RECKITT BENCKISER
In 2000 Reckitt Benckiser’s Derby household-products factory looked likely
to close. Today it holds its own in one of manufacturing’s most ferociously
competitive markets.
OBJECTIVES
Five years ago, the merger between Reckitt & Colman and
Benckiser changed the terms of reference for the Derby factory
which made Airwick, Dettol, Harpic, Mr Sheen, Vanish, Veet,
Windolene and other aerosol and high volume liquid (HVL)
brands. Despite an earlier investment of £15 million, Reckitt had
accepted Derby’s poor productivity. But the new owners put
Derby’s lost value at £2m a year and made clear the site must
improve or close.
Since then the factory has dramatically reduced its workforce,
retrained the rest and unified the culture across the plant’s two
main production technologies.
These changes and the adoption of lean manufacturing
techniques have transformed the company’s quality and
productivity performance and its morale. Derby has won new
production for its HVL operations and is now Reckitt Benckiser’s
only European aerosol site.
SOLUTION
Skill development
In 2000 Derby had over twice today’s 200 employees. Derby was
traditionally two factories on the same site, HVL and aerosols.
The perceived difference in their performance reinforced the
cultural gap between them.
The investment in aerosol production, combined with stockkeeping unit (SKU) reduction and other measures, was
successful enough to make Derby Reckitt Benckiser’s only
economic European production site for aerosols. In HVL, some
Derby products were more competitive with producers inside
and outside the company than others.
The combining of the two operations under one general
manager some years ago was an important unifying step.
Another was the development of one, site-wide training
programme. Derby had to increase both efficiency and volumes
to take better advantage of the four-year investment in its hightech aerosol lines which, from 1997, had set Derby’s course as a
high output, low changeover operation. An increase implied the
need for better skills on the lines.
Best practice in:
Lean manufacturing and high
performance workplace.
Sector:
Consumer goods
Size of firm:
200 employees (Derby site)
Location:
Derby
Website:
www.reckitt.com
“It doesn’t matter what we make in here in future, so
long as we can launch it first. That keeps us in business.”
MARK DEAN-NETSCHER – SITE DIRECTOR
Derby set about developing the skills that would support a leanoriented, team-based approach to production. Each area,
whether packaging, blow moulding or a dedicated product line,
was assigned three levels of operational skills: operators
became cell associates (CAs), fitters or craftsmen became cell
technicians (CTs), and each area had a cell technical expert
(CTE). The CAs and CTs report to CTEs and a group leader for
each area.
Each group takes responsibility for productivity, continuous
improvement, skills and training, and capital investment in the
area. This joint responsibility within the new structure would
foster team working and encourage staff to pay detailed
attention to their lines and how each could be improved. This
closer focus has won important gains. When Derby proposed at
the end of 2003 replacing Harpic labels with a Fujifilm sleeve,
the Harpic line team, led by its CTE, devised the new
equipment’s specification and supervised its installation. The
CTE negotiated the technical issues with Fuji: “He led that from
start to finish and we’ve had a really successful result,” says site
director Mark Dean-Netscher.
Derby drew up a skills development model (SDM) to underpin
the changes. The SDM encourages technical ability, quality
awareness and people skills and rewards each move up through
four skill levels (SLs). A significant number of CAs are now
qualified at SLs 3 and 4, which include autonomous total
productive maintenance (TPM) skills. In all, last June, 91 out
of 93 CAs were at skill level two (SL2), 53 at SL3 and 38 at SL4
or above.
Within the last two years Derby’s £100,000 programme has also
provided both cross-disciplinary engineering training to NVQ
level for electrical specialists to train in mechanical engineering
and vice versa, and NVQ level ‘engineering for non-engineers’
training. Over half the workforce have obtained NVQs at level 2
or higher and Derby intends to raise this to 70 per cent.
The drive for quality
Creating a unified site does not mean eliminating all processrelated specialisms. Derby’s quality record had suffered from
both occasional product recalls and poor conformance
comparisons with its internal and external European
competitors.
Derby now provides a factory-wide, team-based quality bonus
scheme based on how many non-conformance issues are raised
and how quickly they are dealt with at root cause. Aerosols and
HVL use different technologies and packaging-component supply
chains, so each process now has a separate team of quality
technicians and assistants reporting to its own quality manager.
To solve a long-standing problem with leaking aerosol cans,
Derby assembled a group comprising operators, its quality
people, Reckitt Benckiser’s Hull R&D team and the can supplier
to develop an on-line test method that would work at 300 cans a
minute. The resulting electro-chemical test now puts the
supplier’s performance “up with the best,” says Dean-Netscher.
“It’s a massive step forward.”
TPM
From 2000, Derby has involved engineers and operators in a
total productive maintenance (TPM) programme aimed at
reducing unplanned breakdowns. Separate TPM teams were
assigned to each line or area. When they had identified and
solved the biggest problems, they worked out a schedule for
the assets.
Then, says site production manager John Walton, the focus
moved to incremental improvement of overall equipment
effectiveness (OEE): “If there are 20 issues on the lines, the idea
is to address the top four or five, and sort those out today.”
Process improvements have raised OEE measures. For example,
a joint investigation by the CTE, the CT and a machine supplier
found that intermittent problems with a valve inserter on the
aerosol line were reducing the line’s OEE. The problem was
the instability of the valve and its flexible dip-tube at the line’s
high speed. The team proposed that a magnet mounted at the
valve holder on the machine would keep the valve assembly
steady during insertion. This improvement raised OEE four to
five per cent.
SKU consolidation
Between 2001 and 2003 Derby halved the 200 aerosol SKUs
and reduced its 90 HVL SKUs to 50, says site project manager
Tim Hoblyn. About 70 aerosol formulae have been cut to 43,
says Hoblyn.
Derby combined languages on the same pack. By reducing
the number of bottle-top triggers and changing their designs,
Derby both cut costs and raised OEE by around seven per cent,
Walton estimates.
Each of 45 Harpic HVL SKUs used to have its own case. Now
there are two Harpic cases and, but for a packaging regulation,
there would be one. Derby uses a generic case and printing
machinery on the line creates individual labels.
SKU reduction presents a significant benefit in overhead and
labour cost reduction, says Hoblyn.
New product development
New product development (NPD) is one of the few ways open to
Reckitt Benckiser to increase its margins and one in which
manufacturing plays a key role. Speed to market is vital.
“Where we are first to market,” says Hoblyn, “that’s where we
get the big benefit. If you’re second to market, all you get is the
leftovers.” Low cost production is important, but it takes second
place to speed.
Manufacturing’s involvement in NPD has done more than help
cut time to market. The Harpic bottle redesign, initiated by
manufacturing, also reduced its weight by a third and cut its
cost and size. The new design allows up to nine per cent more
bottles on a Euro-pallet, giving the Derby site an unlooked for
£25,000 bonus in reduced environmental recharges.
In manufacture, the bottle allows more bottles per moulding
cavity, increasing production speed and freeing up one or more
moulding machines for other products.
RESULTS
Eight years ago Derby’s future was set as a high output, low
changeover plant. NPD and the need for speed to market
complicate what was once a simple, high-speed, high-volume
production profile.
In the mid-1990s OEE measures were about 41 per cent. The
overall level for 2003 was 57 per cent, but Derby now has peaks
in the 90s on some lines.
Quality has improved equally dramatically: “We’re now up there
with the best in Europe,” says Dean-Netscher, which means
conformance is now 99.9 per cent or above.
Overall, margins on the products have improved, and the plant
is no longer loss making. Taken with other cost savings Derby
has made, the overhead reduction from SKU consolidation has
cut its transfer prices by between 10 and 15 per cent – an
important advantage when competing for volume with other
Reckitt Benckiser sites.
CHALLENGES
The Derby experience is that, if resources are limited, you
cannot tackle all problems. In these circumstances you need to
identify the top issues for action, execute improvements, follow
up and look again.
THE LAST WORD
Without introducing team working, reducing the number of
SKUs and promoting TPM, the Derby site would have closed.
Now the plant is looking ahead. In a bid to increase its flexibility
it successfully introduced annualised hours in 2004 as a
recognition that its future depends on having more new
products manufactured at Derby. As Dean-Netscher
summarises: “It doesn’t matter what we make in here in future,
so long as we can launch it first. That keeps us in business.”
This case study was sourced from the Cranfield School of
Management.
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© Crown Copyright. URN 05/724; 03/05