Joe Gingo, chairman, president and CEO of A. Schulman Inc., was brought in to sell the struggling company in January of 2008. But by focusing on improving processes and operational efficiencies, Gingo led A. Schulman to generate $200 million in cash by the end of that same year. Undertaking several acquisitions, the company was no longer for sale.
A. Schulman is now a leading international supplier of high-performance plastic compounds and resins, with 30 manufacturing and support centers worldwide employing approximately 3,000 people.
Gingo served as a panelist at the October Smart Business Toolbox Series presented by Hyland Software, speaking about lean manufacturing initiatives to drive success in a global economy. Below is an excerpt from the Q&A session.
What are keys for operational efficiencies?
One, you have to have a process, and two, you have to have a leadership that drives it — a leadership that actually believes in it and makes it happen.
Continuous improvement has to be driven from the top down. It has to be something that’s built into your culture, where people actually look to improve everything they do, every day of the week.
How do you look at waste reduction?
People that look at lean tend to just look at it from a manufacturing standpoint, and that’s a big mistake. Everything can be processed, and some of your biggest savings come from that type of thing.
A good example for us was working capital. We had a great deal of concern about working capital when I first came to the company, and we laid out a program and actually developed it down to a board game.
We made a tremendous reduction in working capital. Why? Because the people that actually controlled working capital learned about working capital.
What are the initial steps that need to be taken to get initiatives off the ground?
Take your time upfront to get your team behind it. I don’t believe that you can just force these things. You really need to do a lot of work up front in designing the process and getting buy in from your global team.
What I’ve learned in the past is that without this buy in upfront, without this agreement as to what the process is, implementation gets sidetracked. Things start to happen along the way and delay everything.
How do you get buy in for initiatives?
Don’t give them the solution. Give them the problem.
Communications have to go up and down in this process. From the top is, ‘Here’s what our issue is and here’s why it’s an issue. Here’s why it’s important to us. Here’s how it affects you. This is how you benefit if you do this.’ Then listening to the people when they say, ‘OK. Well, if that’s the real problem, here’s how you solve it and this is what we need. These are the tools we need.’ Then you as the leadership have to provide these tools.
What processes does A. Schulman have to maintain continuous efficiency?
What we attempt to do is, through the Lean process, not only identify the problem areas but establish a priority for them. Priority can come two ways. One way, obviously, is ‘What’s my biggest problem?’ But sometimes that’s really hard to solve.
Sometimes you actually take a little problem that you know you can resolve extremely quickly through that whole chain. Solve that problem, give people credibility that this is going to work, and then you attack each problem along the way. And my experience is you keep redefining the process.
How long should initiatives take?
I look at it as a payback within two years — two years or less — especially for a major initiative (that) is going to cost us a lot of money.
We look at ROI. It’s a very important thing. If it’s going to be over two years, it better be really strategic and it better be really critical to our long-term situation.