Reinventing CardPak

Under the leadership of President Tony Petrelli, CardPak has transformed from a commodity-based business to a dynamic supplier of printed packaging materials with sustainability advantages.

As bad as the recent economic conditions have been, surviving "stormy weather" is old hat for CardPak—literally. "Not just once, but twice, natural disasters almost destroyed the company," says Petrelli. "In 1994, flooding—almost three and a half feet on the production floor—stopped production and in 1996, record snowfall collapsed the building roof and caused a fire due to the downed power lines. The flooding caused $1.3 million in damage, but CardPak lost no customers during the shutdown. The snow and fire caused $12 million in damages and, again, no customers were lost during a two-year rebuilding process," he says. "The ability to keep the company afloat during these two terrible disasters could not have happened if it hadn't been for our owners, Rick and Lisa Thomas and the group of managers and supervisors that held the company together at that time. We are fortunate that this same group of employees would become instrumental in leading the critical transformation and recent rebuilding process."

By 2006, CardPak had annual sales of about $25 million, primarily in blister cards. However, the company that Petrelli took over was struggling to compete in a commodity business and in a market that was drying up. "The company had excellent employees, good equipment, and a relatively good customer base. What was needed was a new direction. We needed to reinvent the company," he says.

Petrelli set out to "de-commoditize" the business by focusing on Lean Manufacturing to instill a culture of continuous improvement, and using sustainability as a platform for new products. Although these were some of the most visible changes in the operation, the transformation impacted virtually every part of the company.

"The company, today, is so different from what it was three and a half years ago," says Petrelli. A clear measure of this is the impact from its new sustainability platform. "While we still continue our blister cards, folding cartons and sleeves, clamshell inserts, skinboard, and specialty displays, the EcoLogical Line of Packaging is what's pushing our growth. ClubPak, SustainPak, and ShelfPak products have gone from zero percent of CardPak's business to as high as 35 percent and rapidly growing," he states.

To keep things simple and focused, Petrelli and the senior management team developed a single-page "scorecard" of 18 key drivers that is used for monthly performance tracking. It can also be used to demonstrate the improvements that have taken place during the last few years in addition to year-over-year analysis. Comparing 2009 performance versus 2006 results, OSHA recordable incidents have been reduced by 88 percent; defect rate is down by 60 percent; waste/spoilage is down 33 percent; the dollar value of rejects is down 67 percent; and gross profit is up 43 percent. Petrelli is especially proud of the company's safety performance during his tenure. "Our safety record is probably one of the best in the business. We have just achieved 13 months without an OSHA recordable incident, surpassing 250,000 hours. Our HR director, David Braddix, and his safety committee have established a world-class program and record."

"You can see how we attacked the business from all sides—Lean Manufacturing, financial management, and product development—all during a down market for the industry," Petrelli notes. "And many of the improvements have resulted directly from our Lean Manufacturing efforts."

CardPak conducted Lean training sessions in conjunction with the University of Akron in the latter part of 2006. "Buy-in was achieved by presenting Lean as a proactive initiative and critical element necessary for us to differentiate ourselves, stay out in front of the competition, and give us an edge in becoming the low-cost manufacturer with quickest order turnaround," says Lamm.

Tisone reports that the company's cost reduction efforts stemmed from establishing key measures driven by a foundation of Lean principles. In part, these included:

• Establish a culture of safety and security for all employees.

• Reduce quality complaints at every level and measure your performance weekly and monthly.

• Reduce operational costs by eliminating unnecessary steps and processes.

• Focus on removing work in progress and inventory to improve cash flow and simplify the process.

Great timing

Given the length and depth of the recent recession, the timing of CardPak's "reinvention" couldn't have been better. The product development program focusing on sustainability caught the wave of interest from customers at just the right time. "Sustainability initiatives have provided a large segment of growth over the last 2-3 years, and this will continue to be the case as more and more companies look to become environmentally focused and friendly with their products and packaging," notes Petrelli.

As for Lean Manufacturing, this helped the company focus on cost reduction and business fundamentals. "It may sound a bit cliché, but we went back to the basics of sound operating and financial management practices," says Lamm. "Lean concepts and cost take out/cost control initiatives were introduced early on."

As for the future, CardPak will continue to expand its EcoLogical Line of Packaging. In addition, it is planning to branch out into other markets and product arenas. "Opportunities exist within various products and packaging options that we currently don't offer, or that we offer, but only as a small percentage of our product mix. We hope, with future investments, we can continue to grow and gain market share in new and exciting markets." pP

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