Valeron

Source: Manufacturing Digital

Date :11/04/2008 04:16:50

The challenge to diversify and conquer new markets can drive some firms well above their competition. But for Valeron Strength Films it’s all about focusing on what you’re good at – and they’re pretty good at that

Written by Ben O’Hanlon and Produced by Alexander N. Hortaridis

Global manufacturing firm Valeron Strength Films specializes in the production of high strength plastic films, used in countless applications worldwide. From airports to supermarkets: whether it’s tagging your luggage, sending a package or possibly even flying a kite, there’s a fair chance you’ve already come into contact with something that’s been made using a Valeron’s award winning product.

Established in Europe in 1965 and then entering the US market in 1969, this is a company that continues to operate on an international scale. It proudly serves the Americas, Asia and Australia from its location in Houston, TX, whilst the sister facility in Essen, Belgium takes care of markets in Europe, Africa and the Middle-East. An impressive reputation has enticed customers on the scale of the United States military, both Navy and Air Force.

This same reputation alerted the attention of multinational Fortune 200 company Illinois Tool Works (ITW), which acquired Valeron in 2001 and now connects it to a 800-stong family of business units. “ITW gives us guidance, and we of course report back financially, but they allow us to run our business with great autonomy,” says Stewart Loftin, Manufacturing Operations Manager at Valeron.

Less Is More

‘Guidance’ can mean more than a chat over a cup of coffee though – Valeron has embraced ITW’s 80/20 philosophy, something which today drives every aspect of the company’s work ethic. Initiated by an Italian economist, Pareto’s Principle (that 80 percent of wealth is controlled by 20 percent of the population) has been adapted into a management style with almost endless applications. 20 percent of your work, for example, will likely consume 80 percent of your time. Or, 20 percent of your sales staff will produce 80 percent of overall sales.

A driving force behind much of our success at ITW is our 80/20 business process, a practice that keeps us focused on our most profitable products and customers. The concept underlying 80/20 is simple: 80 percent of a company’s sales are derived from the 20 percent of its product offering being sold to key customers.

Put simply, too often companies do not spend enough time on the critical 20 percent of their key products and customers, spending too much time on less important activities that are not strategic. Our view is that once you identify those products, processes and market segments that generate the best returns, you can begin to understand what drives your growth and what your true costs are in the business.

Known internally as the ITW Toolbox, this repository of proven strategies and techniques guides our business process and helps us find new ways to enhance customer satisfaction as well as drive margin growth and profitability. Specific strategies that help us reach our goals include: product line simplification, segmentation, in-lining, cellular manufacturing and outsourcing, as well as manufacturing to the market rate of demand.

Applying this principle to your business operations, Stewart says, allows you to focus your resources: “We knew that most of our raw material comes from about 20 percent of our suppliers, so we decided to turn that small portion into our total supply base. We’ve now got a much stronger bond with them, we have fewer issues and profit has increased.” This is largely because the company has concentrated on developing business relationships, including sharing its core values.

The company has also focused service on a core group of products and will no longer produce film that’s beyond the standard thickness. Customers have had to adapt to a more standardized product base, but have been given support to do so. Through standardization and conforming our business to a few products, customers benefit from better product availability and higher service levels. Rather than being good at a lot of things, Valeron is trying to be excellent at a few things. Ultimately, focus has lead to service improvement – which in turn has meant happier customers.

Even Valeron’s approach to developing software links back to the 80/20 philosophy. Most systems are developed in-house – custom built to allow it to focus on what it needs to operate effectively. “Our programmers are here in the building,” says Stewart. “They’ve been trained by us and they know exactly what we’re trying to accomplish.”

Putting People First

With a strong industry background split between engineering and manufacturing, Stewart has been with Valeron for a year and a half. His responsibilities include the equipment maintenance program, staff training and health and safety. The latter, he says, shouldn’t be underestimated: “We want everyone to go home the way they came to work. If they have ten fingers and ten toes then that’s how we want them to leave.”

There’s a rigorous program to support this goal that aims to go above and beyond other organizations. Every shift, for example, begins with a team safety meeting, helping to put the issue at the front of people’s minds. Any near-misses are not only thoroughly investigated, but shared with employees in an attempt to establish ongoing learning. Formal training of the entire workforce also takes place annually.

These commitments are part of a broader dedication to staff, which extends to their personal aspirations. Valeron has charged itself with a responsibility to provide opportunities for all staff to achieve personal fulfilment in their professions. This has developed into a system of levels, whereby (through training and testing) employees can ‘work their way up’ by broadening their knowledge of equipment and systems.

Whilst all staff must achieve level one in the training, there is no requirement for them to progress further. Instead the program acts as a self-motivator for attaining more responsibility matched with financial reward.

Communicating Excellence

Stewart explains that the company fully understands the value of a knowledgeable workforce: “We’re always consulting employees to get their opinions. It doesn’t matter if we’re developing a new product or responding to a customer query, they understand the business so it’s important that they can have a say.” The results speak for themselves. Over the years Valeron’s ‘employee empowerment’ has helped deliver some unique products.

Communication, it seems, is key to success. Maybe this is why the company is keen to extend its consultation beyond the boundary of the factory walls. When developing or improving a product, for example, specifications are driven by the customer. The quality control team ascertains their needs, shares existing capabilities with them and incorporates their opinions into the design plans. During production the material is checked for defects at every stage and must be ‘signed off’ before it can leave the factory door – reiterating the commitment to complete customer service.

Looking to the future, Valeron is keen to develop on its recent successes. Exploring new products and more efficient ways of working are part of a regular drive for continuous improvement; and with its continual commitment to communication, to employees and to identify and focus on strengths, Stewart feels that the company is right not to be concerned about the competition: “We’ve got a unique product that sets us apart; other than that it’s our philosophy on how we do business that’s our biggest driver – that’s what makes us who we are.”

Click here to view the corporate brochure on Valeron