When you look at Sacramento Container Corp.'s business cards, three words immediately catch your eye: "Changing the Rules." You're not alone if you ask, "What exactly does that mean?"
Sacramento Container's owner, Joe LeRoy (l.), and General Manager Bob Bruna pride themselves on delivering on their service commitments.
Joe LeRoy, the independent sheet plant's owner, or any of his employees, will quickly tell you that changing the rules is all about how his McClellan, Calif.-based operation treats customers: Never let them down. It's a critical element of the company's customer-focused mission statement.
"Our customers tell us what they want; we don't tell them what we will do," he states, pointing out that box makers can't afford to maintain the business status quo when big box stores are making box buyers jump through all kinds of service hoops. Today these buyers need extraordinary service. Sacramento Container knows how to deliver it, LeRoy stresses.
Each of the plant's forklift truck drivers has a user ID that provides for full traceability.
The plant services approximately 65 percent of Northern California's dairy business, whether it is milk, ice cream, yogurt, or cottage cheese. This business makes up about 10 percent of its box volume. The bakery, candy, canned goods, and adult beverages industries complete its market makeup.
Many of the clients in the milk business use the same size boxes, but need different messages printed on them. The milk could be skim, 1 percent, 2 percent, or even have a change in ingredients. Granted, it doesn't involve high-end graphics or complicated package design. But the importance of safe transportation makes the overall box quality critical.
From left, Sacramento Container's Bob Bruna, Eddy Hernandez, mini-Martin machine operator, and Joe LeRoy inspect one of the sheet plant's milk boxes.
Each month the plant produces 1.3 million one-gallon boxes on its workhouses: a 37-inch, three-color Midline-Martin flexo folder-gluer (with inline diecutting) and a 25-inch, four-color Mini-Martin Midline (also with inline diecutting). Installed a year ago, the 37-inch machine can produce as many as 18,000 boxes an hour; the 25-inch machine's output can reach 26,000 boxes an hour. It was added to the plant's floor in 2004.
Never Say No
So how do you provide extraordinary service to milk makers? Start with not charging them to change printing plates, and you've gained their loyalty, LeRoy says. He takes pride in his customer service department's ability to manage customer inventories. He's also determined to never say no if any of his 97 customers need help. Still, he wishes they were even more demanding because, like many of his industry peers, he sees the growing pressures from retailers.
From left, first shift crew members Quyen Tran, machine operator, Charles Holcomb, feeder, and Chris Meyer, assistant. They're proud to run one of the sheet plant's workhorses, the Martin Midline three-color flexo folder-gluer.
"Our customers' customers' demands have changed," he says. "They want faster turnarounds, more responsiveness. But too many of our customers have low service expectations from our industry. They call and say, 'I need boxes tomorrow,' but they don't really expect us to perform. When we do, they reward us accordingly."
He takes pride in his independence — pointing out that for too long, integrated box-making employees have been led to believe the company's paperboard mills are where the money is made. He knows because he has experienced it himself.
The plant's Martin flexo folder-gluers are workhorses, producing 1.3 million one-gallon boxes a month.
"When I was working at an integrated company, if you were a box plant general manager and making money, you were a hero," he states. "If you were a box plant general manager and pushing out volume, but the plant wasn't making money, you were a hero — and if you weren't doing either, you had better be looking for another job."
Today LeRoy, who has summited some of the world's tallest mountains, including Mt. Everest, realizes that if he's not growing his business it will slowly die. Even in his current position, he still has a passion for pursuing new accounts and jumps at any opportunity to make a call. He looks back on his days on the road as an integrated box-making salesman with great fondness. While his current responsibilities don't allow him to hit the road as often as he used to, selling boxes for days at a time, LeRoy has lost none of his genuine concern for customers.
HRMS's SmarTrak™ inventory management system allows Sacramento Container to easily find a pallet of finished boxes. The warehouse's ceiling has embedded sensors to aid in the process.
"Focus on the customer and business will come your way," he says.
Focusing on the customer holds true not only for making and delivering boxes efficiently, but answering the phone with a live voice. Sacramento Container has no voice mail for a reason.
"The integrated mentality on returning a phone call is to call back the same day, not immediately," General Manager Bob Bruna says. "Joe fought for no voice mail. So here the customer's concern would have already been taken care of [by the time the integrated company returned its call]."
The plant's distinctive trucks get customers asking, "What does 'Changing the Rules' mean?"
Of course, LeRoy realizes that caring for customers starts with caring for his 110 employees. One way he keeps them energized in their jobs is by providing those on the floor with the opportunity to earn an additional 10 percent of their pay each quarter through productivity incentives. Progress reports are posted every Tuesday.
"The goal is to increase each machine's uptime by two minutes per day versus the previous quarter," LeRoy says. "It's about turning downtime to uptime and supporting people at the machine."
Juan Del Rio, Hycorr diecutter operator, applies a barcoded tag on a stack of sheets. Using HRMS/VantagePoint's SmarTrak, this assures that the plant will always know where this stack is located.
While LeRoy makes every effort to cut downtime, he is vehemently opposed to cutting a price.
"I never got a piece of business I wanted long-term by just cutting a price," he says. "That's a no-win situation. Instead, why not charge them the same price, but give extraordinary service?"
This is how Sacramento Container, which does $48 million in sales and produces 700 million sq ft annually, has been able to distinguish itself from its integrated and independent brethren. LeRoy realizes that fulfilling an order and delivering it on time to one of his company's clients simply isn't enough. For him, it's not about satisfying his customers with service but dazzling them with it. He has changed the rules.
For the past eight years, Sacramento Container has operated on what used to be Sacramento's McClellan Air Force Base, which is actually seven miles northeast of Sacramento. In fact, when the base closed in July 2001, it was the first lessee. McClellan has more than 150 industrial buildings sitting on 3,700 acres. One of the base's main tenants was the Air Force Technical Applications Center, which operated a global network of nuclear "event" detection systems.
The walls of Sacramento Container's 208,000 sq ft facility are 10-and-a-half inches thick. They were built to withstand an attack.
CEO Joe LeRoy worked for a number of integrated box makers, including Inland Container, Weyerhaeuser, and Southwest Forest Industries. Fifteen years ago, he bought a sheet plant in West Sacramento from Gaylord Container. When his lease in that building was up, he received a phone call from his broker who offered him the opportunity to work in a building formerly owned by the Air Force. He jumped at this prospect — and couldn't be happier with the sturdily built, high-ceilinged building.
Over the past five years, LeRoy has witnessed a number of integrateds close plants in the Northern California area. This led to a reduction in box-making capacity that in turn put his plant in growth mode. Growth means investing in additional equipment, which LeRoy isn't afraid to do. He started out with a 50-inch Langston two-color flexo folder-gluer, and now also operates one two-color and one three-color Hycorr rotary diecutter. The three-color comes with an automatic tray breaker system that produces stacks of 100 trays. It was purchased 14 months ago and is one of only two in Northern California, says LeRoy. Two of the plant's workhorses are mini-Martin flexo folder-gluers (see the main story for more details on these machines).
Standard order lead times are three working days. But the plant can provide boxes in 24 hours or less, if necessary, thanks to its 80,000 sq ft on-site finished goods warehouse. Minimum delivery quantity is one pallet.
And how does the two-shift plant keep all these machines in top running order? A disciplined maintenance program: Preventative maintenance is done on one of its five key machines each evening. So by the end of each week, each machine is able to operate in top condition.
Where's that Pallet of Sheets?
Inventory control can make or break a business. Too much inventory, and you will find yourself paying warehousing costs — or even scrambling to learn whether you have enough boxes to fill a particular order. Too little inventory, and you run the risk of losing the account because you couldn't fulfill an order on time.
For the past eight years, Sacramento Container has been using the HRMS software system for not only inventory management but purchasing, accounting, and tracking its goods. However, Bob Bruna, the plant's general manager, found the inventory management software made sheet order control cumbersome; it was limiting the company's ability to marry sheets with orders and handle partial deliveries.
In spring 2006, Vancouver-based VantagePoint Systems Inc. purchased HRMS. Even before this development, however, Bruna had been visiting sheet plants, learning how they were handling their inventories. So by the time he attended the Association of Independent Corrugated Converters' (AICC's) April 2006 spring meeting in Las Vegas, he was already thinking about converting to sheet plant inventory software that would keep him competitive with his peers. He met Jim Hennings, VantagePoint's president, at the meeting and in the course of the conversation threw out an offer.
"I told Jim Sacramento Container would be willing to serve as a developmental site," Bruna states. "Jim said yes."
It was a huge time commitment for Sacramento Container. It involved weekly teleconference meetings and a lot of software trials. But it all paid off: In November 2006, the sheet plant purchased HRMS's SmarTrak™ inventory management system, a wireless network that tracks sheets and finished boxes through bar coding scanning. Every pallet in the plant has a bar code; any time one of the plant's pallets is touched, it is scanned. So now Bruna knows where a particular pallet is stored at any particular time and can pull it quickly. Each one of the plant's forklift drivers has a user ID that provides for full traceability.
After only three months with this system, the plant was hitting 99.9 percent accuracy on inventory levels, which are based on forecasted needs and order quantities.
"This immediately eliminated the time wasted looking for items," Bruna states. "Now I can ensure first-in, first-out shipments from inventory. I have complete lot control. And when a customer calls, asking for specific data, we're confident we can provide it. We now have full visibility."
The plant cycle-counts its inventory every business day, so physical inventories need only occur mid-year and year-end. Before SmarTrak, physical inventories, which usually involved overtime or weekend work, were the only way problems would be discovered. Now, if any problems pop up, they are corrected immediately.
Bruna, who joined the company four years ago with a distribution background, says the employee learning curve for bar-coding inventory was very short, largely because of experience the plant's receiving and inventory control personnel already had in this field. They all knew that if they touched a pallet, they scanned it. This scanning and bar-coding effort not only eliminated shipping errors, but also increased the number of trailers the plant can load each day by 15 percent, or an additional two to three trailers.
Early in this inventory software transition, Sacramento Container stressed to VantagePoint the need to have a full inventory network that always knew where sheets and finished goods were located. Bruna says that has now been achieved.
How does it work each day? When a truckload of sheets arrives at the plant's door, the pallets are immediately scanned and compared to what was originally ordered. If there is agreement, the truck is accepted and received into inventory. A pallet holding any problem sheets is scanned and sent to the plant's quarantined area so that it can be returned.
Once a pallet of sheets is pulled out of the plant's warehouse for converting into finished boxes, it is tracked every step of the way, from its placement in front of any particular flexo folder-gluer or diecutter to its converting to its preparation for shipment to the customer.
All of this tracking has made plant employees constantly focus on the process, says Bruna. They're much more aware of the bigger converting picture.
He admits that when VantagePoint acquired HRMS, he was concerned about having to deal with a totally new software company. But he was assured by Hennings that his objective was to improve and update, not start from scratch. As the plant introduced SmarTrak into its operation, this became even more important. Although employees had bar-coding and scanning experience, it's human nature to be apprehensive about any new system.
"Now our employees couldn't do their jobs without it," Bruna says with a smile. "Looking for product used to be difficult. But now they're doing their jobs more efficiently, thanks to access to real-time, accurate information." He adds that the scanning system assisted in achieving a 9 percent production improvement in this year's first quarter over last year's fourth quarter.
The sheet plant's customers have already benefited from SmarTrak's capabilities. In fact, every week the operation conducts customer tours; one of the first plant features clients are eager to learn more about is the inventory management system.
"We had an owner [of a box buying company] here last Tuesday," Bruna says. "He wanted to know when he could get his management team in to see what we've done."