The Discipline of Producing Profitability LEADERSHIP / TRAINING! TRAINING! TRAINING!

1
The Discipline of Producing ProfitabilityLEADERSH
IP / TRAINING!TRAINING!TRAINING!

• The challenges of tomorrows workplace
• Industry review
• Problem areas affecting profitability in our
  industry
• How do you keep score?
• Waste comparison
• Measuring machine productivity
• Summary

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The Discipline of Producing ProfitabilityLEADERSH
IP / TRAINING!TRAINING!TRAINING!

• Opening Comments
• Leadership

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The Discipline of Producing Profitability

• The challenges of tomorrows workplace
• By 2015 48 of our workforce will be women
• By 2025 40 of our workers will be Hispanic,
  African-American or Asian

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The Discipline of Producing Profitability

• Our workers are not ready for tomorrows jobs
• Today
• 75 of current workforce (25-34) has not
  completed college.
• 21 of adult population has only basic literacy
  skills.
• In the next decade
• 70 of our workforce will not be college
  graduates
• 75 of our workers will need some form of
  retraining.

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For Year 2001 Million Tons
Containerboard Produced
For Domestic Consumption 29.3
Exports 3.1
32.4
Containerboard Consumed
Integrated Corrugators 23.1 (78.8)
Independent Corrugators 5.7 (19.5)
Other Uses 0.5 (1.7)
29.3
U.S. Corrugated Shipments
Integrated 290.4 (76.5)
Independent 89.2 (23.5)
379.6 (100.0)
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IndustryCorrugated Shipments
Year Shipments (Billions Of Square Feet) Change From Previous Year Value of Shipments (000) Change From Previous Year Value Per MSF
1991 320.1 15,367,412 48.01
1993 353.7 10.5 16,770,443 9.1 47.41
1995 372.5 5.3 23,418,799 39.6 62.87
1997 390.1 4.7 19,280,075 -17.7 49.42
1999 405.0 3.8 21,853,416 13.3 53.96
2001 379.5 -6.3 23,179,253 6.1 61.08
Est. 2002 379.0 -0.1 22,107,070 -4.6 58.33
Est. 2003 388.8 2.6 23,747,904 7.4 61.08
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Linerboard Prices Eastern 42 LB.1980-2001(Doll
ars Per Ton)
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The Discipline of Producing Profitability

• Problem areas affecting profitability
• Low price vendors (linerboard or sheets or hard
  assets)
• Board escalator / de-escalator agreements
• E-bidding
• Organizer
• Specifications
• Service requirements
• Finished goods inventory
• Receivables

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The Discipline of Producing Profitability

• How do you keep score?
• Accounting/costing system / Fabricating
  statistics
• Amtech
• Harry Rohde Management System
• Self-designed

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The Discipline of Producing Profitability

• Income statement format
• Sales
• Cost of sales material/waste, manufacturing
  expense, labor
• Fixed expense
• Bottom line expected

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Income Statement
Company A B C
Sales Dollars 10 million 30 million 5 million
Gross Sales 100.0 100.0 100.0
Net Sales 95.6 96.6 94.5
Cost of Sales 61.1 70.3 77.7
Material 47.3 53.1 56.9
Labor 8.4 11.4 14.1
Variable Mfg. Exp. 5.4 5.8 7.0
Fixed Expense
Customer Service 2.8 1.9 2.8
Mfg. Supervision 3.3 1.9 3.2
Gross Profit 28.4 22.5 10.8
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Income Statement
Company A B C
Fixed Expense
Administration 4.4 3.8 5.4
Selling 9.4 8.2 11.0
Net Operating Profit 14.6 10.5 (6.3)
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Waste Comparison Analysis
Company A B C
Sheet Purchases 3,339,428 13,113,000 2,350,000
Waste
6 200 M 787 M 141 M
4 134 M 525 M 94 M
2 67 M 262 M 47 M

Each 1 equals 33 M 131 M 23.5 M
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Flexo Folder Gluer
Avg MSF/ Order Avg Pcs/ Order Pcs/ Hour MSF/ Hour Of Jobs Min/ Set Up /MSF
2000 13.0 1,590 4,362 28.8 3,184 5.4 1.53
2001 13.6 1,709 4,541 29.0 3,421 5.4 1.58
1st QTR 12.0 1,615 4,708 28.4 862 4.8 1.87
2nd QTR 9.2 1,107 4,043 24.3 1,164 6.6 2.22
July 8.5 1,110 4,587 26.1 368 4.8 2.01
Average 10.1 1,290 4,391 26.1 2,394 5.4 2.04
Goals 5,000 5.0
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