Strategies for Laser Printer Cartridge Manufacturing Recharger Magazine Expo 2004 Session S70Wednesday 1:00-2:30pm Mark Hibbard Washington County Community.

Strategies for Laser Printer Cartridge

Manufacturing

Recharger Magazine Expo 2004

Session S70 Wednesday 1:00-2:30pm

Mark Hibbard Washington County Community College

Remanufacturers as Entrepreneurs

Risk

Intel Prop

Planning

Expertise

Formal Capital

Time of Entrepreneurial Period

Five Characteristics

Five Characteristics of Entrepreneurial Growth Company (EGC)

Entrepreneurial Growth (Time)

Process that leads up to looking for modification of production floor, including process control, process modification, or redesign

Risk Management

Initially• Not much money, and even

then …• Not much experience in the

industry …• Persuading others to take

on risk: employees, suppliers, customers

Initial Success • Significant value created

that might be lost • To grow, the tasks are more

difficult (management, strategy, sound investment)

• Fear of failure, you may lose company, or lose control, or lose market share

Risk

Intel Prop

Planning

Expertise

Formal Capital

Time of Entrepreneurial Period

Five Characteristics

Intellectual Property

Earliest Stages:• Remanufacturers create

solutions .. Improvisation, creativity is maximized

Growth• Education .. Process

knowledge• Incremental improvement

and variations• Distinctions leading to

control• Protecting you distinctions• Start to think >> “get

bigger, get niche, or get out”

Risk

Intel Prop

Planning

Expertise

Formal Capital

Time of Entrepreneurial Period

Five Characteristics

Planning

Beginning Stages: ……………….. seek resources

– Research & Development = 14%– Business planning = 33%– Financial help = 50%

• Management by crisis vs. detailed strategy

• However successful remanufacturers show Adaptiveness, Open-mindedness, Quick Decisions, Relationship-based sales

Growing• Demands strategic planning,

tactical decisions• Demands coordinated

management• Demands investment which

demands accountability

Risk

Intel Prop

Planning

Expertise

Formal Capital

Time of Entrepreneurial Period

Five Characteristics

Expertise

Initially• Most have no industry

experience (Printing, EP, Toner, Testing)

• High opportunity is recognized (sales, $$)

• Intelligence, desire, adaptability, sales & marketing skills lead to linked recoveries

Growth Requires• Upgrading resources• Skilled, experienced,

specialized training• Strategy

Risk

Intel Prop

Planning

Expertise

Formal Capital

Time of Entrepreneurial Period

Five Characteristics

Formal Capital

Early• No angels• 66% or less than find capital >

$50,000; average is about $25k; not millions of dollars

Success requires • Transition through growth stages • Truly comprehensive changes in the

entrepreneur • From start to finish, new attitudes

and new skills and roles

Risk

Intel Prop

Planning

Expertise

Formal Capital

Time of Entrepreneurial Period

Five Characteristics

Your Manufacturing Operation

Small Shop ( < 500 Carts/mo)

– People– Sales– Time

Medium Shop ( 500-2000 Carts/mo)

– Materials– People– Sales– Time– Performance

• Sales• Manufacturing

Operations ( 2000-5000 Carts/mo)

– Materials– People– Sales– Time– Performance– Growth

Large Operations ( 5000-20,000 carts/mo)

– Materials– People– Sales– Time– Performance– Growth– Quality– Management

Current Wisdom

“It is not the strongest of the species that survives,

nor the most intelligent …

… but the one most responsive to change.”

- Charles Darwin

Your Manufacturing Operation

• Design for production• Materials management• Manufacturing

processes• Manufacturing systems

& automation• Physical controls for

manufacturing systems

• Information control in mfg enterprises

• Quality management

•Remanufacturing consumables is in the class of “entrepreneurial growth companies (EGC)”

•Not just a fancy name for a small business

•Most EGCs evolve over time, through rough stages of development

Starting Points

• Failure is Acceptable – No such thing as winners and losers– More like: winners and learners

Product design and development Process design and control Manufacturing system and facility design and analysis Production planning and control Operation analysis and management System engineering and integration Technology, human resource and organization management Technical sales and technical marketing

The “present” is not relevant

A Basic Model of Change

CHANGE

PAST FUTURE

Fact Inference

Managing = Manufacturing

• A manager’s product is >>> action.• A manager’s raw material is >>

information.• Analysis and Synthesis

are a part of the manager’s assembly line.

Operations• Production• Equipment

Maintenance • Rework• Facilities• Inventory• H/R

Inbound Logistics• Receiving / Inspection• Production Scheduling • Inventory Control• Warehouse management (Position control)Outbound Logistics• Order Acceptance• Picking • Inventory Adjust• Cycle Count / Inventory Adjust• Ship Confirm

Service and Support• Technical Training• Production Process Development• Testing• Documentation• Recruit / Hire

• Share Knowledge.

• Identify Best Practices.

• Build Institutional Processes.

• Attract Best People.

• Create Training Courses.

• Communicate Consistent and Coherent Messages to Customers and Employees.

Cultivate

Lean Objectives

Anything that adds COST to the product without adding VALUE

• muda - waste• mura - inconsistency

• muri - unreasonableness

Waste

• Correction >> Rework “First Pass Yield”

• Waiting >> Any non-work time waiting for tools, supplies, parts, etc..

• Motion >> Any wasted motion to pick up parts or stack parts, wasted walking

• Processing >> Doing more work than is necessary

• Overproduction >> Producing more than is needed before it is needed

• Conveyance >> Wasted effort to transport materials, parts, or finished goods into or out of storage, or between processes.

• Inventory >> Maintaining excess inventory of raw mat’ls,parts in process, or finished goods.

LOOK at YOUR Operation

• Forecasting (sales, manufacturing, materials)• Delays (shipping, suppliers, scheduling)• Transportation (floor layout, build area, evac & kitting)• Inventory (positions, control, materials, systems)• Inspection (process validation, zero defects)• Defects or correction (validate corrective action, inter-dept.

feedback)• Inefficiencies and other non-value added movement (within

processes)

Traditionally RM’s look at floor layout, capital equip, test equip, new components, and other singular objective to improve operations …

Not that easy.

Enterprise Tactics Customer

Needs

New and CurrentProducts/Service

Performance Priorities

and Requirements

Quality, Dependability, Service

Speed, Flexibility, and Price

Operations & Supplier Capabilities

Technology

PeopleSystems R&D Training Materials QualityDistributio

n

IT & Support Platforms

Financial ManagementHuman Resource

ManagementInformation Management

Enterprise Activities & Capabilities

Enterprise Planning Strategy

Timing is now

• Remanufacturing is decades smarter

New Business / New Product Life Cycles

• Development 1986• Growth 1995• Expansion 1999• Maturity

Mono Laser • Saturation Mono Laser

– Development – Color 2002• Growth --

Mono – ripe for lean technique as color goes into the “growth”

Decline

US Market Monochrome Laser Printer (CAP Ventures 2000)

TOTAL ANNUAL CARTRIDGE SALES

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

year

SALE

S IN

MIL

LIO

NS

OF

UN

ITS

rmfg

ttl. Mkt.

rmfg 11.1 12.6 13.0 14.2 15.0 16.0 16.9

ttl. Mkt. 35.1 44.0 47.9 52.8 56.4 58.4 60.8

1996 1997 1998 1999 2000 2001 2002

Total Cartridge Market

Remanufactured Cartridge Market

~27%

OEM Portion

RM Portion

Opportunity Placement • Development stage, there are no cartridge sales at all. However

manufacturing must support a development area and resources to insure a timely product launch.

• Growth stage, sales are slow and marketing costs are high; often manufacturing resources need to be supplemented by frequent training sessions and manufacturing team building.

• Expansion stage, sales should grow more rapidly, and manufacturing teams are executing their well thought out plans to accommodate growth.

• Maturity stage, sales will plateau as most customers who want the product have quality sources for the product. Manufacturing teams have predicted this plateau and the production schedules will adjust for sales volume and inventory reduction.

• Saturation stage, every customer who wants the cartridge product has several competitive sources for acquisition, and there are few opportunities for increasing sales.

• Decline stage, cartridge sales fall and the product eventually becomes obsolete. Manufacturing teams have transitioned resources to new products and reduced raw materials and finished goods to reduce financial risk.

Color opportunity to m

odel new process

ideas

HPSeries Color Market

0.0

0.2

0.4

0.6

0.8

1.0

1.2

Series1 0.0 0.0 0.1 0.1 0.1 0.1 0.1

Series2 0.0 0.8 1.1 1.0 0.9 0.7 0.6

1 2 3 4 5 6 7

US Market Color HP 4500 --- 4550 ---- 4600

Total HP4500 Cartridge

Remanufactured Color Cartridges

Growth

2 years

Maturity

2 years.

Introduction

2 years

4500/1998

4550/2000

4600/2002

9500/3500/2003

Production Mode 1000/mo. -- Key Statistics

EX PX 4000 WX VX 8100 2100 AX SX NX

TRUE COST dpc >> $33.82 $33.86 $63.33 $55.59 $40.44 $85.50 $45.33 $41.41 $19.82 $33.25

updated 2/00 Yr/Ave 23.80% 5.90% 13.00% 8.70% 6.00% 0.90% 1.00% 10.00% 9.20% 5.9%

Customer Model Cart/ Mo. EX PX 4000 WX VX 8100 2100 AX SX NX

Laser Bob 1000 238 59 130 87 60 9 10 100 92 59

$8,048 $1,998 $8,233 $4,837 $2,426 $770 $453 $4,141 $1,823 $1,962

QPA(AVE)

OPC 0.95 $11.67 $12.45 $20.10 $18.06 $12.23 $22.90 $17.10 $12.10 $7.34 $8.20

PCR 0.31 $7.01 $3.25 $3.20 $7.25 $3.20 $3.90 $2.80 $3.60 $3.20

Cblade 0.80 $3.19 $2.39 $3.10 $5.70 $2.29 $4.65 $3.25 $4.85 $1.85 $3.19

Sweeper 0.78 $0.26 $0.25 $0.32 $0.22 $0.25 $0.21 $0.25 $0.24 $0.36 $0.23

Dblade 0.42 $4.18 $2.65 $3.10 $4.67 $2.32 $5.32 $2.56 $2.65 $3.66

Toner 1.00 $7.29 $4.80 $12.50 $16.20 $5.69 $18.67 $5.30 $4.50 $4.54 $10.45

Seal 1.00 $0.79 $0.65 $0.90 $0.83 $0.80 $0.87 $0.87 $0.73 $0.34 $0.42

Mbush 0.38 $0.25 $0.49 $0.52 $0.25 $0.22 $0.22

Box 1.00 $0.55 $0.48 $0.60 $0.75 $0.52 $0.77 $0.63 $0.48 $0.67 $0.72

Bag 1.00 $0.15 $0.15 $0.15 $0.28 $0.15 $0.30 $0.15 $0.17 $0.15 $0.21

Rocker 1.00 $0.53 $0.52 $0.36 $0.89 $0.47 $0.90 $0.32 $0.55 $0.46 $0.64

Empty 1.00 $2.00 $6.20 $17.25 $4.50 $12.40 $27.00 $12.00 $11.90 $1.00 $1.55

Labor 1.00 $3.28 $3.43 $4.50 $4.20 $3.54 $4.40 $3.67 $3.76 $2.98 $3.77

Ship 1.00 $0.30 $0.25 $0.45 $0.45 $0.29 $0.45 $0.30 $0.25 $0.25 $0.29

QPA'd SUBTotal 43.7 $32.76 $32.54 $60.83 $54.38 $39.47 $82.64 $44.22 $40.23 $19.21 $31.18

Inventory(6turns) $0.943 $1.252 $2.356 $1.127 $0.915 $2.638 $0.674 $1.146 $0.602 $2.046

Rework/cart $0.12 $0.08 $0.15 $0.08 $0.05 $0.22 $0.43 $0.04 $0.01 $0.02

Rework % 10.45% 12.00% 7.50% 11.00% 6.70% 5.00% 17.00% 39.00% 3.20% 1.00% 2.10%

No. RW 29 4 14 6 3 2 4 3 1 1

CostEng/mo. $28.10 $4.55 $19.31 $7.34 $3.19 $2.02 $4.29 $3.61 $0.82 $1.40

Process Developments for Planned Improvement at Critical Process Points• SX Corona Wires• NX Developer sleeve / PCR’s• EX Toner/OPC• 4000 Developer sleeve / blade• Pocket carts OPC’s / Seals / PCR’s• WX Developer Sleeve Sys /

Toner• 4000 Toner / Developer Sleeves• 4500 Toner / Seals / Rollers

Data - Truth

• Statistics 101– List ALL areas where data can be gathered

• Accuracy• Usable data

– Taking the data is the first step• Leaders need time to work with the data to make

process changes• Acquisition and presentation

First and Foremost

• Objectives: • Consistency, Reliability,

Accuracy.• Raw Materials ( Purchases)

• Empties• Incoming Inspection: Quality

Control Methods and Examples

• Allies: Interactive Vendors, Customer feedback,

• Adversaries: Variation, Unexpected Vendor modifications, Inappropriate process deviation

• Teamwork

Process Design & Details

• Cell …………….. To ……………...– From past experience develop cell picture– Solve material flow– Breakdown training issues– Document bill of materials (BoM)– remember the “LEAN long range plan” (LLRP)

• ……… Managed Production– Correct process– Training– Scale UP

Prototype Process Improvements/Changes (IE1011)

• Draw pictures … cut out the paper pieces– Map the process from the Cell stage to Managed production– Look at the facilities details

• Air .. Heat … Power .. Lights … Traffic … Storage

– Pick your people resources Carefully … Cultivate shared ideas

• Set up a dummy cell …. Dry run– Check Raw materials flow– Who’s waiting

– Check your plan

Internal Corrective Action (plan for it) TEAM

• Process defects or procedural changes– Review with all production teams … you may have

some ability to kill a problem before it starts

• Retain Visual samples of manufacturing issues for training

• Prevent drone mistakes … Awareness of the process is crucial

• End of shift positive reinforcement – Announce data– Show / Chart progress– Training awards … not material … verbal praise in front

of peers …. MB walking around (MBWA)

Team Leaders are “people”

• Groom people with future goals in mind• TRAINING is communicating your lean plan• Clear concise and ATTAINABLE Goals• POSITIVE Atmosphere Always

Critical Area's Management

• Empties (The EVAC people !!!!)– Source … Cleaning … Inspect …. Waste … Cost

• Cleaning & Handling (High incidence of waste)– Storage … Damage Control … Assembly Staging– Solvents … Inspect .. Waste … Time … Cost

• Assembly– Readiness … Tools … Inspection … Time .. Cost

DO you NEED Capital Equipment ?

• What is Primary Equipment requirements– Time savings– Quality enhancement– Training required– Human component– New tech .. New process

• Secondary requirements– Maintenance– Obsolescence– Expansion

Capital Equipment & Productivity

• Facility Layout– Material flow – Cleanliness

• Documented Procedures – Simplifies training– creates standard

• Training– Cross training, and daily rotation– Team Leaders … Building TEAM

• Sound Forecast– Minimize... waste, storage,hassles– Supply Chain Management

Cell to Managed ProductionTransition

• Planned transition …– Pick the scope of scale-up early – Set training goals early … DO NOT wait

• Excellent training and complete task description fosters worker happiness

• Success is people when you scale up• EXPECT Surprises … (good and bad)

Generic CellEmpties

Empties.. Disassembly & Cleaning & Seal

Test & await packaging

Remove reject material

AssembleInspect & Stage

Planned new material, remove waste

Diagram and Document

uS Visio – has great layout tools and documentation features

Keep it Simple Stupid (KISS)

• Visual aids … 75% of learning is facilitated by visual cognition. PICTURES not WORDS

(Digital Cameras are CHEAP)

• Constant positive reinforcement is Constant Improvement.

• Cross train similar job functions .. Remember social circles and peer pressure are your allies– Disassembly ---- Assembly– Evacuation ---- Component Prep– Pre Test ---- Final Test

Language Barriers More than 60% of RM’s have non English Speaking Staff (ESL)

Assess each work function - REGULARLY

• Map mini processes– document– training guidelines– WORK Timing IE 101

• Mini production for some work function– Skill assessment– Time

• Realistic training goals– Critical for process control– No job is more important

Production Layouts

• Layouts Continued

– Assumes products total ~250 carts a day (3-6 products) monthly target is 10000

– Setup is for one line “teams” and a “specialty cell”– Product switchovers are scheduled on daily intervals

2000 square feet

Materials cart

Tear-down / Evacuation

Final Test Printing Area

Component Cleaning and Prep area

Sto

rag

e

Are

a

Empties Prep Area / Recycling / Sorting

Inco

min

g D

ock A

rea

OPC PCR Corona

Box Tape & Sort

Production REWORK

Hopper Split & Prep

Labeling / Bagging / Packaging Area

Disassem.

Waste Bin Clean.

Waste Bin Assm..

Hopper Clean

Sealing

Filling

Hopper Reassemble

FINAL

Assemb.

Specialty Reman Cell

Sh

ip D

ock A

rea

Production Layouts

Safety Teamwork

• FROM the TOP Down– ALL quality management tools start from

acceptance at the top … Safety requirements and concerns are PRIMARY

• High visibility area for procedures and Training

• Monthly assessments

Critical Path -- Toner - OPC’s -- etc.

• Toner Placement/Storage: Bulk purchased .. $$$ mark/label

all position, track mass flow, bottling?, Filling, Cleanouts? Protect from Temp/Humidity Fluctuations

• OPC’s – Lightsafe, Clean Dry• Magnets/Sleeves - Clink Clink• PCR’s – Clean, Dry, separate !!! • Cleaning Blades – Critical, safe the edge, NO stacking• Charge Blades – Major critical element post EX and

Pocket cartridges • Print Testing: Time, Data, Review, Statistics, Charts,

REVIEW what are you screening?

• Acceptance Criteria: First Pass Yield:

Canon Cartridge Reman Eff

300

320

340

360

380

400

420

440

460

1 2/ 21 / 98 2/ 9/ 99 3/ 31 / 99 5/ 20/ 99 7/ 9/ 99 8/ 28/ 99 1 0/ 1 7/ 99 1 2/ 6/ 99 1 / 25/ 00 3/ 1 5/ 00 5/ 4/ 00

Date

Car

ts Per Day

Production SPC

Cartridges Produced (per man per hour)

2.50

2.70

2.90

3.10

3.30

3.50

3.70

12/21/98 2/9/99 3/31/99 5/20/99 7/9/99 8/28/99 10/17/99 12/6/99 1/25/00 3/15/00 5/4/00

Date

Car

t/M

an/h

r

Per/LW

Production SPC

Production SPC

2/23/00 132 60 32 20 19 6 7 58 22 15 371 2.912/24/00 127 70 46 35 15 8 5 58 14 27 406 3.18

Line workers 2/25/00 125 61 46 38 18 8 5 54 14 29 396 3.1115 2/28/00 137 63 51 23 13 6 7 37 40 17 393 3.09

2/29/00 138 67 43 32 12 6 7 58 41 35 439 3.443/1/00 128 66 36 26 26 11 7 18 22 26 366 2.873/2/00 136 64 50 26 22 4 6 46 28 20 400 3.143/3/00 126 70 34 22 21 6 9 27 36 27 379 2.973/6/00 127 65 38 30 20 7 5 42 44 25 402 3.16

Totals Days EX PX 4000 WX VX 8100 2100 AX SX NX Grand Rate

291 38468 18436 12128 7657 6535 1892 1898 10930 9486 7106 114534 3.08

Hours 2474Ave/hr $6.75Fringe $1.53

Payroll/Line $307,292Overhead $120,000Utilities $4,500

Summary

• More than 25 individual items may be purchase for network cartridges today.

• Less than 38% of remanufacturers have established quality processes for their products or processes

• Less than 50% of the remanufactured cartridges sold last year met an OEM specification

• Lower Cost and higher profits will only be realized by process control and good manufacturing practice