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Craig Szelestowski of the Royal Canadian Mint. (Photo by Darren Brown, OBJ)

As manufacturers grapple with rising transportation costs and an appreciating Canadian dollar, some companies are looking to trim costs by reviewing the way they assemble and package their products.

While reducing the amount of packaging used can create cost savings and reduce the amount of waste generated, other companies have found efficiencies by reviewing their use of the time-honoured assembly line.

Several years ago, the Crown corporation Royal Canadian Mint moved away from the traditional assembly line method of packaging coins in favour of individual workstations and quickly found the new method improved the productivity of employees at the for-profit Crown corporation, which increased its net income by nearly 93 per cent to a record $21.6 million last year.

However, the mint's Pierre Justino, director of continuous improvement, and Craig Szelestowski, vice-president of human resources and business transformation, say the new assembly line has also given the company more flexibility and improved employee satisfaction.

OBJ: What was your old assembly and packaging process?

SZELESTOWSKI: In the past it was very linear, your traditional assembly line. You needed eight to 11 people to staff the belt. You just needed that many to show up to begin work, whether you had a hundred items to package or a thousand or ten thousand in a day. So it wasn't very efficient. So what we did as part of our lean enterprise program, which was reviewing the value stream across all of our major businesses, we identified this as an opportunity to improve that would provide us a few different benefits. One, it would help us keep the work in-house and conduct the work at a price that was very competitive with outside suppliers. Two, it gave us flexibility to handle either a large order or a small order. And it also gave us a level of quality that we like to have. Because we were able to do it in-house, it reduces the transportation and handling (costs) and so on.

OBJ: What were the challenges of the traditional setup?

JUSTINO: Having all those people, the difficulty comes when one or two individuals are sick. That screws up the line because you need to insert seven coins into the package and you've set up to have one person lay down the lens, one person puts the insert in, one person puts in another coin and another person puts in another coin and so forth.

Having two people missing doesn't do it much good. We have to start pulling people from other areas and that creates delays in other areas. Obviously, it was not the best setup, but certainly a very traditional view of how to mass-manufacture.

SZELESTOWSKI: It wasn't just if an employee was sick. It gave us very little flexibility in terms of using employees from that area in other areas where there might be a bottleneck.

OBJ: When did things start to change?

SZELESTOWSKI: We started at a real piecemeal approach, trying to fix little points in the value stream, instead of looking at the whole process. I think that started in 2002. I think the stations were implemented in 2005 and 2006. The employees were highly engaged in the design. We got them to help us with what it would look like because they would be using it, so it would have to work for them.

We moved from a linear assembly line to individual workstations where an individual packages a product from beginning to end. We can run with one person or we can run with 10.

OBJ: How does your new assembly and packing line operate?

JUSTINO: The setup is essentially that at each static station there is one individual that is working and has all of the packaging material and coins required to complete that product. That gives us the flexibility of having multiple stations where different people are packaging different things. They are responsible for doing that from start to finish. It is laid out so it can be adjusted for different heights and sizes.

We've found as well that one of the benefits of this is the tremendous increase in productivity ... The (output) per person has gone up tremendously.

SZELESTOWSKI: We tried to make the point that it is not about working harder, it is about being better organized and working smarter.

OBJ: What advice would you give to a company that is just starting to review its assembly and packaging process?

SZELESTOWSKI: I would say have an open mind and don't necessarily do what you've seen before. Don't apply a template that worked somewhere else without looking at it and looking at what your needs are. More importantly, what are your customer's needs? What's your customer willing to pay for having 11 people at all times do a process it might only take six to do? You can use those five other people to add value to the customer in other ways.

When we started our 'lean' journey, we made a promise to our employees that we would not lay off any people as a result of any lean improvements that we made. If you are asking employees to find improvements to their workplace or to improve the efficiency of the process, you wouldn't put employees in a position where they would get rid of their own jobs and put them on the street. We've been able to work with our union to find very creative ways of redeploying people when we have projects that improve productivity but may reduce the need for employees in certain areas. We have yet to lay people off and our intent is to avoid that in the future.

THE EXPERTS SAY

The first thing that we have them do is not look just at packaging, but look at the entire system ... That way when they do tend to remove the waste in packaging, they know the impact it is going to have on the whole system, not just on that one point. If you don't understand the entire flow from end to end and you go in and fix one of the nodes or one of the areas, you will have an impact upstream and downstream and it could be a negative impact. You may improve one area at the cost of the rest of the rest system.

They are going to require supplies as they need them, not in large batches anymore. As they need them, they are going to work with suppliers of packaging, for example, to bring them in smaller batches when they need them, so just in time. What that does is improve your cash flow, but also allows you to make changes to packaging because there are sales, people want to put specials or new prices.

You can try to store packaging, but packaging is very fragile. It deteriorates and gets damaged very easily. You end up scrapping and throwing out a lot of your old packaging.

A lot of times we see companies where the old packaging is sitting on shelves, collecting dust and has been for years. They just keep hoping that someday they are going to need it. They've spent all that money, off their bottom line, and there are no ways to recoup those costs.

Larry Cote, president, Lean Advisors Inc.

We've identified sustainable packaging as a significant initiative that is going on in the packaging industry at large, not only in Canada but around the world.

For example, if you go into a Future Shop or Staples, take a look at the software shelves that have a disc inside the box and a leaflet that tells you what is on the disc. If you redesign that package to the size of the product, it takes waste out of the entire system, there is a lot less paperboard, there is a lot less conversion cost related to that, there are a lot fewer corrugated shipping containers, and then there are a lot fewer palates that go on a truck, and at the end of the day, there are a lot less trucks going down the highway. There is an enormous amount of cost added into that because at the design stage, somebody decided to design it a certain way. Design is a critical element of sustainable packaging.

The language we use is triple bottom line – people, planet and profit. The three of them have to be part of the sustainable formula because you've got to look after the people, you are trying to look after the planet and, at the same time, you have to sustain a profit.

It is a very complex subject. The tendency today is that when people think about the environment and packaging, all they ever think about is recycling. This is a much bigger strategic view of the world. The way we think of sustainable packaging is that it is not a tool, it is the tool box.

Jim Downham, president and chief executive officer, Packaging Association of Canada