Questions about supplementary material or other data gathered for this case study can be addressed to Jan Youtie, Economic Development Institute, Georgia Institute of Technology, Atlanta, Georgia 30332-0640 USA, email: jan.youtie@edi.gatech.edu

For questions about the engagement, please contact Tim Israel, Georgia Institute of Technology, Norcross Regional Office, 1770 Indian Trail Road, Suite 410, Norcross, GA 30093, (voice) 770/806-2112, (fax) 770/806-2114, e-mail: tim.israel@edi.gatech.edu.

ABSTRACT: Corporate Printers, Inc. (Corporate Printers) is a 110-employee commercial printing company established in 1976 in Cumming, Georgia. In the past six months, Corporate Printers improved profitability, maintained an estimated $800,000 of its current sales, and realized nearly $1.6 million in operational savings. The savings largely came from inventory phase-outs and reduced product spoilage. These benefits resulted from the company's efforts to become registered to the International Organization for Standardization (ISO) 9002 quality standards. A major customer required its suppliers to become ISO 9000 certified within 18 to 24 months. Corporate Printers appointed an ISO coordinator and engaged a consultant to work with the company to develop an implementation plan, produce documentation, and train employees. After 10 months of implementation, Corporate Printers requested ISO specialists at the Georgia Manufacturing Extension Alliance (GMEA) to conduct a preassessment audit. The GMEA audit team provided 90 hours of assistance in the course of preparing for and conducting the audit. The team found 27 nonconformities which would not have passed the formal registrar preassessment audit. Corporate Printers' managers viewed the audit as a turning point in their understanding of the ISO 9002 quality standard. They expanded employee involvement in the ISO process and made changes to inventory and other systems. The formal registrar's preassessment audit conducted in May 1996 found no major nonconformities. Corporate Printers passed the registration audit on July 2, 1996 and was recommended for ISO 9002 registration; the certificate is expected in August 1996.

Case Report

Corporate Printers, Inc. (Corporate Printers) is a commercial printing company located in Cumming, Georgia, a metropolitan Atlanta suburb. Corporate Printers was established in 1976 and employs about 110 workers on annual sales of $18 million to $20 million. It is currently operated as one of six separate businesses by LOR, Inc., a holding company under the Rollins Corporation.

Corporate Printers Pursues ISO 9002 Certification

In March 1995, a major customer notified Corporate Printers that it was requiring all suppliers to become registered to the ISO 9000 quality standard within 18 to 24 months. Corporate Printers lacked internal expertise to pursue ISO 9002 registration on its own. The company hired a consultant who developed an implementation plan, provided training, and assisted with the creation of documentation of employee practices. An internal ISO coordinator was also appointed to work with the consultant on documentation and other aspects of the implementation plan.

GMEA Performs Preassessment Audit

LOR, Inc. desired to establish internal ISO expertise so that Corporate Printers' ISO experience could be replicated within the other five companies under the LOR umbrella. The holding company's quality manager attended a five-day GMEA Lead Auditor Course in south Georgia. The quality manager requested that one of the course instructors come to Corporate Printers to conduct a preassessment audit.

Corporate Printers provided preparatory material and invited the GMEA course instructor to the facility to obtain background information for the audit. On January 16, 1996, a four-member team from GMEA (which included a field engineer with a commercial printing industry experience who had recently implemented ISO 9000 at his previous employer) went to Corporate Printers to perform the two-day audit. The audit team examined approximately 20 elements of the company's quality management system. Major and minor nonconformities were noted, findings described, and references to the standard provided. The team also distinguished between procedures that did not comply with the standard, procedures that had not been put into practice, and procedures that were not effective. In all, the GMEA audit team provided 90 hours of assistance in preparing for and conducting the audit.

The audit team found 27 nonconformities over the 20 quality management system elements which would have not passed a formal registrar-conducted preassessment audit. The team's recommendations included:

• improve product identification and traceability. GMEA staff recommended that all products associated with a job be identified as such.
• improve inventory control and materials flow. GMEA staff found that the company was buying paper and storing it for customers which was costly, added clutter, and occupied space. In addition, the company had leased a second warehouse which hindered product traceability.
• redesign the job jacket (form containing work order instructions) to improve readability. In particular, the GMEA team suggested that the name of the sales person and estimator be added so that any problems with an order could be more efficiently addressed.
• match documentation and practices. For example, documentation called for equipment maintenance every 24 hours of elapsed time, whereas employee practice was to provide maintenance every 24 hours of equipment operation.

The audit team found that Corporate Printers' procedures were well documented. However, because employees were not central to documentation development, the documented procedures did not reflect employee practices.

Inventory Savings Realized

Corporate Printers management saw the GMEA audit as a turning point in its pursuit of ISO 9002. The LOR company quality manager said, "This is when everybody got religion. It was an eye-opening experience. It really got the people to understand the standards." In particular, employees became more involved in documentation and other aspects of ISO implementation. The quality manager noted, "Employees feel like they're part of the business. There's a lot more pride."

A company reorganization involving a new president and ISO coordinator produced a more favorable climate supportive of GMEA-recommended changes to ISO implementation. As a result, Corporate Printers implemented several changes its operation.

• The firm eliminated inventory held for customers and cleared 20,000 square feet of space. Because the company is currently expanding its facility, management avoided the capital expenditure of adding a further 20,000 square feet to the facility. This capital expenditure avoidance savings is estimated at $54,500.
• The firm implemented inventory tracking procedures which have reduced spoilage rates. For example, Corporate Printers returned unwanted and "bad" product to the mill in May, receiving $18,000 to $25,000 in paper sell-back savings. Corporate Printers estimates that this spoilage rate reduction equates to approximately $1.5 million in cost savings on an annual basis.
• Management closed the second, off-site warehouse, resulting in an annual savings of $8,400.
• The company redesigned the job jacket. The new jacket was tested in April and implemented in May. Preliminary results suggest that overtime was down in April, although it is too early to assess the impacts.

The GMEA audit gave Corporate Printers the opportunity to address the instances of nonconformity prior to the formal registrar's preassessment audit. The formal registrar audit conducted in May 1996 found no major nonconformities. The company saved $3,200 --the cost of an additional formal registrar audit--by undergoing the GMEA audit first.

Table 1 summarizes these savings. In all, Corporate Printers realized $1,566,100 in total savings as a result of the GMEA audit. The inventory phase-out and return of paper products comprised the largest share of the savings. These changes benefitted from the competitive prices offered by paper suppliers at that time, which made it economically feasible for the company to buy paper as needed rather than holding it in inventory.

Table 1

Cost Savings from GMEA Assistance

GMEA Recommendation    Company Action               Savings                       

Improve inventory      Implemented inventory        $54,500 savings from          
control                phase-out                    avoiding construction of a    
                                                    22,000 square foot addition   

Improve inventory      Identified and returned bad  $1.5 million reduced paper    
tracking               product                      and related costs             

Close second           Closed second warehouse      $8,400 annual lease cost      
warehouse                                           savings                       

Redesign the job       Implemented a new,           Reduced overtime              
jacket                 redesigned job jacket                                      

Address major          Actions to address           $3,200 registrar costs        
nonconformities        nonconformities are in       avoided                       
                       process                                                    

     Total savings                                  $1,566,100                    

Sales Maintained, Profitability Improved

With the help of the GMEA audit, Corporate Printers has maintained its ISO certification timetable. Originally planned for May 1996, the ISO registration audit was scheduled for July 1996. On July 2, 1996, Corporate Printer's registrar recommended the company for ISO 9002 registration. The certificate is expected in August 1996.

This ability to maintain the ISO process has helped the company preserve its current business and be able to bid on new business. Without ISO certification, Corporate Printers might have lost 5 percent of its current sales--about $800,000. In addition, several new customers interested in working with firms registered to the ISO standard have requested that Corporate Printers provide estimates on new jobs.

The operational savings and decreased overtime at Corporate Printers has contributed to increased profitability. The ISO coordinator reported that, "sales totals for March and April 1996 were almost identical while overtime and spoilage were lower in April than in March. The results were that March was a 'loss' month, but April was 'profitable.'"

Chronology of Services

March 1995: Customer notified Corporate Printers of ISO registration requirement for suppliers. Corporate Printers began ISO registration process and hired a consultant.

August 1995: Corporate Printers holding company sent manager to the GMEA Lead Auditor course.

September 9, 1995: GMEA provided an ISO 9000 walk-through in preparation for audit.

October 1995: Corporate Printers reassigned ISO coordinator position to sales manager.

November/early December 1995: Corporate Printers selected a registrar.

December 1995: Corporate Printers completed documentation.

January 1996: New president started.

January 16-17, 1996: GMEA conducted a preassessment audit.

End of January 1996: Corporate Printers revised its implementation plans.

March 1996: Corporate Printers closed the off-site warehouse.

April 1996: Corporate Printers began an inventory phase-out plan and piloted a redesigned job jacket.

Early May 1996: Corporate Printers went through a formal registrar preassessment audit.

May 20, 1996: Full implementation of a redesigned job jacket began.

July 2, 1996: Corporate Printers' registrar recommended the company for ISO 9002 registration.

August 1996: The ISO 9002 certificate is expected to be received.

Endnotes

1. The Georgia Tech Center for International Standards and Quality is the unit within GMEA responsible for delivering ISO-related courses and technical assistance.

2. Georgia Tech Center for International Standards and Quality, "Record of Nonconformity;" and Georgia Manufacturing Extension Alliance, ProTrac, May 1996.

3. Quality Manager, LOR, Inc., May 24, 1996.

4. Ibid.

5. Estimated at $31 a square foot (Source: 1996 Means Square Foot Costs) at the 30-year mortgage rate of 7.00 percent.

6. The registrar charges $1,600 per day, including expenses. A preassessment audit lasts approximately two days.

7. ISO Coordinator, Corporate Printers, Inc., May 28, 1996.

8. Letter from ISO Coordinator, Corporate Printers, Inc., May 31, 1996.

For more information about GMEA's evaluation plan, please contact Philip Shapira at 404/894-7735 (email:philip.shapira@pubpolicy.gatech.edu) or Jan Youtie at 404/894-6111 (email:jan.youtie@edi.gatech.edu).

modified 10/31/96