Berry Plastics in Ahoskie Writes Prescription for Success

“Muda is waste and WIP is a no-no,” said David Hepburn, plant manager for Berry Plastics in Ahoskie. Hepburn knows muda, the Japanese term for waste, but what he understands best, is how to eliminate it.

Hepburn, lured to Ahoskie from Scotland not only brought his thick Scottish accent, he also brought his experience with lean manufacturing. Based on the company’s lean transformation, the Ahoskie plant has gone from near the bottom of the performance metrics to leading in all Berry Plastics plants.

He and lean are the reasons Ahoskie is now the benchmark for Berry plants worldwide.

Berry recently reported an economic impact of $3.7 million based upon the gains they’ve made through their lean transformation with the help of the North Carolina State University Industrial Extension Service (IES).

The Ahoskie plant manufactures child resistant and tamper evident closures for the pharmaceutical industry with clients such as Novartis, Wyeth, Merck and Pfizer.

Berry Plastics is one of the giants in the packaging industry with 60 manufacturing plants in the USA and abroad specializing in plastic packaging including containers, tubes, drink cups, bottles, closures, caps, industrial buckets, consumer products, prescription vials, and overcaps.

1B4 who

That $3.7 million impact will be celebrated in NC State’s 1B4NC campaign. Berry Plastics will be recognized on January 15, 2008 as a major contributor to the IES promise: to create $1 billion in economic impact for North Carolina by 2010. Since January 2006, IES’ economic impact for the state of NC is $316 million.

Hepburn was initially brought on board by Kerr Plastics prior to the purchase by Berry Plastics to help increase the company’s EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) in preparation for being sold. EBITDA is an approximate measure of a company's operating cash flow and overall health based on data from the company's income statement.

Before lean, the Ahoskie facility had an injection molding division and a lining division almost as though it was two different companies, each with its own management structure and employees. The company had operated in this manner since their move to Ahoskie in 1986. Due to the independent configuration, there was very little communication. “We had machines that were 14 feet apart and yet because it was separate, we had people working for the company for 18 years who did not know each other,” said Hepburn.

Mindsets were different, too. The molding operation would produce on average of 1 million more pieces than what the lining department required. There were issues with storage and absorption of overhead costs with this type of philosophy. In this way, the 1 million components went into *WIP (Work in Process). Components in WIP can become misshapen from the weight of the pieces and can increase the reject rate exponentially. Often WIP inventory results in additional muda.

Hepburn’s lean manufacturing experience led him to utilize a tool known as value stream mapping, in which they “identified muda all over the place,” said Hepburn.

Two become one

In 2005, they established a physical link between the molding and lining departments. Now they feed the components straight from the molding machine into the lining machine and into a finished box, thus completely eliminating WIP by 80 percent. Their reject rate went from 17 percent to less than 1 percent in process and 6 percent total by connecting the processes.

Hepburn saw the value in lean and took the principals as far as he could. “We looked high and low for help, training help,” said Hepburn. “We were struggling and knew we needed some help here.” Hepburn gives Patty Argent, human resources manager, full credit for finding that help with IES.

Hepburn stressed the importance of adopting a lean mentality and scheduled a Lean 100 on-site with IES at Berry so everyone in the organization could benefit. Lean 100 is a fundamental course in the philosophy of lean which is simply reducing waste; waste in movement, waste in time and waste in materials.

Single Minute Exchange of Die (SMED)

Berry tapped into IES expertise once again to undergo a Single Minute Exchange of Die (SMED) event. A SMED event aids in decreasing the changeover time on a machine from making one product to another. The most extensive changeover is termed a ‘rack-to-rack.’ This changeover took 1 ½ days (including first article approvals) from good part to good part. Today, the rack-to-rack is done in three hours.

A color changeover prior to the SMED event was 2 hours and 200 lbs of scrap resin. Now it is 15 minutes and 3 lbs of scrap.

Scrap

Another measurement of a plant’s productivity is based on scrap rate. Because Ahoskie’s clients are pharmaceutical and regulated by the Food and Drug Administration, they must use all virgin materials, which means, regrinding is not allowed.

Bearing this in mind, Ahoskie’s scrap rate is .002 percent in process. End process scrap is 2 pieces or less based on 4.5-5 million components daily.

Innovation

This plant employs 155 employees. Hepburn believes wholeheartedly in promotion from within. Hepburn spoke of two different employees who started as fork lift operators almost 20 years ago and are now in senior management and technical positions.

But Hepburn is most proud that his workforce is the same one he started with when the average EBITDA was 12 percent. Now that Ahoskie’s EBITDA is an average of 28 percent, his pride is palpable; “They’re an absolute gem to work with and I’ve worked with people all over the world.”

Based on their location in northeastern North Carolina, the Ahoskie plant has been forced to be innovative. “We’re not in the heartland of industry here in Ahoskie,” he said. “It’s made us somewhat insular yet extremely self-sufficient. There is more innovation in this little plant than I’ve seen in Silicon Valley, RTP and the like.”

The company is now poised for expansion and considered one of the healthiest of Berry’s plants.

The Berry Plastics project was supported by the Region Q Workforce Development Board and Roanoke-Chowan Community College.