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Cutlit Company

CASE%STUDY% %

CUTLIT&COMPANY& OFFSET&LITHOGRAPHY& % SERGIO%TERZI%

% %

1. &THE&COMPANY& % Cutlit% Company% has% become% a% point% of% reference% for% the% medium% sized% companies% competing% in% the%Italian%printing%industry.%It%is%mainly%renowned%for%its%managerial%daring%decisions%made%in%the% past,%the%fearless%orientation%of%the%company’s%owners%towards%investment%and%the%initiative%of%its% technicians.% Since%its%establishment%in%the%’30s,%the%company%has%operated%in%the%paper%and%cardboard%industry% and% over% the% last% years% its% businesses% are% mainly% focus% in% two% areas:% paper& and& cardboard& for& packaging%and%papers&and&cardboard&for&mail.% Packing% solutions% designed% and% produced% by% the% company% are% folding% cases,% wrappers% for% multipacking%(for%instance%for%bottles%and%cans),%vegetables%trays%and%boxes.%All%items%are%made%by% stretched%card%whose%paper%weight%varies%from%250%to%500%gr/sqm.% Customers% who% ask% for% primary% and% secondary% packing% solutions% are% mainly% big% companies% producing%food%(Barilla,%Star,…),%home%hygiene%products%(Deoflor,%Cererie,…)%or%electronics%product% and%similar%items%(Osram,…).% The%production%for%the%mail%use%is%related%to%flyers,%leaflets,%coupons,%brochures%printed%on%paper% whose% weight% is% from% 90% to% 200% gr/sqm.% This% kind% of% items% are% requested% by% big% direct% mailing% companies%(De%Agostini,..)%or%by%publishing%houses%(Mondadori,%Rusconi,…).%% 1.1. THE%PRODUCTION%SYSTEM% 1.1.1. Classification-of-the-system-

Production% is% on% order:% sometimes% batches% are% single,% whilst% in% other% cases% the% demand% is% for% repetitive% batches% (items% similar% or% identical% to% the% ones% produced% in% the% past% are% requested.)% Every%job%is%managed%singularly%without%creating%different%production%lots.% Because%of%the%irreversibility%of%operations%this%system%can%be%classified%as%a%process%production.% 1.1.2. Production-process-

For% both% the% production% lines,% production% is% organized% around% 3% main% steps:% press% run% (printing% phase),%cutting/punch%cutting%and%preparation.% % %

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Cutlit Company

v Press&run& In% Cutlit% company,% printing% of% leaflets% and% packing% solutions%uses%the% offset%lithography% technology%and% it%is% carried%out%with%pre-cut%paper%on%sheetfed%presses.%% Sheets% of% paper% and% paperboard% are% moved% to% the% printing% machines% in% piles% on% pallets.% Single% sheets% are% then% processed% by% a% series% of% rollers% that% distribute% the% ink% to% the% plates% (the% document% to% be% printed% is% converted% to% aluminum% plates.% When% the% plates% are% exposed% to% light,% a% chemical% reaction% occurs% that% allows% an% ink-receptive% coating% to% be% activated.% This% results% in% the%transfer%of%the%image%from%the%negative%to%the%plate.)%

ABOUT OFFSET LITHOGRAPHY Offset%lithography%works%on%a%very%simple% principle:% ink% and% water% do% not% mix.% Images% (words% and% art)% are% put% on% plates% which% are% dampened% first% by% water,% then% ink.%The%ink%adheres%to%the%image%area,%the% water% to% the% non-image% area.% Then% the% image% is% transferred% to% a% rubber% blanket,% and% from% the% rubber% blanket% to% paper.% That%is%why%the%process%is%called%"offset"%the% image% does% not% go% directly% to% the% paper%from%the%plates.%

The% image% area% of% the% plate% picks% up% ink% from% the% ink% rollers.% The% water% rollers% keep% the% ink% off% of% the% non-image% areas% of% the% plate.% Each% plate% then% transfers%its%image% to%a% rubber%blanket%that%in%turn%transfers%the% image%to% the%paper.% Each%of% the% primary%colors%-%black,%cyan%(blue),%magenta%(red),%and%yellow%-%has%a%separate%plate.% A%registration% is% needed%in% order%to% align% the%printing% plates% as%they% apply%their% respective% color%portion% of% the% image% that% is% being% printed.% If% the% plates% do% not% line% up% perfectly,% the% image% will% appear% out% of% focus%and%the%color%will%be%wrong.% The%image%on%the%support%(paper%or%paperboard)%is%thus%obtained%by%the%overlapping%of%different% colors%printed%in%the%rollers%through%a%subtractive%synthesis%of%colors.%% A%sheet’s%side%at%a%time%is%printed%and%the%number%of%colors%is%fixed:%in%case%the%second%side%has%to% be%printed% too,%sheets,% properly%turned,%need% to%pass%again% thorough%the%series% of%rollers% and,%in% order% to% use% an%higher% number% of% inks% than% the% available% ones,%sheets% already% inked% need% to% be% reprinted.% On% the% support% sheet% more% than% one% unit% of% the% same% leaflet% or% packing% could% be% printed% depending%on%the%size%of%the%workable%sheets%and%the%product%size.% Sheetfed% presses% differ% from% each% other% depending% on% the% sheet% sizes% they% can% work% and% the% maximum%number%of%colors%that%can%be%printed%in%a%single%passage.% Ink rollers

Water rollers

Printing plate roller Rubber roller

Paper

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Cutlit Company

% v Cutting/punch&cutting& Different%pieces%printed%on%the%same%support%sheet%need%to%be%trimmed%to%the%final%delivered%size.% Usually,%advertising% leaflets%and% similar%items%are% printed%on% paper%and%are% rectangular.%They% are% divided% by% linear& cutters:% a% stainless% steel,% floating% blade% cuts% bunches% of% sheets% that% are% positioned%by%the%operator%following%the%linear%borders%of%the%printed%pieces.% Packing%items,%on%the%contrary,%are%printed%on%paperboard%and%feature%a%complex%shape.%They%are% separated%by% punch&cutters%that,%trimming%one%sheet%at%a%time,%are%able%to%remove%directly%wastes% and% scraps.% The% cutting% is% done% by% a% press% provided% with% a% socket% punch% and% a% countermould% shaped%according%to%the%layout%of%the%printed%sheet.%They%are%made%of%thin%stainless%steel%threads% and%impress%the%support%thus%forming%the%folding%lines.% v Preparation& After% the%cutting% phase,%pieces% can%be% either%shipped% to%customers% (for%example,% simple%leaflets,% flat% boxes% that% are% assembled% by% customers)% or% undergo% another% operation% in% specific% workstations.%Different%preparation%lines%are%available%to%finish%the%packing%items.%In%particular,%the% following%machines%are%available:% • folder&gluers:%they%close%tubular%paperboard%pieces%and%glue%it%in%order%to%make%it%ready%for% the%use;% • showcard&mounting:%they%are%used%to%prepare%trays%for%vegetables% • window&patching&machines:%they%join%a%PVC%sheet%with%a%paperboard%box%to%create%a%seethrough%window%to%allow%the%user%to%see%inside%the%packing%(for%example,%box%for%pasta).% • laminators:% they%are%used%for% coupon%and% small%leaflets.% They%are% a%line% of%machines% that% fold%and%stick%the%piece%in%an%envelope%shape%and%add%the%label%in%a%single%passage.% 1.1.3. ASME-(American-Society-of-Mechanical-Engineers)-diagramThe%detailed%technological%process%is%shown%in%the%ASME%diagram%that%follows.%Open%arrows%refers% to%possible%exit%points.%In%the%graphic%industry%it%is%common%to%accept%orders%also%for%intermediate% products%in%order%to%achieve%a%high%level%of%utilization%of%the%printing%equipments%that%are%the%most% expensive%machines%within%the%production%process.% Being% the%production% comparable%to% a%continuous% process,%there% are%no% rework% points%along% the% process.%The%only%possible%multiple%passage%in%a%production%step%is%due%to%multicolor%printing:%it%is% not%correct%to%consider%it%as%a%rework,%because%it%is%a%double%operation%carried%out%in%subsequent% times.% % %

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Cutlit Company

% In% the% following% scheme% the% transformation% of% products% within% the% production% system% is% shown;% also% storage% points,% intermediate% buffers% and% transport% units% (pallets% with% sheets% piles% or% single% pieces)%are%indicated.%% %

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Cutlit Company

1.2. THE%MARKET%% % Over%the%last%years,%the%graphic%industry%in%Europe,%and%in%particular%in%Italy,%has%underwent%radical% changes%due%to%the%technological%advances%and%the%changing%customers’%requests.%% The% technological& evolution% providing% more% and% more% powerful& machines% and% reduced& setup% times%has%led,%in%less%than%10%years,%to%a%big%production%and%managerial%gap:%average%productivity% values%have% more%than% tripled,%whilst%the% setup%have%become% four%time%more% quick,%in% particular% for%the%printing%machines%(in%the’80s,%for%equipment% with%5%or%6%printing%castles%it%took%1%hour%to% carry% out% the% setup% for% a% single% color;% nowadays% in% 1% hour% time% it% is% possible% to% prepare% 3% or% 4% castles%of%colors).% The% production& quality& has& hugely& improved% thanks% to% automatisms% and% real% time% electronic% controls;%the% operators% safety% and% the% equipment% availability%are% guaranteed.% At% the% same% time,% the%number&of&operators&needed&for&each&machine&has&decreased%for%all%machine%types:%from%5%to% 2%operators%in%the%printing%departments;%from%4%to%2%in%the%punch%cutting%area.% Thanks%to%the%technological%advance,%it%has%been%possible%to%meet%the%changing%customers’%needs% who% tend% to% ask% smaller% quantities% more% frequently.% For% instance,% in% the% packaging% world,% big% companies% ask%for% several% reprints% a% year% of% the% same% packing% solution% with% a% limited% notice% for% each%order%and%are%demanding%in%terms%of%waste%rate%and%quality%level.%Publishing%and%advertising% houses,%on%the%other%hand,%ask%for%prints%of%modified%flyers%(for%instance,%in%different%languages%or% changing%some%graphical%elements)%during%the%year%by%reducing%the%average%circulation%(circulation% can%be%defined%as%the%number%of%processed%sheets%by%the%operation%of%interest)%to%both%lower%the% number%of%unused%copies%and%comply%with%the%modern%publishing%that%is%more%and%more%focused% on%specific%clusters.% The% time% when% big% printed% circulation% were% processed% and% kept% in% stock% is% over% due% to% the% dynamics% of% the% global% environment:% the% time% between% the% negotiation% with% the% technical% and% sales% office% and% the% actual% production% has% dropped,% whilst% the% respect% of% delivery% time% is% imperative.% In%addition,%it% has%to%be%considered%the%peculiar% situation%of%the%Italian%graphic%industry,%a%highly% fragmented%world%where%a%large%number%of%small%sized%printers,%often%organized%in%a%consortium,% steal%the%smaller%and%smaller%circulations%to%the%medium%sized%companies%due%to%the%lower%price% they%can%propose%since%the%low%fixed%costs.%Medium%sized%and%big%companies%are%thus%fighting%to% get%small%orders%with%their%huge%managerial%organization%that%hinders%the%flexibility%level.%%% The%competition% is%even% more%fierce% when%direct% competitors%renew% their%equipments% providing% the%market%with%more%capacity%that%better%fit%with%customers’%needs.%% Areas% of% possible& improvements& and& expansion% are% difficult% to% be% discovered% and% are% usually% limited% to% niche% sectors% or% specialized% products% like% trays% for% vegetables% that% are% produced% exclusively%for%the%Italian%market%by%Cutlit.% Anyway,%for%the%company%these%niche%products%are%not% enough%to%restore% the%force%of% the%production% system%and% the%only%possibility%to%strengthen& the& competitive&position&is%to%improve%the%customer%loyalty%and%the%responsiveness%of%the%system.% !

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Cutlit Company

1.3. THE%PROJECT% % Over%the%last%years,%the%company’s%management%has%become%aware%of%the%ongoing%changes%and% has% paved% the% way% for% a% huge& internal& reorganization% by% modifying% the% financial% statement;% looking%for%reliable%financial%backers%and%launching%different%projects.%% In%order%to%identify%possible%improvements%to%remain%competitive%in%the%new%markets,%every%area% of%the%company%has%been%analyzed,%from%the%management%control%system%to%the%identification%of% the% most% suitable% technological% changes% passing% through% a% waste% reduction% analysis% and% the% production%management%and%control%system.% Recently,%particular%attention%has%been%addressed%towards%the%analysis%of%the%production%system.% It% emerged% that% an% overall& change& is& needed% due% to% the% high% scrap% rate% and% the% inefficiencies% characterizing%the%current%production%flows.%% Furthermore,%the%plant%is%by%now%too%close%to%the%built-up%area%and% too&wide%for%the%volumes%that% the%company%is%and%will%be%asked%to%produce%in%the%new%competitive%environment.%% For%these%reasons,%the%management%decided%to%move%the%production%in%another%location%and%last% January% the% construction% of% a% new% plant% started% in% the% industrial% area% of% the% city% (the% land% was% bought%as%an%investment%by%Cutlit%years%ago).%This%new%building%is%expected%to%be%ready%for%the%end% of%the%year%and%is%expected%to%allow%the%company%to%reduce%managerial%costs%and%to%update%the% technological%installed%base.% The%plant% covers% a% 10000& sqm% surface% (against%the%14000% sqm% of% the% current% situation),% it% has%a% single% bay% (50& x& 200& x& 6& m& height)% and% no% fix% partition% walls% (to% make% easier% the% control% that% is% difficult%in%the%current%situation%where%there%are%several%small%sheds).%A%700%sqm%building%linked%to% the%main%shed%houses%the%offices.%% A%project%has%been%launched%at%the%beginning%of%the%year%aimed%at%designing%the%new%production% system.% An% internal% team% (including% the% sales% manager,% the% technical% manager,% the% production% manager% and% the% logistic% manager)% is% in% charge% of% the% coordination% of% the% project% and% has% to% provide%the%necessary%data%to%the%appointed%consulting%company.% The%design%of%the%new%production%system%should%include:% § the%configuration%of%the%departments%(type%and%number%of%machines);% § the%layout%of%the%equipment%and%storage%areas;% § a%rough%analysis%of%the%economic%feasibility%% %

1.4. DATA% 1.4.1. Forecasted-demand-and-production-levels-The%sales%manager,%one%of%the%main%supporters%of%the%project,%has%asked%his%staff%to%provide%the% consultants%with%the%requested%information.% Last%December%the%sales%department%had%already%carried%out%a%demand%analysis%interviewing%the% main%customers%with%the%aim%of%developing%a%price%policy%for%this%year.%The%collected%information% !

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Cutlit Company

had% been% then% updated% considering% the% forecasts% provided% by% the% bulletin% of% the% National% Association%of%Graphics.% Starting%from%these%information,%the%sales%managers%said%the%consultant%that%it%should%be%possible% for% the% company% to% strengthen% the% relationships% with% the% loyal% customers% during% the% next% two% years.% With% the% contribution% of% the% production% manager% too,% the% consultant% arrived% at% the% following%average%values%for%the%production%volumes:% § 600& orders& evenly& distributed& over& the& year% with% a% light% pick% period% in% September% (that% compensates%for%the%summer%closing%in%August);% § A% total% of& 432.000.000& pieces,& printed% on% average% of% 18% per% sheet,% corresponding% to% 24.000.000%sheets%of%the%size%of%140x110%cm.% The% forecasted% production% should% be% split% into% the% production& mix% shown% in% the% following% table% which%depicts%for%each%product-line%the%expected%quantity%and%orders.% % Product&code& Description& %&quantity %orders& P001% Printing% 20%% 15%% P002% Printing,%linear%cutting% 4%% 3%% P004%

Printing,%linear%cutting,%folding%

5%%

4%%

P003%

Printing,%Punch%cutting%

28%%

42%%

P005%

Printing,%punch%cutting,%moulding%

5%%

5%%

P006%

Printing,%punch%cutting,%folder%gluering%

14%%

23%%

P007%

Printing,%punch%cutting,%window%patching,% folder%gluering%

24%%

8%%

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% Products% P001,& P002,&P004&correspond&to& the&paper& items&(paper& and&cardboard& for&mail)& and,& like% in% the% previous% years,& they& account% for& 29%& of& the& total& quantity,& whilst% the% majority% of% production%is%for%paper%and%cardboard%for%packaging%% Code& P001% that% passes% through% a% single% operation% (printing)% is% the% main% case% of% double% passage% and%it%can%be%totally% considered%as%a%case%of%double%passage% (in%case%a%double%passage%is%needed,% assume%to%need%also%a%double%setup).% 1.4.2. Machines-and-internal-logisticsThe% production% manager% has% been% contacting% the% main% equipment% suppliers% for% a% few% years% in% order%to%be%updated%about%the%state%of%the%art%of%the%technology.% In%December%he%was%asked%to%provide%the%list%of%the%new%machines%and%equipment%the%he%believed% to% be% suitable% for% the% new% plant.% He% had% identified% the& machine& types& needed& in& each& department,%but%he%had%not%the%time%to%evaluate%the%number%of%resources.%% The%consultant%has%been%provided%with%the%following%data:% % % % !

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Cutlit Company

Department& Printing%

Machine&type& Konig%Bauer%140%(5%colors)%

Punch%cutting% Bobst%140%x%110% Linear%cutting%%Polar%Molar%

Setup&time&

Productivity&

Consumption&

20%min.%per%color%

8.000%sheet/h%

kw& 50%

2%h% 30%min.%

4.000%sheet/h% 180.000%flyer/h%

50% 20%

Window% patching% Folding%

Kohimann%

4%h%

54.000%folder/h%

30%

Multimatic%

4%h%

5.000%folder/h%

30%

Folder% gluering% Moulding%

Bobst%

4%h%

54.000%folder/h%

40%

Owo%

4%h%

54.000%snowcard/h%

20%

% The%production%manager,%thanks%to%his%long%experience,%was%also%able%to%set%for%each%machine%type% the%minimum%total%space%required:%each%block%includes%the%material%handling%space%according%to% the% safety% rules;% the% space% for% one% incoming% and% one% outgoing% pallet% and% the% space% for% the% supporting%systems%(for%instance,%electric%devices%on%the%machine,%tanks,%….).% The%following%table%summarizes%all%these%information.% % Machine&type& Dimensions& Konig%Bauer%140%%

24%x%8%m.%

Bobst%140%x%110%

14%x%6%m.%

Polar%Molar% Kohimann%

5%x%5%m.% 8%x%8%m.%

Multimatic%

14%x%2%m.%

Bobst% Owo%%

20%x%4%m.% 5%x%3%m.%

% The%company%works%2%shifts/day%of% 7,5&hours&each&for&5&days&a&week%and%the%Saturday&morning%(4% hours)%for%46&weeks&a&year.% The%pallet%moved%within%the%production%plant%have%an%average%load%of%2.000&sheets&of&paperboard% or%%4.000&paper&sheets,%being%the%difference%due%to%the%different%thickness%of%the%2%used%supports.%% The%batch%size% (load%of%the% pallet)%do% not%change%until% the%end%of%the%production% process,%whilst% the%items%are%sent%to%the%finished%inventory%warehouse%in%smaller%batches%(the%the%capacity%of%the% stock%keeping%unit%can%vary).%% The%company%holds%about%15-20%days%of%both%raw%material%and%finished%items.%This%value%is%aligned% with%the%average%suppliers’%delivery%time%and%the%customers’%requests.% Working%with%sheets% piled% on%pallets,% in%the%raw%material% warehouse%the%best%storing%system% for% paper%products%is%the%stack%system.%The%space%need%is%reduced%by%putting%one%pallet%on%top%of%each% other.% The% picking% is% made% easier% by% grouping% different% typologies% of% papers% and% creating% passageways%for%handling.% !

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Cutlit Company

The% basic% module% is% 2% sqm% for% each% pallet% including% loading% and% unloading% space,% whilst% the% average%height%is%1.5%m.%The%overall%space%needed%for%passageways%and%transit%areas%is%30%%of%the% actual%stocking%area.% The%finished&goods&inventory%needs% a%difference%storage%system%since%it%is%never%possible%to%put% one%palle...