Boxes in small batches: long popular in Europe, the Corrugated Focused Factory is gaining recognition in North America

Paperboard Packaging, May, 2004 by Ken Rohleder

Successful U.S. manufacturers are responding to the onslaught of global competition by embracing new business models designed to eliminate non-value added activities and waste. Often the result is shorter lead times, more deliveries and lots of tiny box orders.

Lean principles dictate we eliminate all activities and processes that aren't valued by our customers and our customer's customer. For example, unsold inventory is poor use of working capital because customers don't value inventory per se--they value speed, agility, responsiveness and one-size-fits-one. Raw material inventories are a drain on working capital and are subject to shrinkage and obsolescence. And consumers no longer want the product that's in the warehouse--instead they want a special version customized to their individual needs--and they want it now.

There is little doubt that Demand Flow Technology[R], Lean, Theory of Constraints, and Six Sigma production strategies are crucial to the viability of manufacturing in the United States--converters need to understand these strategies intimately and immediately. Get lean or die is the mantra in many factories ... as the plant manager fights to eliminate decades of wasteful processes and activities, the global sourcing manager is sipping green tea with his new best friend in Shanghai. The urgency is real.

As important as these new business principles are for our future, lean creates a conundrum for the corrugated industry because it wreaks havoc with the traditional scale economies the paper industry was modeled on. As customers become leaner, order size decreases, order velocity increases, quality standards are tightened, lead times shrink and the corrugated converter feels the pinch. Who pays for all those extra setups? And who pays for the upstream inventory that buffers just-in-time deliveries?

Customers certainly don't want to pay and buyers aren't corrugated experts so collaborative solutions are rare. Instead, the demand for smaller batch sizes at the same price, with zero defects is pushed blindly upstream.

There's A Better Way

The Europeans have responded by shifting the corrugated value chain closer to the customer, creating a mini-converting plant (a 'focused factory' in lean parlance) that makes corrugated components in the exact quantity required--only minutes before it is needed.

A Corrugated Focused Factory (CFF) is a small, agile corrugated component plant located on the shop floor. The CFF converts corrugated board into components, one at a time, as they are needed on the packaging line in the plant. Corrugated components are converted from stock-sized corrugated sheets or--with more sophisticated equipment--the components are made from fanfold. Fanfold is a continuous length of corrugated that has been accordion-folded onto a pallet at the corrugator.

The equipment for converting the components can be as simple as a sample room slitter/slotter or a computerized sample production machine. For higher volume requirements, equipment is available that will convert fanfold into dozens of packaging styles, automatically, using up to five fanfold magazines of various widths and paper combinations. These machines will automatically set up in seconds and run any number of cartons required. The requirement can be manually entered into the computer by the operator, or a PLC control can signal the requirement from the line using a scanner or other input device.

A coordinate measuring system can be used to measure the finished product, "design" the pack and manufacture it--all automatically. State of the art machines can manufacture more than 3,000 cartons per day.

Columbus Container, an independent corrugated converter in Columbus, Ind., has experience with the concept. President and Founder Bob Haddad says the company has been doing Corrugated Focused Factories with a few, very progressive customers for a number of years.

"We happen to call them 'mini plants,' but the concept is the same," Haddad says. "We either provide a turnkey solution operated by our staff on the customer's factory floor, or we help the customer specify their own equipment and work through the process flow with them. We are working on a new program for a customer in Mexico right now. There is no question that the concept saves money and simplifies corrugated programs that are really fragmented with a lot of small volume requirements."

Box converting as an upstream manufacturing process in the customer's plant is a radical concept by U.S. standards but it is in perfect alignment with lean principles. By mapping the value stream the benefits become obvious.

Orders less than 10,000 square feet are generally the bailiwick of sheet plants. Orders less than 3,000 square feet are difficult to manufacture profitably at a reasonable price--even by a sheet plant--because of the complexity of the supply chain and the impact of setup costs. Orders less than 100 square feet are impossible to execute profitably without the customer paying a huge price.