software security.
Create a records-retention procedure.
Implement a back-up and storage strategy.
Define and test storage, back-up, and application systems.
Identify an alternate site for end users to work out of and contract with provisioning vendors.
Develop network recovery and relocation strategies, as well as replacement options for hardware and service.
Implement an alternate site that is engineered to deliver the recovery time and recovery point objectives.
Define recovery teams and develop a communication plan.
Publish the disaster recovery plan to include the recovery procedures.
Annually test the disaster recovery plan.

Adhesives in the Bindery: An Overview

February 1, 2010

by: Ken Kroeger, Ph.D.

Adhesives are used in many different operations in the bindery. In a pejorative sense, adhesives are the Rodney Dangerfield of the bindery (they get no respect) because while adhesive performance is very critical to finished product quality, adhesives are almost always a very low cost component. For example, in the production of an 800-page college textbook, the total cost of adhesives is approximately $0.06:

$0.0134 for animal-glue casemaking adhesive to wrap and bond the cover to the chip board
$0.0025 for hot melt for back lining to reinforce the spine
$0.0082 for hot melt for gluing off to flexibly reinforce the book block after sewing
$0.0092 for a liquid resin adhesive for end-sheet tipping
$0.0264 for a liquid resin adhesive for casing-in, in which the book block and end sheets are bonded to the cover

This six cents is just a fraction of the total material cost (including the paper, printing inks, cover wrap, chip board, etc.), but the performance of the adhesives is as important as any of the components to the quality of the finished textbook.

In this first part of a two-part series about adhesives in the bindery, an overview is presented of the three major categories of adhesives used: animal glues, resin emulsions and hot melts.

Animal Glues

Animal glues are the adhesives with the oldest historical record of use. Evidence of their use is dated at least to 1350 B.C. and, indeed, animal glue was used to bond wooden decorations on the tomb of King Tutankhamun! Animal glues (an unfortunate moniker) also are commonly called hide glues in the dehydrated form, gelatin-based adhesives, and cake glues since they are usually produced in a gelled cake form (see Figure 1). Animal glues are water-based adhesives using gelatin protein as their adhesive polymer. Gelatin is the same material used to make Jell-O™, marshmallows, and pharmaceutical capsules. It is produced industrially by the chemical treatment (hydrolysis) of collagen protein contained in the hides and bones of cattle and pigs.

Simple mixtures of gelatin (hide glue) and water have been used in woodworking for thousands of years and in book binding for at least 200 years. Modern animal glues contain not only gelatin and water but also performance modifiers such as plasticizers, sugars, salts, surfactants, defoamers, and biocides. These glues are sold in gelled cake form and are liquefied for use by heating to 150°F. The performance of modern animal glue formulations is much improved over the simple gelatin/water mixtures of the past. The formulations are tailored for each application by modifying parameters such as the level of tack, open time (speed of set), and viscosity. For example, L.D. Davis Industries produces over 100 different animal-glue formulations with open times ranging from two seconds to three minutes.

In the bindery, animal glues are used in hardcover case making, perfect binding, and back lining. The major advantage of animal glues, and the reason they’re still being used 60 years after the advent of synthetic adhesives, is that they possess excellent initial wet tack. In other words, when an animal-glue adhesive film is applied, it is immediately very tacky. This property allows the use of animal glues when a glued turned edge is needed. The major limitation of animal glues is their lack of specific adhesion. Animal glues form only mechanical bonds. This means that they adhere well to porous surfaces but poorly to some coatings and all nonporous substrates such as metals and plastics. Animal glues are outperformed in some ways by synthetic adhesives but persist because of their unique property of excellent wet tack, which remains unmatched by any synthetic aqueous adhesive.

Resin Emulsions

Adhesives based on resin emulsions have a very brief history compared to that of animal glues. Up until the 1940s, the major adhesives in use were natural polymers dispersed in water such as starches, dextrins, and animal glues. After World War II, scientists extended the technology for the emulsion polymerization of synthetic rubber (developed for the war effort) to the production of plastics. This gave birth to adhesives based on resin emulsions. These adhesives are commonly called liquid glues, white glues, or cold glues because of their appearance (see Figure 1) and use at ambient temperature. Resin emulsions are stable dispersions of polymer microparticles (0.1-1.0 micrometer in size) in water. In other words, they are mixtures of tiny plastic particles in water. The polymer microparticles can be composed of “homopolymer,” which is usually polyvinyl acetate produced by the polymerization of vinyl acetate. Alternatively, the polymer microparticles can be composed of “copolymer,” which is formed when vinyl acetate is copolymerized with ethylene (vinyl acetate ethylene) or an acrylate (vinyl acetate acrylate). The copolymers possess better adhesive properties and are more flexible than the homopolymer, but they are more expensive to produce. In addition, rubber-based polymer emulsions can be used to formulate pressure-sensitive adhesives.

Resin emulsions adhesives are formulated by blending one or more resin emulsions with modifiers such as plasticizers, surfactants, defoamers, polyvinyl alcohols, thickeners, fillers, adhesion promoters, and biocides. Various types of adhesives can be tailored in this way for properties such as speed of set, viscosity based on the application method (roller, extrusion nozzle, spray, silk screen, or brush), specific adhesion required, and level of lay-flat needed to avoid warping. The most common uses for these adhesives in the bindery are casing-in and end-sheet tipping. The major advantages of these liquid glues are their good specific adhesion to many surfaces and the ease of use due to their ambient application temperature. The major drawbacks are the lack of immediate wet tack and the need for at least one of the two bonding surfaces to be absorbent. When a bonding situation is encountered where excellent wet tack is not necessary and the surfaces are absorbent, liquid glues are usually the best choice.

Hot Melts

Hot melts also have a relatively brief history, with commercial use limited to the past 50-60 years. Hot melt adhesives are polymer-based and are 100 percent solids (contain no solvents or water). They are thermoplastic, which means they are solids at room temperature but liquefy upon heating and solidify again upon cooling. This property gives hot melts a fast setting speed if desired. The lack of water and solvents allows hot melts to attain peak bonding strength very quickly (as soon as they cool).

Hot melts are typically composed of four major components: polymer, tackifying resin, wax, and antioxidant. The polymers used for most hot melts utilized in the bindery are ethylene vinyl acetate (EVA) and styrene block copolymer (SBC, for pressure-sensitive hot melts). The polymer component of a hot melt determines its strength, toughness, and flexibility. Tackifying resins control the adhesion and hot tack properties of hot melts. They can be synthetic hydrocarbons or natural pine rosin or rosin derivatives. Waxes are selected for controlling the open time and set speed of the hot melt. Antioxidants are added to improve the pot life (preventing charring and other oxidation reactions). Plasticizers and/or diluents also are sometimes added to improve the flow characteristics and modify the viscosity and open time of the hot melt. Hot melts are normally applied at a temperature of 350°F, but lower temperature versions are available and can be applied as low as 250°F. Application methods include roller, extrusion nozzle, and spray. Hot melts bond mainly by mechanical means in that the polymeric components wet out and penetrate the bonding surfaces prior to solidifying as they cool. When adhering to thermoplastic surfaces (plastics, polyolefin laminates, and some coatings), bonding is very similar to welding due to the temperature of the hot melt when it’s applied.

PUR (reactive polyurethane) hot melts are a more recent development for perfect binding and are largely different from the EVA and SBC hot melts described above. They polymerize when applied so that they form much stronger bonds than traditional hot melts. They also possess superior flexibility and can withstand a larger range of temperatures. PUR is currently much more expensive than traditional EVA hot melts (2-4X), but application rates are much lower.

The most common uses for these adhesives in the bindery are perfect binding spine glue, side glue, gluing off/up, and back lining. The major advantages of hot melts are the excellent immediate (green) tack, the quick achievement of final bond strength, very good adhesion to many surfaces, and excellent shelf life. The major limitations for hot melts are the suspect nature of the hot melt bond at temperatures over 150°F due to its thermoplasticity and safety issues due to the use of high temperatures. Hot melt adhesives are an excellent choice when bonding difficult substrates where immediate tack is needed.

Conclusion

Since World War II there has been a great development of adhesive technology, providing the bindery with a large variety of adhesives – an embarrassment of riches. For every adhesive need in the bindery, an animal glue, resin emulsion, or hot melt can be selected to meet all desired criteria for tack level, open time, set speed, flexibility, bond strength, application method, and temperature stability.

In part two of this series, we’ll investigate the environmental impact of adhesive use in the bindery.

Acknowledgement

The author would like to thank Kevin Rodeck of IFS Industries for his assistance.

Dr. Ken Kroeger has been the research and development manager for L.D. Davis Industries for the past thirteen years and is an adjunct professor of chemistry and physics at Wingate University. He has an undergraduate chemistry degree from the University of Dayton and a Ph.D. in Chemistry from the University of Colorado at Boulder. In addition to adhesives, Dr. Kroeger has experience working in the fields of macromolecular X-ray crystallography, atmospheric chemistry, isotope separation, and explosive and pyrotechnic chemistry. L.D. Davis Industries, Inc. is an 84 year-old family-owned company manufacturing both animal glues and resin emulsion adhesives, as well as distributing multiple lines of hot melts for the graphic arts, rigid box, packaging, and other industries. For more information, call (800)883-6199 or visit www.lddavis.com.

CPSIA and Its Implications for Binderies

February 1, 2010

by: Staff

Recently, a conversation on the BIA listserv revolved around the Consumer Product Safety Improvement Act (CPSIA), lead and phthalate testing, and its applicability to binders. The responses indicated that not all binderies are clear as to the testing requirements and the manner in which the requirements will affect their business. Lead and phthalate testing and certification requirements were due to become mandatory on Feb. 10, 2010; however, after a petition was submitted by Printing Industries of America, the Consumer Product Safety Commission (CPSC) granted an additional one-year stay to Feb. 10, 2011. Even though the one-year stay was granted for testing and certification, the core requirements of not selling a product that exceeds the lead and/or phthalate limits remain in effect. In addition, the stay does not impact any painted product such as coil for a coil-bound book.

At this time, it would be wise for binderies to prepare to meet the testing and certification requirements of the act.

What is CPSIA?

In August 2008, the U.S. Congress established safety standards for children’s products under the Consumer Product Safety Improvement Act. The act establishes several key requirements regarding the safety of children’s products, including limits for lead and phthalates, a requirement that manufacturers and importers test and certify that their products meet the limits using accredited third party labs, and imposes tracking labels for products.

The current lead limit for non-painted products is 300 parts per million (ppm). The limit for paint is 90 ppm. The phthalate limits are 0.1 percent di-(2-ethylhexyl) phthalate (DEHP), dibutyl phthalate (DBP), or benzyl buty phthalate (BBP) and an interim prohibition on children’s toys that can be placed in a child’s mouth or child care articles containing more than 0.1 percent diisononyl phthalate (DINP), diisodecyl phthalate (DIDP), or di-n-octyl phthalate (DnOP).

As of August 14, 2009, tracking labels or “permanent markings” on children’s products are now required to facilitate recalls. The label or permanent mark must contain core information or at least provide enough information (such as company name and address) that would allow a consumer to “ascertain” the core information. The core information is the identification of the manufacturer, date of manufacturing, location of manufacturing, and cohort information such as batch or lot number.

As can be imagined, the publishing industry reacted strongly to the CPSIA and questions are still arising as to its implications for printers and binderies. The full text of the CPSIA can be found at http://www.cpsc.gov/cpsia.pdf.

Are Any Products Exempt from Testing?

As noted, the testing requirements were granted an additional one-year stay and are now taking effect in February 2011. Binders need to be aware of their responsibility in regard to compliance for the individual components that are used to make a children’s printed product (e.g., paper, inks, binding components).

On Aug. 26, 2009, the CPSC acted on a petition by the Printing Industries of America, granting a permanent exemption from testing and certification for the following items:

Paper
Any product printed with four-color process inks (CMYK)
Any product coated with varnish, water-based, or UV-cured coatings
Threads used for book binding
Animal-based glues
Adhesives that are not accessible
Binding materials that are not accessible

The items that have not received an exemption are as follows:

Spot or PMS inks
Saddlestitching wire
Non-animal-based glues that are accessible
Metal coils, both coated and uncoated, for coil bound materials
Plastic coils for coil bound materials
Foils used in foil stamping
Laminates

Since many of the materials that have not received an exemption are critical components of books and other printed matter, any product that contains a non-exempt component will have to be tested and a certificate issued for the product. Work continues with the CPSC to gain an exemption for the products that are not currently exempt.

How Does CPSIA Affect Children’s Books?

In the Frequently Asked Questions section of the CPSC website, the following question was posed:

Does the new requirement for total lead on children’s products apply to children’s books, cassettes and CD’s, printed game boards, posters, and other printed goods used for children’s education?

In general, yes. CPSIA defines children’s products as those products intended primarily for use by children 12 and under. Accordingly, these products would be subject to the lead limit for paint and surface coatings at 16 CFR part 1303 (and the 90 ppm lead paint limit effective Aug. 14, 2009) as well as the new lead limits for children’s products containing lead (600 ppm lead limit effective Feb. 10, 2009, and 300 ppm lead limit effective Aug. 14, 2009). If the children’s products use printing inks or materials which actually become a part of the substrate, such as the pigment in a plastic article, or those materials which are actually bonded to the substrate, such as by electroplating or ceramic glazing, they would be excluded from the lead paint limit. However, these products are still considered to be lead-containing products irrespective of whether such products are excluded from the lead paint limit and are subject to the lead limits for children’s products containing lead. For lead-containing children’s products, CPSIA specifically provides that paint, coatings, or electroplating may not be considered a barrier that would render lead in the substrate inaccessible to a child.

What are Coil Manufacturers Doing to Meet CPSIA Requirements?

Anna Massey, sales and marketing manager for Gateway Bookbinding Systems, Ltd., explained the process the company went through to confirm that its PLASTIKOIL binding is lead- and phthalate-free: “When the legislation was originally initiated, we immediately went to work with our base resin and colorant suppliers. We already knew that our PVC base compound was lead-free and phthalate-free, because it is actually a food-grade compound. However we still had our compound supplier confirm through accredited lab testing that the material was well within the To assist its binder partners, Gateway keeps all lab testing and accreditation on file and available upon request. All of its PLASTIKOIL coil and filament customers are provided Certificates of Conformity, offering assurance that Gateway’s products meet the CPSIA standards.”

Matt Roth, vice president for Spiral Binding Co./James Burn, explained that the certification process was relatively simple, albeit expensive. The company knew compliance would be critical to its customers since it was a wire-bound book that started the original lead scare in the United States. “Not only do we support the nation’s cause to make sure our children’s books are bound safely, we viewed this as an opportunity to distinguish ourselves and our bindery partners from those using low-priced imported wire that might not be CPSIA-compliant and lead- and phthalate-free,” he said. “With certification on file, our bindery partners can feel confident using our products in their operation and can prove to their customers that the binding elements they use in their books are safe.”

For links to additional CPSIA information, including The Printing Industries of America’s CPSIA Resource page, visit www.thebindingedge.com.

Additional Resources:
Due to the complexities and ever-changing interpretations of CPSIA, printers and binders should monitor the CPSC website for amendments to the Act at http://www.cpsc.gov/ABOUT/cpsia/cpsia.HTML#whatsnew.

The Printing Industries of America also has created a CPSIA Resource Page, which can be found at http://www.printing.org/page/4344.

To access the CPSIA Frequently Asked Questions section, visit http://www.cpsc.gov/about/cpsia/faq/101faq.html.

Additionally, the CPSC website contains a statement from the General Counsel Advisory regarding books and the CPSIA: http://www.cpsc.gov/library/foia/advisory/323.pdf

Thank you to Gary Jones, director of Environmental, Health & Safety Affairs, Printing Industries of America, for his valuable input.

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