Lean label converting makes 'cents' for Estée Lauder

Anne Marie Mohan

January 29, 2014

5 Min Read
Lean label converting makes 'cents' for Estée Lauder

In 1946, Mrs. Estée Lauder laid the foundation for her now-world-renowned cosmetics empire with a jar of skin cream developed by her chemist uncle "and the desire to bring out the beauty in every woman," relates the Estée Lauder website. Today the Lauder legacy has flourished from a single, unlabeled skin-cream jar to more than 9,000 skincare, makeup and fragrance products from 25 brands marketed by The Estée Lauder Companies, Inc., New York, NY.

Among the brands offered by Estée Lauder are Aramis prestige fragrances and grooming products for men; Clinique allergy-tested, fragrance-free skincare items; Prescriptives custom-blended makeup and skincare products; Origins Natural Resources natural skincare, makeup and bath and body products; and designer fragrance, skincare and makeup lines from Tommy Hilfiger, Donna Karan and Michael Kors, just to name a few.

Given Estée Lauder's dynamic product portfolio, the need for a rapid-turnaround, cost-effective and flexible product-label manufacturing solution is vital. In 1999, the company transferred part of its label manufacturing responsibilities to Glen Rock, PA-based Topflight Corp. (www.topflight.com) to take advantage of the manufacturer's unique, lean supply-chain program.

Through Topflight's Operation Eliminate, Estée Lauder's pressure-sensitive product labels are converted in a dedicated manufacturing workcell driven by an ERP (enterprise resource planning)-to-ERP data interchange that utilizes real-time information to produce only the labels needed for Estée Lauder's next production run. Eliminating inventory and leadtimes, the program also makes purchase orders, invoices, label usage transactions and price negotiations for new or changed labels, or "parts," a thing of the past.

Topflight, located in a 97,000-sq-ft manufacturing facility in Glen Rock, and with international affiliates in seven locations around the world, has accumulated a long history of engineering, design, printing and converting experience since it was established in 1943 as a precision machine shop. Topflight's competency in converting liner-backed, adhesive labels extends to high-speed flexo, gravure, letterpress, screen, digital and hot-stamp printing, as well as die-cutting, laminating and coating.

According to Nancy McHenry, Topflight's vp of supply chain, Operation Eliminate is the culmination of the company's efforts to reduce label-converting costs for many of its customers, including Black & Decker. "Being in a very competitive industry, Black & Decker drove us to eliminate costs, not transfer cost burdens," she relates. "With Estée Lauder, we realized that we could use what we had learned through our long association with Black & Decker and others and apply it to other customers, especially those in increasing competitive markets.

"In an industry such as cosmetics, the lifecycle of parts is getting shorter and shorter. Companies are constantly changing the verbiage and the look of their labels to meet regulatory requirements and to grab the interest of the consumer. They also make different versions depending on where they are selling things. There's just no way they can manage their labels the way they did in the past."

Estée Lauder's transition to Operation Eliminate took about six months, McHenry tells PD. During this time, Topflight standardized label specifications, materials, inks and colors where variation had crept in due to multiple suppliers; made trial runs; and obtained quality approvals.

Currently, Topflight handles several thousand parts for Estée Lauder. The parts consist mainly of shade, base and UPC labels that are fairly small—under 3 to 4 sq in.—and are flexo-printed in two to three colors. Although an average run length (produced to meet regular consumer demand) is about 10,000 labels, much larger runs may be produced for special promotions. According to McHenry, during heavier-production months, Topflight handles an average of 20 "less-than-one-day" leadtime orders each day and ships more than 2,000 orders per month to 100 packing locations.

Through Operation Eliminate's lean order flow, a data feed from Estée Lauder's ERP system is automatically transferred to Topflight's ERP system on a daily basis. "It's not just an automated MRP [materials requirements planning] 'dump,'" McHenry says. "Also included is data on the work orders and the finished products, which gives us the information for delivery directly to manufacturing." Jobs are converted in a dedicated cell and hold all the equipment, tools and materials, including press plates and special inks, required to produce Estée Lauder's jobs. The main equipment is a 6.5-in., six-color flexo press, developed by Topflight, and a hot-stamp machine. A rewind station built by Topflight and equipped with an inspection system converts master rolls into finished label stock.

The cell typically operates two shifts per day, five days a week, with three operators working in the cell during each shift. Three additional employees on the front end manage new and changed parts, and interface with Estée Lauder's production planners.

When new artwork is submitted by Estée Lauder, Topflight inspects it for print-to-die tolerance and point type, and plates are produced by the prepress department. Base material, adhesive and topcoat information is entered into the Topflight specification, and a PDF of the converted artwork is sent to Estée Lauder for approval. Finished labels are inspected on-site at Topflight, which checks the labels' rub, scuff, die-cutting/measurements, color accuracy and label copy.

Unique to the industry, Operation Eliminate uses average pricing wherever possible, which "cuts out negotiation costs for new and changed parts and eliminates the possibility of price 'creep up' within the contract period," says McHenry. "Many pressure-sensitive labels are only about a penny or two each. As our customers are making shorter runs, we're making deliveries that cost less than the customer's traditional cradle-to-grave purchase order costs (often about $150 a purchase-order line). That clearly takes the opportunity for total cost reduction from haggling on the already beat-down price, to eliminating steps in ordering and using components in the supply chain.

She adds, however that the real value of Operation Eliminate is the way in which it eliminates steps in the supply chain, making label converting quicker and more flexible. "While we often describe Operation Eliminate in terms of costs, that's because purchasing usually looks at total costs in decision making," she says. "But it's the more strategic value of being able to change quickly that far exceeds the cost value. Think of that lean agility as the ability to continually maximize revenues in our rapidly changing, competitive world."

More information is available:

Topflight Corp., 717/227-5400. www.topflight.com .

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