8-12 page paper

The Packaging Film Group (PFG) is a small, family owned and operated business specializing in consumables packaging materials, meat processing non-consumables, and custom assembly line package printing solutions. PFG operates out of a 15000 sq ft facility at 736 Fort Crook Road in Bellevue, NE (the old Hancock Fabrics building). It is owned and operated by Mr. Tom O’Brien. Mr. O’Brien was kind enough to give me a tour of the facility, as well as answer some questions regarding his operation.

Mr. O’Brien got his start in the sausage business by working at the family business, O’Brien’s Fine Sausages. Working his way up, he was the President of the company, handling not only the strategic tasks, but overseeing the day to day operations, and maintained a hand’s on approach to working at the company. An offer was made by an outside organization to purchase the company, and the O’Brien family decided to sell. While working at O’Brien’s Fine Sausages, Tom developed a patent with his father dealing with printing on packaging material. He also learned in great detail how to repair and maintain the equipment used in the production facility. He began to contract out to repair equipment on vacuum sealers and other processing equipment. While attending an industry trade show, he was approached by some of his former suppliers who thought he should sell their products. That, mixed with his patented printing system caused PFG to exist.

Service and Product Design/Quality Management

PFG provides two basic services, custom integration and service of printing systems into manufacturing line, and the distribution of all types of packaging materials. They maintain some stock in their warehouse, however they do custom manufacture printing systems for factories. They have clientele based all over the continental United States, and into Canada. Although they are a small company, they are the largest US distributor of the Leibenger brand of laser jet print products.

When asked about quality and performance within PFG, Mr. O’Brien stated the he doesn’t necessarily follow a specific quality model, however while discussing quality issues with him, I believe that his quality style matches nicely to Total Quality Management (TQM). PFG strives for customer satisfaction, and conducts regular callbacks to its clients to ascertain their needs, and maintain their level of customer satisfaction. O’Brien shies away from using customer surveys, as he feels they are a waste of time. As PFG is a small business, employee involvement is high. All members of the team are given responsibilities and opportunities. Everyone pitches in to accomplish the goal of serving the customer.

PFG maintains a minimal ordering and production processes. For packaging materials, orders are received in the office area. They are then moved to the warehouse where the orders are picked from inventory, and then moved to the packaging area, where they are packaged, and then picked up by the shipping company. For custom installations, a site visit is required, which is followed by the creation of a bill of materials. The BOM is then taken to the warehouse, where items are pulled packaged and delivered for installation. PFG then visits the site again for installation of the product, and follows up with the customer a few days after the installation to ensure everything is still working properly.

In terms of production processes, PFG utilizes a first in, first out system. This is subject to available inventory loads, however the on-hand inventory is set to ensure products are in stock to meet the forecasted demands of its customers. Their capacity planning system is to handle “as much as we can, as fast as we can.” While there are no processing contingency plans, the customer base is significant enough to minimize idle times yet maintain a steady state of work for its employees.

Location/Layout

PFG recently moved into their current facility. Their prior warehouse location was recently evacuated due to the flooding of the Missouri river during 2011. The requirements for the new location was a facility that had a loading dock for large truck access, as well as a ground level entrance accessible by forklift. A secure facility was required to ensure equipment and inventory was not easily subject to criminal intervention. Additionally, the facility needed in-place three phase power for equipment, and the area had to have easy access to main roads for inbound and outbound shipping. Their current facility met these requirements. When questioned on further expansion to the organization, O’Brien believes that this facility should be able to handle operations for several years to come. However, if expansion would again be necessary, the same requirements would be in effect, just additional floor space would be needed.

As mentioned earlier, the current facility is approximately 15000 square feet. It is organized into office space, the warehouse, and packing/shipping areas. The office space is located adjacent to the warehouse, so orders can easily be taken in the office area, and then transferred to the warehouse for processing. From the warehouse, ordered materials are transferred to the shipping area for packaging and distribution. There are no apparent issues in the layout of the organization that would require adjustment to the current setup to better facilitate the order fulfillment process.

Human Resources

Human resources functions within PFG are handled via several sources. PFG outsources its payroll, benefits, and safety functions to a local company specializing in these processes called Profit Advantage. By sourcing these functions, office personnel are able to focus on order fulfillment. Other HR functions such as staffing, and employee issues are handled by Tom, his wife Mary, or both of them together. Currently, the staffing at PFG is adequate enough to handle their workload and surge operations if necessary. If additional staffing would be needed, O’Brien would handle those issues. New employees would not be required to have any certifications; however, engineers would be required to have a solid knowledge of electronics and electricity. Warehouse operators would need to have practical experience working in a warehouse environment.

PFG has three different classifications of employees; office, engineers, and warehouse. No classification is exclusive however, and primary duties often yield to multitasking to assist in other functions of the business. Office personnel frequently do warehouse duties such as pulling orders, moving inventory, etc. Engineers not only perform customer site surveys and design, but will also assist in every other function of the company. All employees work together as much as possible to ensure that the customer is taken care of, and maintains a positive impression of PFG. Employee scheduling is handled by O’Brien. The majority of employees work regular business hours. On occasion, weekend and evening work is required, but that is handled by the O’Brien family members. Mr. O’Brien’s dedication to his employees is such that he will personally come in to handle off-hour business so his employees are not impacted.

Supply Chain Management

PFG does not have a standard supply chain, yet it does get its materials from mostly the same vendors. PFG looks for the best value and quality raw materials it can find for its customers. For its custom printing installations, it solely sources the Leibenger brand of printers, imported from the German manufacturer. It has not found a product that produces the same results at the same price point as them. For its packaging raw materials, PFG tries to source its materials from vendors it has established trusted relationships with. While many companies would try to source its products at the least cost as possible, O’Brien insists that he will not sacrifice quality to improve his bottom line. He maintains that a consistent quality product will keep his customers coming back. PFG is a small enough operation not to require.

Inventory/Production Scheduling

PFG does not use a specific type of sales forecasting. As the packaging supply market can be volatile, the sales cannot be associated with horizontal, trend, seasonal, or cyclical forecasting models. Instead, PFG uses a random forecasting technique to predict how their sales will go. This is achieved by actively communicating with their customer base to gauge how their businesses are operating and what their demand is looking like. PFG uses these conversations to judge how much inventory they should maintain. If an organization speculates that it will need “x” amount of product over the next 6 months, O’Brien will ensure that he has it in stock. PFG avoids altering their pricing scheme based on general fluctuations; rather, they keep their pricing schedule consistent. They take advantage of discounts from their suppliers on raw materials that they know will pass through their inventory system. While PFG acknowledges the current trends towards just in time inventory and lean solutions, it is not a system they can implement, since their customer’s orders are randomly placed. As an example, O’Brien highlights one of the products they carry – a cellulose based sausage casing used to make skinless hotdogs and sausages. This product is made by two companies within the US. Each company requires a 12 week lead time for orders. If he were to practice a lean environment, there would be no way that he could adequately respond to his customer’s needs. PFG tries to keep inventory no more than six months ahead of his customer’s requirements. Inventory turnover rates average between 30 days to six months, based on the product types.

In terms of system production, PFG uses a random forecasting model as well. They keep a limited supply of materials on hand for small production orders, however, if a larger order comes in, they must order to meet those demands.

PFG’s customer base has developed through a variety of methods. Initially, PFG used cold calling to gain customer support. However, networking, and word of mouth has been their greatest source of customers. PFG’s reputation of customer service is one of their biggest selling tools.

Maintenance

There is very little machinery that PFG uses on a daily basis in terms of production. They do not have automated assembly lines or order fulfillment systems. The machinery they do have is not on a scheduled maintenance plan; rather PFG utilizes a break/fix maintenance program. Maintenance and facility repair is generally conducted in-house by Mr. O’Brien. PFG recently sourced an office cleaning company to handle janitorial services. If a major repair on facilities is required, PFG would source the item to a professional entity, however, minor repairs are handled in house.

I questioned Mr. O’Brien on what the most frustrating thing he encounters for his business. His response was “finding enough time to get everything done.” I imagine that his sentiments are echoed by many small business owners. Finding a balance between workload and the financial impact of maintaining competent staffing is a major decision for small businesses.

O’Brien believes that the core value of PFG is customer service. Their greatest value is taking care of their customers in a timely manner, ensuring quick service, and in stock products.

This paper has discussed the ten critical business decisions of operational management in relation to a small business in the Bellevue, NE area called PFG. We have covered how PFG manages service and product design, quality management, process and capacity, location, layout, HR, supply chain Management, Inventory, project scheduling, and maintenance.