Dixon Ticonderoga Company

A SMART┬áapproach┬áDixon Ticonderoga is best known for making the No. 2 pencils used by millions of students on standardized tests. As Keith Regan learns, Dixon is focusing on operational excellence and restoring employee pride in a formidable 200-year-old brand using lean six sigma methodologies. The Dixon Ticonderoga Company traces its roots back to 1795. Today, itÔÇÖs part of the FILA family of companies and manufactures and distributes a host of office supplies and promotional items, including the No. 2 hard lead pencils that are ubiquitous in schools around the world and helped the company gain its fame. The company has won some major retail contracts in recent years, with its Prang, Dixon and Ticonderoga brands gracing the shelves of major retail stores. Today, Dixon Ticonderoga is aggressively driving operational change. The changes have accelerated over the past eight months since Tim Gomez joined the Heathrow, Florida, company as director of operations. Gomez brought with him a Masters education from Cambridge University in the United Kingdom plus 20 years of operations experience from companies such as Brunswick Corporation and a deep background as a black belt in lean six sigma methodologies, which he has combined into his own formula for improving operations. Gomez has dubbed his approach SMART (for Safe Manufacturer Achieving Results Timely) and says it focuses on driving the cultural changes that lean can spark without making it complicated or overloading employees with too much information. ÔÇ£You have to keep it simple,ÔÇØ he says. ÔÇ£A lean person can do an assessment within a few minutes, and shortly after arriving I had done that. We had some major retail customers come on board, so I knew we had to focus on keeping excellent service levels while reducing costs through waste elimination.ÔÇØ Among the areas Gomez set out to tackle was supply chain logistics. He found that operations overseas and the logistics connecting them to the Macon, Georgia, distribution and manufacturing center were not being coordinated across functional responsibilities to allow for efficiencies. One key change was a vertical integration partnership Dixon forged with UPS. ÔÇ£ItÔÇÖs the best single thing IÔÇÖve done since I got here,ÔÇØ Gomez states. The partnership has not only eliminated the need to use multiple over-the-road carriers but also leveraged UPSÔÇÖs expertise in information technology integration. ÔÇ£We have a very strong IT department, but it wasnÔÇÖt being leveraged to the extent it could be.ÔÇØ Dixon will soon use a UPS service to replace trucking and brokerage services it was doing on its own, enabling it to eliminate several third-party services and saving the company $65,000 annually in the process without spending any money up front. The improved logistics support much stronger operations within the distribution center, where lead times have been cut dramatically. Previously, when an order came into the Macon facility, it could take three days or more before the product shipped. ÔÇ£Now if an order comes in, weÔÇÖre so fast we can literally ship it within 30 minutes,ÔÇØ Gomez says. Technology was used to level-load pickers and enable tracing of orders down to the specific order-picker assigned, boosting accountability and boosting the average order-picking rate from 130 per day to 190 per day, all while improving quality by training workers on the specific requirements of each customer in terms of how orders are picked and packed. Dixon has also been able to streamline its human resources operations. Because it has seasonal spikes in demandÔÇöthe busy season runs from May through September, most of it focused around the back-to-school marketÔÇöit traditionally relies on staffing services to provide temporary labor. In fact, when Gomez arrived, three firms were being used. Now, the company utilizes one company, and that firmÔÇÖs staff recently spent an entire day at the Dixon plant, learning the ins and outs of the operation and what types of skills and traits Dixon wants its temporary employees to exhibit. ÔÇ£We went from having a very high turnover rate to having very little turnover because we partnered with Select Staffing and explained to them exactly what we were looking for in the promotional products, the display production and the distribution center,ÔÇØ Gomez says. The company also instituted a promote-from-within policy, giving temporary employees a pathway to permanent positions. The changes have been most noticeable in the promotional products area, where lead times in that category were as long as 10 days and now are in the three-to-five-day range. The company is operating with 21 people in the department this year, compared to 46 a year ago, marking a reduction in headcount of more than 50 percent while lead times were reduced. Dixon also cut scrap in that area by 75 percent. Internally leveraged IT and the UPS partnership have also helped reduce the time it takes Dixon to import products made overseas, where it has manufacturing operations in China and Mexico. Value-stream mapping has been used to better coordinate the forecasting, planning and scheduling process. The sales force is now using four-month forecast windows instead of a year, and product from China that once took as long as 45 days to arrive now can be obtained under 20 days to the East Coast. The same effort enabled inventory to be reduced by 13 percent in the course of seven months, a number that would be more dramatic if not for some intentional inventory buildups the company has made due to market share gains and new-product introductions. Perhaps most impressive of all the changes has been the cultural gains already made. The Macon facility is now populated by the visual metrics and tools of lean six sigma, as well as promotional banners celebrating the companyÔÇÖs lengthy history and its future prospects.ÔÇ£What weÔÇÖre focused on now is getting ready to grow,ÔÇØ Gomez says. ÔÇ£There is so much opportunity to keep growing and performing. You can grow organically and through acquisitions, and thereÔÇÖs no reason you canÔÇÖt do both if youÔÇÖre efficient at what you do operationally. WeÔÇÖre a highly reputable and trusted brand that everyone knows, and we want our customers to trust that we can get them what they need when they need it. Our employees are also taking much more pride in being part of this company. TheyÔÇÖre more aware of our history and where weÔÇÖre going, and as a result theyÔÇÖre just very passionate and excited about doing things right.ÔÇØ ÔÇô Editorial research by Kevin Foss┬á