Bobst reboots production for global markets

The Switzerland-based converting specialist is implementing ‘disruptive evolution’ of its production methods to stay competitive in markets such as the Middle East and Africa.

Bobst's factory at Lausanne in Switzerland.
Bobst’s factory at Lausanne in Switzerland.

Visitors to the Bobst headquarters in Lausanne never risk running short of conversation points. For those from the Middle East, the view of Mont Blanc is likely to spark a comment, as might the artificial river running alongside the production buildings.

Then, there is the immaculate demonstration hall, where flagship die-cutters and folder-gluers race through sample products and customer prototypes.

Guests with an interest in history will pause at a Braille machine from 1915 that first earned Bobst its reputation for innovation. Those with an eye for the environment will be entranced by roof-top solar panels and a combined heat and power gas plant.

But for Claudia Sorrentino, Head of Supply Production Logistics (Business Unit Sheet-Fed), there is just one key message for visitors from emerging markets like the Middle East and Africa.

“We want to show customers that we are not wasting a single cent in our supply chain cost and processes but adding value to the product – which is what the customer will pay for,” she says.

In fact, while Lausanne remains the cradle for R&D, much of the demonstration hall’s cutting-edge kit reflects the expertise of the firm’s expanding plants in China and India.

“While our headcount has stayed at about 5,000, fewer staff are based in Switzerland,” says Sorrentino.

“At Lausanne, we have been reducing headcount with the same workload by 20% over a period of 18 months.”

Inventory costs are also plunging – down 40 million Swiss francs this year alone.

Like several of print’s biggest names, Bobst looked outside the sector to tackle the sector’s complex new challenges. Sorrentino brings expertise developed in streamlining production of lifts and automobiles.

“Studies suggest ‘disruptive evolution’ is best when it comes from someone outside the industry who is ignorant of established practices,” she says.

A global production overhaul

Over the last two years, Sorrentino has steadily transformed all the firm’s 11 sites, including key locations in Brazil, China, India and Switzerland.

With an eye on China’s engineering prowess, Bobst now produces much of its die-cutters for Africa and the Middle East in Shanghai. Meanwhile, MEA demand for folder-gluers is largely met from a competence centre in Pune in India.

But all Bobst’s facilities work to the same exacting standards – and each is undergoing radical changes to head off rising Asian competition through higher efficiency.

At Lausanne’s production floor, this is instantly clear as the overhaul hinges on “visual management”: making processes visible so any obstacles to smooth production are spotlighted.

“We replaced a static system by dividing the processes to be performed for each machine into eight daily stages,” explains Sorrentino.

“The press now flows across the production space, moving forward each day as the processes are completed, so that if there is any holdup, this is immediately obvious.”

At a gathering point for each production team, lines of computer screens trace the progress of machines through a checklist of tasks. Brief comments highlight any hiccups, while a national flag at the corner of the displays records the kit’s eventual destination.

“The same guys who test a machine in the factory do the commissioning when it is installed at the customer’s facility, which is why each unit is tagged with a national flag,” she adds.

With each machine containing as many as 50,000 parts, Bobst is also busy standardising elements and enhancing modularity. So far, the new approach has already halved part numbers for screws and washers. In the Indian plant, final assembly lead times have also been halved.

“We still believe we have too much material of the shopfloor,” says Sorrentino.

“I expect to have a steady state in about three to five years.” In the meantime, she is eyeing further “lean production” gains from developing processes that integrate suppliers more deeply into the production process.

The supply chain is also poised for a further transformation through a hard look at the current distribution centres.

“We are running an analysis on the best distribution nodes with a focus on customer service,” said Sorrentino.

“We will look at our global strategy and part of this will be to revaluate our replenishment process from internal and external suppliers to these distribution centres.”

Maintaining an edge

But Bobst’s focus on efficiency, continuing this year with a double-digit target in cost savings on materials, is twinned with a commitment to quality and innovation.

“Technology leadership is one of the company’s core values and it is also our role to ensure the company has money to invest in this,” says Sorrentino.

“The process knowledge we have in the four walls helps us to establish the talent pipeline for business unit services. We not only install the machine but offer knowledge to help customers improve their processes.”

In line with this value proposition of “high productivity, high reliability and high technology”, Bobst will continue to make “strategic components” in Lausanne while shifting other manufacturing closer to growth markets.

For Sandro Gubinelli, Head of Technical Marketing & Competence Center, a large portfolio underpins the company’s success.

“Very often our competitors are in a single niche – it could be folder-gluers, it could be die-cutters, it could be laminating machines – and it could be just one or two different models, while we have 12 or 15,” he added.

But he also hails a shift from pure manufacturing into services as key to continued growth.

“We have four different services that we offer – ranging from the core service to different types of solutions such as retrofitting to give a higher return on investment,” he said.

“In order to remain No.1, we have to raise the brand, to offer new solutions, to listen to what the market expects and come with new solutions.”

Recent demonstrations of this innovation include Accucheck inline quality control in folder-gluers and the Hawkeye register in flexible material to protect against pinholes.

“Our latest development is to enter into digital packaging with an agreement with Kodak,” he added.

Bobst in the MEA Within the MEA, Bobst has progressed from an initial focus on African markets such as Nigeria and Algeria to win clients in Saudi Arabia before entering other Gulf markets such as the UAE.

But the company is also taking new approaches in these markets, says Samir Khoudja, Managing Director for the Middle East and Africa.

“Service is a big issue,” he says. “You can justify investment in our machines, which are not the cheapest, if the machine is running correctly. We have to think about how we service the machine and how we train the people.”

Indeed, he sees a growing role for Bobst in ensuring its customers gain the most from the firm’s technology.

“We have an excellent technology, but you have to know how to serve the customers, how to help them improve productivity,” he said.

“In some cases, we can even give ideas how to get new jobs, new markets. Our customers are not travelling like we are travelling and they do not know what kind of new opportunities there might be… So this is our job to provide the technology and help the customers improve their business.”

In addition, the company is diversifying staff to ensure its installations are trouble-free.

“We are starting a technical platform in Saudi Arabia,” he said.

“We started this year to have a local engineer in the field and we also do this in Dubai, maybe Pakistan. If there is a market, we have to be very close to the customers and listen to the customers.”

Recent successes within the region include new installations of die-cutters and folder-gluers in Jeddah.

“The potential is there, in the Middle East and Africa, thanks to new multinationals in the area,” says Khoudja.

“We have our traditional customers, who make up 50-60% of the sales, but we are also finding a new piece of the cake.”

Bobst in India: ramping up capacity in folder-gluers

Working to the standards of its Swiss parent, Bobst’s operation in Pune now meets a large slice of global demand for folder-gluers and is even developing an R&D role, the management team tells Packaging MEA.

Bobst's plant in Pune, India, where much of the firm's folder-gluers are now produced.
Bobst’s plant in Pune, India, where much of the firm’s folder-gluers are now produced.

PMEA: How big is Bobst’s plant at Pune?

Upendra Deglurkar, president and local entity head, Bobst India: In 1994 we had only a sales and service setup here. We set up this plant in 2002 and began operations in 2003 and have a huge capacity to expand.

We are 77,000sqm (23 acres), of which around 2 acres (10,000sqm) is occupied by the manufacturing facility. We employ 68 personnel on the shop floor but Bobst India has around 220 plus employees.

We have close to 900 machine installations across the country, covering both flexible and board packaging, so many employees are service engineers who operate from home and travel extensively.

At Pune, we have a back office for sales and service, finance, HR and general administration.

PMEA: What products do you develop and produce?

Venugopal Menon, vice president, Indian Sub-continent, sheetfed: We manufacture folder-gluers for the global markets, loaders for our corrugated board for flexo, and die-cutters for the corrugated industry.

Beginning this year, we also started the R&D facility for folder-gluers. We have a team of 22 R&D engineers including two expats from Switzerland, which means a lot of developmental work will be outsourced to India. This August we launched our first folder-gluer, called Lila, for litho laminated micro flute boxes.

For folder-gluers, 50-60% of the parts are done locally, 50% of which are fabricated in-house the rest being outsourced. Strategic electronic and electrical components are still imported.

We also have a competence centre now in India, as we do in Switzerland, Brazil and China, with a demo centre for die-cutters and folder-gluers where customers come for demos and trials.

We have a training programme for operators and 1 August 2013 was the passing out ceremony for the first batch. We train diploma holders or customers’ sponsored candidates. We feel there is a lack of operators here.

PMEA: How does the Indian plant compare with Lausanne in quality?

UD: We have been given a specific range of machines for exclusive global production, discontinuing production elsewhere.

Brazil does assembling and we send lot of parts there. This proves that we are seen as a good manufacturing unit within Bobst.

More than 60% of the manufacturing here is exported, which shows our quality is up to the mark.

Subhasis Roy, business director, SEA & South Asia, sheetfed: Our standards didn’t happen overnight. There were baby steps, trial projects. We started with manufacturing unwinders and rewinders.

Then the loaders got outsourced from here.

Next we tried the solventless, laminated flexible packaging machines.

Our quality kept up to the Swiss standards. This instilled a lot of confidence in the management and they decided to move their important product line, the folder-gluer machine, to a production facility in Pune.

I can mention standards we follow but in the end it has to be proven in the marketplace. The demo machines in Switzerland are from India. Machines sold and working in Germany, France and Switzerland are all manufactured in India, which is also mentioned in the nametag.

We not only manufacture cost-effective machines but ones that meet the standards.

Wherever we are still not confident on our quality or feel there could be chance of compromise, those parts are still imported. We also supply modules to China or Brazil for assembling and some parts to Switzerland for manufacturing of other product ranges.

We have a fully fledged R&D centre here for products such as the Ambition, Expert and Vision range of foldergluers, made here for the global markets.

We started with 19 folder-gluer machines in 2010 and we manufactured 97 of them in 2012. We expect it to be around 110 in 2013.

Our compounded annual local sales growth rate is about 20%.

PMEA: How do you compete with low-cost Asian machines?

SR: People invest with a lookout on return on investment and we can prove Bobst is a much better proposition than a Chinese product. The cost of producing X number of quantity on a Bobst equipment is cheaper than other alternatives.

When it comes to capital goods, a customer looks at only three things: the end cost of production to be minimum, return on capital invested to be maximum, and the machine should be reliable.

In terms of reliability, they have no doubt about Bobst, thanks to our manufacturing standards. In terms of productivity, if a Chinese machine produces 25-40% less, it doesn’t matter because their price is half that of Bobst.

But, seeing all parameters, Chinese machines end up costing more. We have even given machines on pay-per-usage schemes, machines on rent as trials to prove that we are cheaper than Chinese kit.

Four of five customers have gone through the entire learning curve of using a Chinese machine, and then choosing a Bobst machine because they found out it’s the most cost-effective solution.

PMEA: How is production organised?

Mukul Ghanekar, head, production logistics, sheetfed: We have two in-house assemblies, with 2000sqm dedicated to folder-gluers. We build the machines only to order. For the folder-gluers, the assembly is done in three modules.

But we also have sub-assemblies, which are divided further into sub-assemblies to reduce the assembly lead time or the commercial lead time, which is the time from getting the order till the machine is dispatched.

Having this modular assembly system helped us reduce the assembly lead time from nine weeks to six weeks. The way we manufacture is different from the conventional approach elsewhere and has resulted in tremendous efficiency across the whole assembly line.

Lead time plays a huge role in issues such as interest costs and currency fluctuation. This helps during exhibitions when you have a lot of deals and you suddenly have a rush of order. This method requires a lot of planning and anticipation.

You need to plan six months in advance to have the parts ready.

PMEA: How do you minimise costs?

MG: In assembly we are focusing on lean methodology. Switching over to a modular concept was also a part of that. ‘Lean’ means eliminate the waste.

Secondly, we are switching over to ‘pull’ system. Till now we were just pushing the material to the assembly from the warehouse, according to the order. Now we are going to change it from ‘push’ to ‘pull’.

We have a two-bin system for manufactured items. When a specific quantity is consumed, we post a card to the Kanban post that will indicate that we should now manufacture these items.

If the parts are not consumed, we will not manufacture them, which prevents overproduction and excess inventory.

We have implemented this for production and will now implement it for the purchase point. The supplier itself manages this two-bin inventory system.

PMEA: What manufacturing processes take place at Pune?

MG: We have a fully fledged sheet metal facility in-house, with laser-cutting machines, bending machines, welding tables and a paint shop where we do powder coating and liquid painting.

All the parts used on different machines are painted in house. For the sheet metal shop, nearly 95% of the parts are manufactured in house, although parts longer than 3 metres are outsourced.

In May 2013 we expanded our machine shop along with the sheet metal shop where some of the critical parts of the folder-gluer machines will be now made in house. This makes us more cost competitive than other suppliers and helps us export items and subassemblies to other sites.

We are sourcing a lot of stainless steel sheet metal parts to Brazil and China.

 

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