DusoFinalBusinessPlan

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Team 4
Fall 2012
Final Business Plan
Business Idea: GreenClean: It Grows On You
Team Members:
E-mail address:
Megan Adcock _________________________________ ________________________
Megan Anise
_________________________________ ________________________
Evan Duso
_________________________________ ________________________
Kari Fujiwara ________________________________
________________________
Michael Morsch _______________________________
________________________
Table of Contents
Executive Summary
GreenClean: It Grows on You
Evan Duso
3201 NW Lower River Road, Vancouver, WA 98660
Phone: 1 (732) 539-8503
Fax: 1 (732) 539-8504
Email: evanduso@gmail.com
Web Address: http://www.greenclean.com
Management:
General Manager
First-Line Supervisors
Advertising & Promotion Manager
Industry: NAICS 322291 – Sanitary Paper
Product Manufacturing
Number of Employees: 23 FTE
Bank: Bank of America
Future Auditor: Barrett Company
Law Firm: Schwabe, Williamson & Wyatt
Law Office
Amount of Financing Sought: $8,645,000
Current Investors:
Personal Funds: $50,000 (00.58%)
Bank of America: $4,225,000 (48.87%)
Stock Issued: $4,370,000 (50.55%)
Use of Funds:
PPE: $6,510,900
Salaries Expense: $1,150,817
Business Description: GreenClean is a
corporation that takes pride in producing and
delivering napkins that are made from 100%
recycled tealeaves. Our corporation will
produce a line of recycled tealeaf napkins in
Washington state, made form post-production
tealeaves used in bottled green tea production.
Products/Services: The tealeaf napkin will
create revenue of $664,038 (66,403,800
individual napkins) and our cost of goods sold
is $65,000, both in our first year of business.
Each napkin will sell for $0.01. Our tealeaves
will be shipped from Arizona Tea. This
unique napkin will fulfill the need for highly
eco-friendly napkins that are completely free
of paper, thus sustaining the environment and
building a brighter and greener future.
Company Background: GreenClean is a
growing corporation who is truly passionate
about sustainable development in every day
paper products.
Management: In order to ensure the safety
and quality of our process, our general
manager will be OSHA certified and our first
line supervisors will be certified in lean
manufacturing.
Competitive Advantage:
GreenClean will use a niche strategy and focus
on flexibility, the quality and innovation of
our process to gain competitive advantage.
We will be competing on Porter’s threat of
substitute products. Our unique operation
process gives us an enormous competitive
advantage because without these machines we
would not be able to pulp the tealeaves for
further production. Because we are the only
corporation in America with this distinctive
pulping process, we may wish to patent it
depending on our success.
Markets: Our target markets are universities
and catering companies who are concerned
with social responsibility and are based on the
West Coast. Our market segments are large,
medium, small for-profit and non-profit
businesses also based on the West Coast.
There are 5,821,277 small businesses, 128,299
medium businesses and 981 large businesses,
and 1.4 million non-profits in the United
States. There are 9,702 catering companies in
the West Coast and 2,713,096 students at
universities in the West Coast (West Coast
Universities, 2012). The growth rate for paper
napkins is currently 2.5%, which is low but
relatively stable.
Distribution Channels: As a B2B sector, we will use our website and direct sales force comprised of
regional sales representatives who will work as a team to focus on the West Coast of the United States to
distribute our product. Our product will be delivered directly to our customer through NationWide Trucking.
Competition: GreanClean’s current direct competition is Proctor and Gamble, Kimberly Clark, and Georgia
Pacific. These three corporations hold 74.5% of the entire market for paper napkins and are also B2B. Our
potential indirect competition is substitutes such as cloth napkins. We will be the sole producer of these
highly unique, 100% recycled, green tea napkins the in the United States.
Financial Projections (Unaudited):
2009
2010
Revenue:
664,038
3,125,500
EBIT:
(1,339,342)
218,051
2011
4,030,400
976,509
2012
4,965,000
1,534,807
2013
4,812,375(dollars in thousands)
1,632,723
Product Description
GreenClean is a company that takes pride in producing and delivering one of the most
unique and environmentally friendly products of its time. We will produce a line of 100% recycled
tealeaf napkins that are originally used in bottled green tea production. We are passionate about
providing products that are friendly to the environment while delivering one of the best quality
standards in the industry.
Businesses in other countries have already begun to adopt this product line. For example, Ito
En is a company that has created a growing trend in Japan of using post-production tealeaves to
make paper products and by doing so they have received numerous awards for their contributions to
the environment. Their success in creating value out of waste has inspired us to replicate this
product line in America, beginning with napkins (Ito En, 2012).
Our product is not only innovative because of our unique process and inputs, but also
because it is customizable, green in color, eco-friendly, and smoother than generic brands. The
green tea leaves also have properties that include reduction in poor odors and antioxidants that fight
off bacteria, resulting in a more sanitary napkin. These properties are retained through our unique
napkin making process using our customized machines purchased from Sandusky International Inc.
(Sandusky, 2012). Our main focuses in terms of differentiation from other paper product brands are
flexibility and quality. By using our converting machine to print various business logos on the
napkins, it allows the companies buy from us to exemplify their support to the green movement and
overall social responsibility to their own customers and employees. We will also differentiate
ourselves by ensuring quality in our products and processes by using a lean manufacturing process
along with ISO 9001 certification. Our production will exponentially grow over the next five years,
eventually leading to the production of paper towels, plates, envelopes, boxes, and many more
invigorating products.
Business Description
GreenClean is a company built on strong principles and ethical beliefs. We hold the
environment to be of utmost importance and always take precautionary steps to reduce the impact
made on our ecosystem. We feel that the businesses we sell to and our ultimate consumers will
appreciate and learn from our initiative to ‘go green’ and will continue to buy only ‘green’ products.
GreenClean believes that we not only have a responsibility to improve the current condition of our
environment, but also part of this “corporate social responsibility” is to create jobs and products
manufactured in the United States. This is why we are choosing to locate in the state of Washington
at 3201 NW Lower River Road, Vancouver, WA 98660 for our manufacturing facility, and 112 W
11th Street, Vancouver, WA 98660 for our office property (Showcase, 2012). As stated on US News
and World Report in 2009, Washington is first among the states in steps towards energy efficiency
and using more alternative energy sources, which is clearly a strong goal within our business. Also,
Washington has very low taxes, as well as no income tax nor capital gain taxes (US News and World
Report, 2009). Although we are located in Washington, our five sales representatives will work to
serve the Western region of the U.S. to promote our business as well as build contracts with
businesses. For the first 5 years, we will only deliver our products to companies within the United
States, but hope to eventually expand to other countries worldwide, which will result in an
expansion of our sales workforce to include international sales representatives.
Staffing size is listed more in depth on our organizational and staffing charts. We have hired
one General Manager that will lead the entire operation of the business. The General Manager will
be OSHA certified in order to ensure a certain level of safety within GreenClean, which will reduce
workplace accidents, as a result, lowering workers insurance rates (OSHA, 2012). The two first-line
supervisors and one Advertising and Promotion Manager will each report to the General Manager.
One first-line supervisor will work during the day and one will work at night in order to ensure that
we always have people to supervise the ten manufacturing workers. Our manufacturing workers will
be NAM-Endorsed Manufacturing Skills Certified and trained through OSHA as well. The first line
supervisors will be certified in APICS and lean manufacturing in order to ensure a high quality
process. We also have two technically skilled workers, one for each shift, which have more
specialized skills and will also assist in multiple quality control procedures. We chose to have one
Advertising and Promotion Manager that will gather reports from the five regional sales
representatives and assist our General Manager in overall decision making for the business and two
market researchers to help evaluate what steps will be taken as far as promoting our business.
GreenClean’s key assets are the employees as listed previously, the input of tealeaves from
Arizona Tea, our unique and customized machinery produced by Sandusky, and our physical
buildings. The manufacturing of our tealeaf napkins is a unique process that will take place in our
customized machine, which includes the processing, production and converting mechanisms (Paul
Martin, Sandusky, 2012). It is this converting process that allows for our customization and
flexibility within our product through the option of printing on the napkins.
The demand for napkins has been stable over the past few decades, however the trend of
environmentally friendly products has recently seen rapid growth. There is a tremendous need for
‘green’ products in businesses all across our nation. Corporations such as Wal-Mart and GE have
stated that since customers are increasingly buying from companies that are ‘going green’, they feel
the need to join the bandwagon before they fall off and lose customers to competitors (Stark, ABC
News, 2006). Many American companies can benefit from buying our product by promoting their
sustainability and social responsibility with a small venture into the ‘green’ industry.
Industry Size
The industry for sanitary paper products is comprised of toilet tissue (45%), paper towels (36
%), napkins (12%), facial tissue (6%) and other uses, including sanitary (1%) (Brad Kahil, RISI,
2009). In 2007, tissue consumption in North America was approximately 2.5 billion. Therefore, the
napkin consumption was approximately 300 million units total.
Important trends
Why purchase napkins made from tealeaves instead of paper?
Napkins are unquestionably important to our society. On average, Americans consume six
napkins per day, in relation to the consumption of food and beverages (Ito En, 2012). While
standard paper napkins diminish the earth’s natural resources, one of society’s major challenges,
GreenClean uses 100% recycled tealeaves, thus supporting these non-replenishable natural
resources. According to Environmental Paper Network “recovery of paper continues to grow in
North America, helping to reduce the high environmental costs of disposing of paper in landfills.
The U.S. paper recovery rate rose from 46% in 2000 to a record high 63.4% in 2009”
(Environmental Paper Network, 2009). Following this social trend, GreenClean turns used tea leaves
from bottled tea products can both reduce the use of natural resources such as trees and reuse the
tea leaf waste.
External factors
There are multiple interrelated external factors that influence the paper product industry as a
whole. These include competitive, social, economic, legal/regulatory, and technological factors.
The factor that has the largest impact on our company is competition. Our company is one of many
in a growing trend towards sustainability. Due to businesses having a plethora of paper companies to
buy from, it is crucial to establish core competencies in key areas to obtain market share. According
to Pickton and Broderick, “The main forces that are operating in any industry are: customers,
competitors, suppliers and potential substitutes for goods and services” (Pickton & Broderick,
2012). Social factors such as education, locality and social trends may also greatly impact our
industry. Potential customers may not be as educated on the importance of sustainable products to
the environment as well as to the perception customers have of their businesses for buying those
products. Locality may be a great influence for our target market that consists of smaller businesses.
Customers may want to purchase from companies that are nearby, hence creating a barrier to
customers who are not based in the western region of the United States. Also, there is an
exponentially growing trend in social media websites including Facebook and Twitter that prove to
be an important part of new advertising campaigns, which we may take part in.
As technological forces go, there may be an impact on the capabilities of machinery for
producing and printing on the napkins. For example, Gordon Moore, Intel's founder, observed that
the processing power in the world doubles about every 18 months, while costs remain constant
(Adam Theirer, Forbes, 2012). This is evidence that newer technologies could increase producing
capacity and ultimately lead to a higher competitive advantage for our company in the future.
Similarly, Economic factors such as the recent recession could hinder our company’s
performance. The recent downturn in 2008 that has continued over the past four years could be
causing businesses to cut back on their expenditures and choose more basic products that are at
cheaper prices. Exposing customers and ultimate consumers to the benefits that ‘going green’ has
our environment in the long-term may however help to overcome the price barrier. This may
encourage people to spend a little bit more to help do their part in restoring the planet, despite a bad
economy.
Lastly, legal and regulatory forces will also impact our company mainly in terms of our labor
force and facilities. Requirements for breaks during shifts, special safety training courses and health
and safety acts can create greater costs for our company, however we have decided to instill OSHA
certifications and lean manufacturing in order to ensure the quality and safety of our poeple and
process.
Competition
GreanClean’s current direct competition is Proctor and Gamble, Kimberly Clark, and
Georgia Pacific. These three corporations hold 74.5% of the entire market for paper napkins and are
also B2B (Household Paper Products, Mintel, 2012). These corporations currently sell to retailers
such as Officemax and Staples, who in return sell to our market segments. We differentiate from this
competition by eliminating the intermediary of the retailer and the input of tealeaves, and instead sell
directly to our customer. For example, Proctor and Gamble makes the recycled napkins and sells
them to Officemax who may in turn sell than to various offices at Fannie Mae. GreenClean plans to
make the napkins and deliver them right to the offices at Fannie Mae, thereby reducing the number
of places for the napkins need to travel before reaching the customer.
Characteristics, target market and positioning
Our business targets other businesses as the ultimate consumer. The specific metrics of small
businesses include having less than 100 employees, medium range businesses classify as having
between 100 and 9,999 employees, and large corporations are sized as having more than 10,000
employees (Dolan, 2011; Pettijohn 2011; Stark 2006) (Figure 1). While we aim to sell to as many
businesses as we can, one of our target markets are educational services such as colleges, and schools
in the Western region of the United States. We will be marketing to this geographic area because
according to Mintel, people in the Western region of the United States are a more responsive to
recycled paper products than the other regions of the United States (Mintel, 2012). It also states that
they are looking for cost savings as well so if there are environmentally friendly paper products that
are cost effective it would be well received in this region. Also, by focusing on businesses that are
closer to our manufacturing plant, we will help to decrease our shipping costs associated with
delivering napkin orders. The other reason we will target schools is because they have similar
behavioral factors in that nearly all schools have cafeterias so we know their demand for napkins and
eco-friendly products will be much higher than general businesses that use napkins for a break
room. As the need for environmentally friendly products increases and more businesses make the
transition to this, we expect to receive higher rates of sales from this region. According to an original
survey completed by PC Dukes Manager ... their business is willing to pay up to 8 times more for
eco-friendly products, such as GreenClean napkins, and stated they were very interested in the
purchase of eco-friendly products. Our other target market will be catering companies in the west
coast region. Similar to educational services, we know that companies like catering companies are a
good target market because they will have a much higher demand and usage rate for napkins in their
business. From her article, Catering to Environment, Elizabeth McGowan quotes one Maryland
catering company owner, Josh Carin. When speaking on the need for going green within his
business Carin said, "Of course, we're a caterer, so we're selling food, But this green initiative is
really important to those who hire us. For us, that's the icing on the cake." (McGowan, 2010). This
displays how catering companies have a need for not only napkins but for specifically ‘green’
napkins. Owners see eco-friendly products as an influential factor when potential customers are
deciding where to have their events and feel the need to buy them to please their market.
Break Down of Market
(Figure 1)
Our positioning strategy is going to be within the business production and industrial market.
GreenClean has decided to position this way as a result of original or survey, which in return guided
the creation of the perceptual map (Figure 2). We hope to create an impression in our target
market’s mind that our products are higher quality than other generic paper product competitors
because of the additional sanitary and aesthetic benefits contained within our napkins; however they
are also less expensive than other eco-friendly napkins. Furthermore, our napkins are at the same
absorbency standards as other generic paper napkins. These napkins are up to standard of
absorbency compared to other standard paper napkins, yet have multiple additional sanitary and
aesthetic benefits. Therefore, buying our napkins is a way that businesses can receive the same, if not
better quality standards and help the environment, while not spending an outrageous amount of
money.
Perceptual Map
(Figure 2)
Product and Brand Strategies
GreenClean is a groundbreaking company that will help to restore our planet’s ecosystem by
using tealeaves instead of the basic wood pulp. We will begin by creating napkin products from
tealeaves and hope to ultimately brand our company into one of the largest sanitary paper product
companies that includes various lines of paper products. The core aspects of our product include
the composition of used tealeaves in the production, and its cleaning and antibacterial properties.
The actual aspects include the green color, the potential to include logos, and the napkins’ other
tangible qualities such as the softness and low-ply of the napkin (ITO EN, 2012). It has a strong
texture despite still being relatively thin and inexpensive. The Core product is comprised of the main
benefits which include its low impact on the environment, antioxidants that fight off bacteria, and
the ability to have them customized. The actual product is the napkin itself, which is smooth and
green. The augmented product would be the guarantee that if the product is damaged or poor
quality in any way, we will pay for the product to be shipped back to us and send them a new batch
of napkins as well as a 10% discount on their next purchase.
The paper napkin market is in the mature stage of the product life cycle (Household Paper
Products, 2010). The paper napkin industry has an extensive history and has also become an
oligopoly. Our company is in the introduction stage, so this means that initial sales will grow rapidly
before settling out to match up and compete with the established market. The oligopoly that is
established has created high barriers to entry and competition has a strong presence.
The life cycle changes that our brand will have to adapt to will not come from the market,
but rather from within our own company. The market is and has been in the mature stage for
multiple years, and is not expected to change, thus there will always be a demand for napkins. Our
product will pass through both the introduction and growth stages, so GreenClean must adapt to
the rapid sales growth, possibly by increasing production, and then must eventually establish routine
practices and forecasts as demand settles into the mature stage.
Catering companies in city areas with big businesses contract out to office buildings,
providing food for whichever businesses rent the facility. GreenClean will seek to contract with
them, gaining access to every business that they feed. One company in particular, in the San Diego
area, named Bekker Catering, caters to many businesses.
Businesses that use thousands of napkins a day, such as college campuses, would place bulk
orders to place in dining facilities across their campus. These campuses would order by the ton, and
perhaps on a biweekly to monthly renewal basis. Social responsibility is not only a fad, but also an
ingrained trend for the future of the business world. The opportunity to promote our napkins’ ecofriendliness, as well as to even print their own custom logo on the napkins is a trend that companies
seem highly interested in.
Price Strategy
The pricing objective that GreenClean seeks to use is keeping prices low due to our input
comprised of waste, which is lower priced than our competitors using wood pulp or other recycled
products. The idea is to manufacture 5 tons of napkins per day, so this is not one special order
product.
Our prices are determined first and foremost on the basis of the cost of our resources. Since
the cost of getting the used tealeaves is shipping and a small premium fee to the supplier, this means
we can keep costs low. We are going to use a competitor-based pricing strategy, which involved
researching the prices of our various competitors, generally more so our competitors that produce
environmentally friendly napkins, and pricing our napkins at around the same price as those
competitors. Since our inputs are generally at a lower cost than those of our competitors, we will be
priced slightly lower than some of our eco-friendly competition. With strong promotions done by
our sales representatives, we hope to entice some of our competitors’ customers to try out our brand
instead of their usual purchase. Later, as our brand becomes more established and people realize the
benefits of GreenClean, we will build an even larger customer base. We will also be able to advance
our process over the years and cut out excess errors in production that will ultimately lower our
costs and thus our prices.
This close grouping of businesses seeking our product also provides us with the ability of
simplistic pricing. An individual napkin is sold for $.01, meaning we fit the low-cost desires of the
businesses (subject to change). This also helps in competition-based pricing, seeing as most
companies with a large market share charge between $.016 and $.025 per napkin. Seventh
Generation, our most similar competitor, even charges 1.8 cents per napkin (Household Paper
Products, 2010; Recycled Napkins, 2011). This, when factored into the high-volume market is a vast
profit margin difference, which will help us undercut the competition and gain market share, in what
could be considered our niche competition.
Price can be slightly elastic in this mature market. Another thing is that our products
competitive advantage, its all-natural, recycled tealeaf composition, allows for GreenClean to flex the
price point somewhat. This is due to the tangible benefits of saving trees and paper.
Timing, however, does not have a factor with our products pricing. To elaborate, when
video games go on sale, they tend to begin at a price of $60 and decrease in price as time passes. Our
napkins, however, do not follow that trend. They will stay at an established price, that may fluctuate
based on the market, but not on timing issues which coordinates with our make-to-stock inventory
strategy. As a result, we would implement a fixed quantity production schedule along with sales
forecasting. We have listed both of our break-even analysis and fixed and variable costs respectively
in Figure 3.
Break-even Analysis
(Figure 3)
Distribution Strategy
GreenClean will use a direct sales force comprised of five sales representatives and will also
take advantage of web-based sales. Our sales representatives will work as a team and travel around
the West Coast of the United States to seek out our segmented customers in order to instill
contracts, ideally long term ones. If companies outside of the West Coast desire to purchase our
product, they can use our web-based sales and customer service phone line for questions. Our
regional sales representatives will report back to our advertising and promotion manager once a
contract has been created in order to prevent the same customer from being targeted and contacted
repeatedly. After the contracts are set and the web-based orders are submitted, GreenClean will
directly ship our product to our customer through NationWide Transport services. Our product is
neither perishable nor heavyweight, thus our carrying cost are relatively low cost and low risk. If the
transportation experiences an accident that ruins our product and fails to deliver our napkins, we
will give the customer a rebate of up to 15% of their order cost.
Promotional Strategy
Since we are doing business to business selling we will not be focusing on general advertising and
will use a more direct selling strategy to advertise our business. We have 5 sales representatives and
they will focus primarily on meeting with big corporations to purchase our product. During our
startup we will be sending out direct mail to our two target markets in the West coast. While we
offer our product to any company that is interested, our sales representatives will focus on personal
selling in only the western region. This will help to cut down on transportation costs for traveling
expenses as well as shipping costs. We also expect higher purchase rate because of the higher
response rate for inexpensive eco-friendly paper products in the West coast region. Each
representative gets a 1% sales commission on their sales and any future sales their customer makes
with our company. This will not only motivate them to get businesses to make initial purchases but
also help build a lasting relationship with our company. The 1% commission during our startup will
not be significant, however as they continue to build our customer base the expected commission
once we build up is around $45,000-$50,000 per year.
Monthly Revenue Chart
(Figure 4)
Because our production machines are customized,
we will not start producing napkins until July. We
plan to sell 100% of our napkins during the
remaining year. The amount of napkins sold will
rise each month due to increased awareness of our
brand and new contracts being formed with
businesses that hope to satisfy their need and/or
want with GreenClean’s napkins.
Quantitative Review of Marketing Decisions
Our first month of sales will not be until July because of the 6 months required for the
equipment to get shipped and set up. Then our sales team will go around 3 months prior to
production to meet with companies interested in a meeting to learn more about our product. In July
we are expecting sales of $80,800. According to (insert name here) Dukes orders approximately
90,000 napkins a week or 360,000 napkins a month, which would be $3,600 and is a midsized
business. The first month we are expecting about 22 mid-sized customers to purchase from us since
this is our first month. In August we expect some of our customers to be repeat buyers along with
expanding our customer base and expect $90,900. For September we expect a bigger increase in
sales now that we have been operating for two months and are able better show our product to
potential customers and also have them talk to existing customers to get their inputs as well. We
expect that by now we will be able to secure two bigger customers who will purchase a million
napkins per month for $10,000 each. The rest of the sales will continue from our middle orders
resulting in estimated sales of $120,350. As the holiday seasons approach, we expect sales for
napkins to increase more heavily as the use for them increase during this time. Sales in October of
$165,780 come from one additional big purchaser of a million napkins or more, and 35 medium
businesses. Then for the remaining revenue we expect smaller local businesses in our area to begin
to purchase our napkins too. As we continue with our direct sales and grow our reputation the
expected sales for November and December are $201,450 and $250,240 respectively.
Human Resource Management
At GreenClean, our employees’ will have the passion and drive to create success for our
business. In her journal on organizational commitment to the green movement Zee, Hartman and
Fok wrote, “Specifically, as organizations become greener, we should see a move toward a more
empowered, employee-centered, and customer-centered culture. Additionally, however, a culture
which is supportive of the green movement should lead to better outcomes and, perhaps in part
through self-selection, to employees who, themselves, are more supportive of the green movement”
(Zee,40). If the employees truly care about the green products we are producing, the investors will
be compelled to care about what we have to offer as well. This provides our investors with
incentive to put their money into our business.
Alongside passion, our employees will have expertise, knowledge, ethical beliefs, and
communication skills that will allow for accomplishing our goals. Our General Manager will have the
knowledge of a Bachelor’s degree and 8-10 years top management work experience involving a
manufacturing company. They also are required to have experience in developing company health
and safety programs that are compliant with OSHA and become lean certified. Moreover, they will
have to have the ability to mentor, lead, be ethically sound, and genuinely care about the product
and the environment.
GreenClean’s Advertising and Promotion Manager will have a Bachelor's degree with a
concentration in marketing, and 3-5 years of work in the sales or promotion field. This manager will
be proficient in communication, leadership, forecasting, and research.
Our first line supervisors will have the knowledge of a Bachelor’s degree and 3-5 years work
in the operations field, preferably at a paper manufacturer. The Association for Operations
Management offers certificate programs in production and inventory management, which we will
require our first-line supervisors to obtain (OSHA, 2012). First-line supervisors must also be lean
certified in order to achieve our companies desired quality assurance. They will have the ability to
understand how the machine works, be organized, approachable, and timely.
Our manufacturing employees need to have a minimum of a high school degree. We would
prefer at least one year of previous manufacturing experience, however it is not required. Once
hired, the employees will become NAM-Endorsed Manufacturing Skills Certified, which directly
addresses the deficits in manufacturing education and training on our machines (The Manufacturing
Institute, 2012). They have to be trained through OSHA, which helps to ensure that workers are
more knowledgeable about workplace hazards and their rights (OSHA, 2012).
We will recruit our manager and supervisor positions from other companies by offering high
incentives to make the switch to our company, such as a handsome salary and health insurance
benefits.
We will also seek to hire people that have been recently laid off from companies due to
the recent recession. As for our manufacturing workers, we will be recruiting from within the
Washington state area through advertising. Listed below is the visual hierarchy of GreenClean’s
employees (Figure 5).
Organizational Chart
(Figure 5)
As listed in our employee-staffing chart, we will motivate our various employees with
commission, health benefits, vacation time and retirement plans (Figure 7). In addition, we will have
an employee of the month, whose name will be presented on our employee of the month wall.
Along with the pride, personal confidence and recognition that accompany this reward as employee
of the month, we will offer these specific employees various stock options. As stated in Small
Business Center from Fox Business, "Managers must help the employee build confidence, establish
routines, and set realistic, difficult goals. They need to remind employees of past successes, not past
failures” (How to Motivate Your Employees, FOX News, 2012). Thus, instilling the employee of
the month program will increase productivity and motivation. GreenClean will also implement peer
evaluations semi-annually, which will motivate employees to perform their best even when top
management is not present.
Due to the commitment and motivation of GreenClean’s employees, we expect our
company to grow in the future. The successful growth of GreenClean is dependent on a strong
foundation and clear organization of vital dates and completion points, which is shown in our
timeline of vital events (Figure 6). GreenClean will expand further, to toilet paper, paper towels,
paper plates, boxes, envelopes and more. We will continue with napkins for 5 years and if
profitable, we will expand during our 6th year to include these products. With the increasing trend
in sustainable products and our increasing knowledge within the paper product industry, we will
have a great advantage in this industry.
Our customer will be satisfied with the quality of napkins, which in turn will produce not
only long-term relationships and contracts, but hopefully the faith in our company to expand to our
other products. We are ensuring the quality of our products by instilling a lean manufacturing
system, and an ISO 9001 certification, as well as customer feedback forms on which we can use to
improve our product. If the customer is unsatisfied with their product, we will pay the shipping cost,
and will offer 10% off their next order, along with a free shipment to replace any faulty napkins.
To insure that GreenClean is growing at the rate that we expect, our accounting firm, Barrett
and Co., will report to our general manager on a monthly basis regarding our profit and the percent
change in our profit. If this percentage change is not met, and thus our growth objectives are not
met, we will first identify the problem and then react accordingly. Possible options of increasing the
growth of our business are increasing our sales representatives, expanding to different target
markets, enlarging our workforce and increasing our operating days because we currently operate
Monday to Thursday.
As we expand our business, we will purchase more machines to make these diverse products.
We hope to also expand to multiple locations across the East and West coast. As a result, we will
need to expand our line and staff positions within our operations, finance and advertising and
promotions departments. We plan on providing increased training as we develop the business and
expand our product line.
The strategy that will drive our business from Porter’s Five Forces Model is the threat of
substitute products. GreenClean is the first company making 100% tealeaf napkins in the US and
because it is new, it is easy for companies to start-up and begins competing with GreenClean. A
speculative start-up cost that could act as a barrier to entry is the cost of machinery, however the
cost of materials is relatively low, whether companies were to use tea leaves or wood fiber. The
customer has a large proportion of control in this market, because if they are not satisfied with our
products quality, price, or image, they can easily move to a competitor such as Proctor & Gamble.
Substitute prices differ very little from ours, but on a per napkin basis we are less expensive ($0.01
per napkin).
The switching cost from our company to another is practically non-existent unless a
company is under a contract. If the company is not, it is simply a change in purchasing decision at
the next reorder point. An important aspect in this threat category is that there is little to no quality
depreciation because our product is very durable in inventory. Until used, napkins retain the same
level of quality, pending some kind of product destruction.
We will protect our investment in equipment through maintenance that will occur on a
quarterly basis. Paul Martin, head of Sandusky Company, determined that this would be an
appropriate time length for each maintenance check-up and offered their services. We will pay them
$100,000 a year ($25,000 per check-up) for their maintenance team to visit our facility and preserve
our machinery so that it may last up to its useful life. By spending this amount each year, we feel we
will ultimately be saving money in the long-run because maintaining our equipment will ensure
higher quality napkins and preserve our equipment so that it will last longer. We will have insurance
on our rented facility and this amount can be seen as part of our monthly rent expense. We will also
have insurance on our processing, production and converting machinery of $150,000 a year.
Timeline of Vital Events
(Figure 6)
Week Two:
January 6 –
12th, 2013
Founders hire General Manager through previous advertising; founders purchase
equipment from Sandusky Co., founders rent factory and sign the lease and obtains
licenses (5-11 days from inception)
Month Three:
March 1-31st
2013
General manager hires the first-line supervisors, the Advertising & Promotion
Manager, the sales representatives and the market researchers. General manager
will set up company structure, refine website and add ordering service option. Our
advertising and promotion manager will begin other marketing tactics along with
market researchers.
(85-116 days from inception)
Week 26: June
8-12th 2013
First -line supervisor will receive tealeaves, machine is fully assembled by Sandusky
employees, first-line supervisor will train workers to use machines, run a pilot test
week and send out 100 count samples to companies within our target markets who
have expressed an interest.
(188-194 days from inception)
Week 27: June
13-19th 2013
All employees will work together to produce the first official batch of napkins and
deliver them to customers. The sales representatives will establish contracts with
companies (195-202 days from inception)
Employee Staffing Chart
(Figure 7)
Competitive Advantage
GreenClean will use a niche strategy and a focus on flexibility, the quality and innovation of
our process to gain competitive advantage over our competitors. Because we are the first company
in America to create napkins from 100% recycled tealeaves, we are unmatched in the current
domestic market place. We will advertise this on our napkins through the customization option of
having “Made in America” printed on the napkins, with many other customization options. This
domestic strategy follows the current trend of supporting the American economy by creating new
jobs being formed on American soil and that may be a primary selling point for our business
(Business Week, 2011). This relates to our niche strategy and flexibility by targeting customers who
want American made products and different customization options.
Our unique operation process gives us an enormous competitive advantage because without
these machines we would not be able to pulp the tealeaves for further production. As stated below,
Sandusky will create these machines for us, which will enable our company to utilize our distinctive
process. This process is further explained in below in the process flow chart (Figure 7). Other
standardized napkins and even eco-friendly napkin companies do not have this unique process, and
thus all use wood pulp. According to The Daily Green 2007, “Compared to using virgin wood,
paper made with 100% recycled content uses 44% less energy, produces 38% less greenhouse gas
emissions, 41% less particulate emissions, 50% less wastewater, 49% less solid waste and -- of course
-- 100% less wood.” Not only is sustainability of vital importance in our current day in age, it will
only become more of a vigorous issue in years to come. If, and when, more paper companies turn to
alternate sources for pulp besides wood in the US, this will give our company an extreme
competitive advantage because of our expertise in the area. Our process will also be ISO 9001
certified, which will add quality and value to our distinctive process against other napkin companies
who are not ISO certified. This relates to our niche strategy by targeting customers who feel that
they have a social responsibility towards the environment, and who also want to be ensured quality.
Key Operational Elements
Our tealeaf napkins will begin with the recycled tealeaves from Arizona Tea Company that
have been packed into bricks and then transferred by specific Nationwide Transport Trucking. They
will be relatively moist in order to retain their beneficial properties (Ito En, 2012). As stated below,
we will use acceptance sampling upon the tealeaves arrival to our facilities to ensure the quality of
the leaves. Once the tealeaves are accepted, they will be placed into our customized machine, which
is approximately 40 feet wide by 150 feet long by 30 feet high, and has a four-step process.
According to Paul Martin at Sandusky, the first process begins with pulping and then retting, which
corresponds to our competitive advantage (Sandusky, 2012). Our pulping process is extremely
innovative and unique in the United States, and it is this that allows us to differentiate our machines
from standard paper making machines. This unique process takes the wet tealeaves, which we
receive from Arizona Tea, and turns them into a paper pulp in a large vat. This will reduce 500L of
oils and reduce 1.3 tons of CO2 normally used during the drying process. (Ito En 2012). In fact, the
tealeaf is that it absorbs CO2 like other plants do, thus by producing 1,000 recycled tealeaf napkins;
we can reduce about 165g of CO2 for the environment. (Ito En, 2012) It is this pulping step that
isolates our company and gives us an advantage. After this step, the leaves are manufactured in a
similar manner to standard napkin making machines, as discussed shown in our process flowchart
below.
Our general manager, first line supervisors, and manufacturer workers all have unique
skills, which are discussed earlier in the management section, which will ensure a high quality
process and product leading to our competitive advantage. The placement of workers is vital to our
operations running with fewer mistakes. Workers will be placed at each one at acceptance stage of
the leaves, at the output stage before storage, and after customization. This will help with efficiency
in production, and more output will give us a competitive advantage. Part of our strategy involves
two rotating shifts – day and night. This will ensure that in the time span of Monday – Thursday,
when the machines never shut off, that the quality is maintained to our companies’ standards. It also
allows for rapid response time in the event of an error in production. Having different people on
different shifts allows for people to be fresh and motivated to provide quality work; tired employees
make more mistakes and create more waste.
As described in our quality approach, the workers on the machines will hand pick 10
napkins at the end of our hour to for visual and physical inconsistencies. This will ensure that a
sample from each batch has been inspected, which will ensure quality consistent with the ISO 9001
standards.
Operational Processes
Outsourcing
We are outsourcing our accounting and payroll services as well as our legal services through
Barrett Company and Schwabe, Williamson & Wyatt Law Office, respectively. These businesses
were chosen because they are located in Vancouver, Washington and thus will be simple to meet
with if needed. We are also using NationWide Transport to ship our products to our customers
because they are able to ship from Arizona Tea Company, located in New York, to our
manufacturing plant.
Proactive Quality Approach
Our company is make-to-stock, therefore our first step in our process would be to look at a
sales forecast of demand for the week. We will then place an order with Arizona Tea Company to
receive the desired quantity of tealeaves on a weekly basis. The operations manager at Arizona will
ensure that the recycled leaves are placed in the Nation Wide Transport trucks, which will be
insulated and cooled to no higher than 77 degrees Fahrenheit to ensure the leaves are able to be
used in production (Ito En, 2012). Our first line supervisor will examine the condition of the leaves
upon arrival through acceptance sampling in order to ensure the quality of leaves before they are
transformed into pulp (Q1) . This will reduce the probability of a poor quality napkin, thus reducing
the costs that would be entailed if we did not perform this process. After the tealeaves are accepted
and blended into a pulp, they are processed through high-pressured mechanisms that should
preserve the green color of the leaves by using the correct 120-130 degree of Celsius in 30-60
minutes. However, if the leaves are no longer green, the pressure simply needs to be lowered and the
leaves re-pressurized and the green color will reappear (Q2, F1). This will ensure that our final
product will in fact have a green aesthetic color. After any remaining bacteria are killed off, the pulp
will be checked for any bits of tealeaves leftover by our first-line supervisors (Q3). If the pulp still
has bits of leaves, then it will be deposited into the stair-step configuration to remove the last bits
and the process will continue thereafter. After the pulp is entered into the production equipment, it
will be dried and then scraped down to the desired thickness. Manufacturing workers will check the
quality of the thickness and adjust the equipment to fit the correct thickness specification (Q4). Our
final two quality checks will be based on the visual appearance of the napkins and the physical
properties, such as if the napkins are being produced at the proper size, the smoothness and if the
customization printing is clear. At the end of the cutting process, the workers on the machine line
will look for visual inconsistencies in the napkins, while also picking up ten individual napkins to feel
for the proper consistency, which can be identified through touch. These checks will be positioned
at the point where the napkins are produced before customization on the machine line (Q5), and
also after they are customized and before being packaged (Q6, F2). Our first-line supervisors will
check the machines weekly for mold, and if any is found, it will simply be removed and sterilized
using steam and cleaning products (F3). With our tealeaf napkin production machines running 24
hours in 4 days, we can prevent the molding of tealeaf pulps and our operation is guaranteed to run
as efficiently as possible to produce 5 tons of napkins per day. If our final product does not meet
our quality standards either after the cutting process or after printing, we will have to dispose of the
faulty products (F4). If our consumer would like to have their napkin customized, they will send in
their desired logo as a PDF, then the napkins will simply be removed from inventory, and they will
be entered into the converting equipment and printed on using the Animation Creation Tool.
Although GreenClean is due to have failures at some point, this is will rarely occur due to our
various quality checks throughout the process and because of our lean and ISO 9001 certifications.
Process Flow Chart
Start
Start
Look
Look at
at sales
sales
forecast
forecast
Purchase
Purchase used
used
tea
tea leaves
leaves (UTL)
(UTL)
from
from Arizona
Arizona
Tea
Tea Company
Company
Deposit
Deposit pulp
pulp
back
back into
into stairstairstep
step
configuration
configuration to
to
remove
remove bits
bits of
of
UTL
UTL
Q3
No
Transport
Transport via
via
Nationwide
Nationwide
Transport
Transport
Tucking
Tucking
Comapny
Comapny
Does
Does the
the pulp
pulp not
not
have
have leftover
leftover bits
bits
of
tea
leaves?
of tea leaves?
Yes
No
Clean
Clean machinery
machinery
to
to ensure
ensure no
no
mold
mold or
or residue
residue
Pulp
Pulp deposited
deposited
into
into cylinder
cylinder
Are
Are the
the UTL
UTL
usable?
usable?
Unload
Unload UTL
UTL into
into
factory
factory
Store
Store in
in
warehouse
warehouse until
until
shipping
shipping isis
needed
needed
Package
Package napkins
napkins
in
in boxes
boxes by
by
certain
certain quantity
quantity
specifications
specifications
Q4
Fine
Fine blade
blade
scrapes
scrapes tissue
tissue
down
down to
to the
the
desired
desired thickness
thickness
F4
No
Does
Does customer
customer
place
place order
order for
for
customized
customized
napkins?
napkins?
Print
Print designs
designs on
on
napkins
napkins
F2
Tissue
Tissue isis reeled
reeled
and
and cut
cut into
into size
size
specifications
specifications
Yes
High
High pressure
pressure and
and
heat
heat extracts
extracts
liquid
liquid from
from the
the
bits
bits of
of UTL
UTL that
that
remain
remain
Q2
IsIs itit back
back to
to the
the
color
color green?
green?
No
Lower
Lower pressure
pressure
to
to 1.2
1.2 mpa~2
mpa~2
mpa
mpa and
and lower
lower
temperature
temperature 10
10
degrees
degrees Celsius
Celsius
Q5
Do
Do napkins
napkins meet
meet
specified
specified standards?
standards?
(color,
(color, smoothness
smoothness
etc.)
etc.)
Receive
Receive
payment
payment from
from
customer
customer for
for
order
order
Receive
Receive PDF
PDF of
of
design
design from
from
customer
customer
Enter
Enter napkins
napkins
into
into converting
converting
equipment
equipment and
and
use
use Animation
Animation
Creater
Creater Tool
Tool
No
Dispose
Dispose of
of
napkins
napkins
Keep
Keep pressure
pressure
temperature
temperature
within
within 120~130
120~130
degrees
degrees Celsius
Celsius
in
in 30~60
30~60 min,
min, 1.2
1.2
mpa~4
mpa~4 mpa
mpa
Q6
Are
Are designs
designs
correct
correct and
and
clearly
clearly visible?
visible?
Yes
Pulp
Pulp continues
continues
down
down stair-step
stair-step
configuration
configuration
F1
End
End
No
Yes
Yes
UTL
UTL and
and water
water
added
added to
to blender
blender
to
to turn
turn them
them into
into
aa pulp
pulp
Make
Make sure
sure the
the pulp
pulp
isis flowing
flowing to
to high
high
pressure
pressure (the
(the
process
process should
should only
only
contain
contain about
about 1~10
1~10
micro
micro grain
grain
diameter
diameter of
of UTL
UTL
reside)
reside)
No
Dispose
Dispose of
of
faulty
faulty napkins
napkins
Pulp
Pulp isis processed
processed
through
through aa
Yankee
Yankee Dryer
Dryer
Make
Make the
the Pulp
Pulp
into
into aa ‘purer
‘purer
pulp’
pulp’ by
by
disposing
disposing of
of
remaining
remaining bits
bits of
of
UTL
UTL
Enter
Enter UTL
UTL into
into
processing
processing
equipment
equipment
Do
Do he
he napkins
napkins
need
need to
to be
be
shipped
shipped now?
now?
Pulp
Pulp pushed
pushed
through
through two
two
pressure
pressure rolls
rolls to
to
eliminate
eliminate
moisture
moisture
Kill
Kill any
any
remaining
remaining
bacteria
bacteria from
from
pulp
pulp with
with water
water
that
that will
will reach
reach aa
temperature
temperature of
of
500
500 degrees
degrees
farenheit
farenheit
Yes
Yes
F3
Q1
Reorder
Reorder from
from
Arizona
Arizona Tea
Tea
Company
Company
Transport
Transport
napkins
napkins
Pulp
Pulp entered
entered into
into
napkin
napkin production
production
equipment
equipment
End
End
Test
Test
concentrated
concentrated
UTL
UTL pulp
pulp
Reactive Quality Assurance
We will use ISO 9001 in order to confirm our standard quality and certify this to our
customers. Our factory workers are responsible for the cleaning the production machine and
exchange ink for our logo-printing machine on the last day of production of every week. The first
line supervisor is then responsible for checking the production and converting machines for mold
since our product begins as a liquid as well as the ink supply in our logo printing machines as well.
Our general manager will create a program in which every employee is required to attend upon
employment, in order to clarify expectations of quality in our process and product. The
manufacturing workers and first line supervisors will be trained more in depth about the quality and
process. By doing this, the general manager will make sure that the employees who involved in the
process are properly educated on the manufacturing process and how to exactly check to quality
during the process. Our advertising and promotion manager will also contact each of our customers
that purchase a batch of napkins to confirm that they are receiving the proper quality napkins and
their logos are being printed correctly if they request customization, thus ensuring that they will
continue to purchase from us. Our customers will be provided with a copy of the ISO 9001
certification, confirming that the customer receives the expected quality (Lean Certification, 2012).
This should eliminate the customer receiving poor quality goods, however, if a customer receives a
poor quality batch of napkins, they can send the product back to us and we will pay for the shipping.
If the first line supervisors agree that we, GreenClean, are at fault, we will send the customer a fresh
batch of napkins free of charge and offer a 10% discount on their next purchase. We will also create
a survey that will accompany each batch of delivered napkins, thus we will receive customer
feedback on the quality of our product and direction in how to improve in the future. We will also
build an evaluation based on our Project Flowchart that will include quantitative data about our
inputs such as raw materials and labor, machinery such as specific tealeaf compressing temperate,
and finished product. This will allow us to monitor and control the threat of unwanted species
during our operating process.
Quality Strategy
Our company will implement a lean process in order to ensure the quality of our process and
product, along with ISO 9001. We will practice lean manufacturing by keeping relatively low
inventory levels by basing production off sales forecasts. This approach to quality relates to our
business because our napkins are previously made, and then customized once the order is placed,
which is why inventory management quality is vital. It is important that we limit excess inventory,
overproduction, waiting, transportation, errors in processing, poor quality, and wasted labor, which
can all be done though the lean system. This process works particularly well for our business the
workers are close to the process. By implementing the lean quality process, we are ensuring our
competitive advantage because it will decrease our costs by properly managing the seven deadly
wastes of lean, while improving quality and customer satisfaction (Integrated Functional Systems,
2011). This process will be applied though a clear company wide definition of quality, a process that
is ISO 9001 certified, having first line supervisors who are lean certified, and strategically placing
manufacturing workers at specific points along the machines doing quality checks on the product.
ISO 1400 standards will also be employed to ensure that our systems follow environmental
standards through the use of product standards and performance evaluation. This is especially
important for our company as our main goal of producing the tea leaf napkins are to promote the
awareness of keeping our environment eco-friendly and create value out of waste as part of our
competitive advantage and wholesaler appeal (ISO, 2012).
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