An expanded kit assembly operation brightens retail market sales for Lighthouse for the Blind-St. Louis, helping augment its government contracts.
Faced with diminished business from its government customers, the Lighthouse for the Blind-St. Louis recently invested in new retail business. In February 2014, the non-profit company bought the Quake Kare line of ER Emergency Ready Disaster Preparedness kits, which transformed its packaging into a more dynamic kitting operation, with new elements of customization and direct-to-consumer shipping—trends that challenge the packaging operations of many brand owners today.
Kit assembly was already a core competency for the Lighthouse, also known as LHB Industries. Since 1933, LHB has manufactured, assembled, warehoused and sold a variety of medical and chemical products to customers as varied as schools, hospitals, the military and government agencies. The majority of its business is product manufacturing, at 68%. But contract packaging, which also includes some kitting, represents a healthy chunk at 25%. Medical kitting is 6% and sterilization is 1% of its total business.
LHB is one of more than 100 non-profit agencies in the U.S. that “share a mission to provide employment opportunities and support services for people who are visually impaired or blind,” explains Brittney Smithers, LHB marketing manager. “Each agency operates autonomously, but is an affiliate of National Industries for the Blind, a nationwide organization that focuses on enhancing opportunities for economic and personal independence of persons who are blind. Associated NIB non-profit agencies serve as the largest employer of people who are blind by the sale of Skilcraft branded products to federal customers.”
The Skilcraft brand name appears on more than 3,000 products, including office supplies, janitorial equipment, uniforms and hospital supplies. In 2013, government and military sales represented 80% of the company’s business. By second quarter 2014, that percentage had dipped to 72%, primarily due to the drawdown in troops and the government sequestration.
LHB saw the dip coming. The new Quake Kare product line was a strategic acquisition designed to generate revenue to support the company’s programs for people who are legally blind. “We viewed this asset acquisition as a valuable opportunity to further expand LHB’s kitting operations, thus providing additional employment for people who are blind or legally blind in St. Louis,” Smithers says. “Profits from the product line will also provide much needed income to support our 15 community outreach programs serving hundreds of children and adults who are visually impaired in Missouri and Southwestern Illinois.”
After the acquisition, LHB moved the Quake Kare manufacturing and packaging operations from a Los Angeles suburb to LHB’s Overland, MO, plant near St. Louis. LHB operates two manufacturing plants in the St. Louis area located in Berkeley and Overland.
Brian Houser, director of sales and marketing, describes how LHB’s business has changed dramatically since the Quake Kare acquisition. “We went from a medical and kitting packager that did business exclusively with the government and commercial companies to a company that now markets and sells directly to the consumer, as well as Amazon.com,” he says. “These markets were completely new to us and we had to make some adjustments to our normal operating procedures to accommodate the demand and purchasing patterns. The government and commercial markets build in lead time for their ordering and delivery of products. Consumers and Amazon.com orders, on the other hand, demand immediate attention and have the mind set of ‘I want my kit now!’ We learned early on that there was a tremendous sense of urgency in the disaster preparedness kitting business and we had to adjust quickly.”
The Quake Kare product line consists of survival kits such as earthquake, tornado and hurricane preparedness kits, as well as emergency kits for home, office, school, car and boat. But consumers are individuals and are now used to finding and buying exactly what they want online. “We found out early on that there is a high demand for ‘custom’ orders and kits that require a fulfillment type of operation, which was not one of our core competencies,” Houser says. “Some of our customers are requesting custom-packed kits with special or supplemental supplies to accommodate the specific needs for their family or school, including many people heading back to school.”
In August 2014, the company began offering customized kits from its stock of emergency preparedness supplies. These built-to-order kits complement the company’s choice of more than 100 survival kits.
Custom and stock kits are packed and sealed in an assortment of carrying cases designed for specific needs, including portable backpacks, convenient and easy-to-store fanny and cooler packs, or a 5-gallon bucket, supplied by C.L. Smith Industrial Co., a local St. Louis manufacturer. The bucket protects the contents from water leakage and can be stored indoors or outside. With an optional snap-on seat lid, an empty bucket can also function as a toilet in emergency situations.
After the acquisition, LHB switched to local packaging suppliers to get faster delivery, better service and, in many cases, lower costs, according to Houser.
A kit contains items such as non-perishable food, water, first aid materials, hand-crank power radios, light sticks, candles, waterproof matches, ponchos, multi-purpose knives, portable toilets, blankets, tissue packs and emergency tents.
“The only change we made was switching from Boxed ER Emergency Water to pouched water because the boxed water was becoming obsolete. We’ve left everything else as is to understand the industry better and learn hands-on about each kit and its relevance to the marketplace,” Houser says. “We have, however, added a Tornado/Hurricane Survival Kit to the product mix.”
John Thompson, president of LHB, says, “In addition to corporate and organizational emergency preparedness markets, we will market to special interest groups such as survivalists, outdoorsmen, adventure seekers and travelers.”
Setting up manufacturing operations in the Overland plant required a modest equipment investment. Clint Cruse, LHB vp of manufacturing, says, “We augmented our packaging line and warehouse operations with new equipment to streamline order fulfillment, and engaged a consulting process engineer to assist in retrofitting our headquarters plant in Overland, MO, to handle our expanded ‘just-in-time’ product packaging operations.”
LHB set up an assembly line type of operation that includes roller conveyors that enable kits to move easily from place to place during assembly. Clearly marked bins hold kit components; the most common of these are positioned close together to minimize the need for movement. Houser adds, “Multiple shelves were added to the warehouse to accommodate Quake Kare inventory and there is now a workflow for building kits and handing fulfillment orders.”
Multiple kits are assembled at the same time. Houser explains the operation: Kit components are in bins with lids that identify what is in the bin. When a kit is produced, only the bin lids of the items that go in those specific kits are removed by the visually impaired kitter so that they know what products go into each kit they are building. A bill of materials is provided for each kit so that the kitter knows what and how many go into each kit. Depending on the level of sight, the kitter, who is legally blind, may need the assistance of a CCTV or portable magnifier to view the bill of materials.
Assembled kits typically move into the warehouse for inventory, though custom kits or kits in high demand go directly to shipping.
LHB controls all orders through Microsoft Dynamics NAV software. Shipping labels are generated through UPS Worldship for small parcels or Corelogic for freight shipments. Houser says managing two different supply chains (direct-to-consumers and pallet-load shipments) in the same facility presents no issues. “While there are multiple supply chains, all orders are handled the same, regardless of the end user or customer,” Houser says.
Adapting to conditions
The Quake Kare business has added several new elements to LHB’s operations. “Keeping in mind that the majority of our employees are visually impaired,” Houser says, “you can imagine the learning curve for all involved. While many think that a person who is visually impaired is a liability when it comes to any type of work, we do not. With proper training and adaptive technology—such as magnifiers, CCTVs, JAWS, a computer screen reader program, and Zoomtext—a person who is visually impaired can easily become a productive employee.”
New employees learn how to navigate throughout the building and grounds by shadowing a blind veteran employee. Houser says, “Much time and effort is spent with mobility training prior to each employee navigating on their own.”
Employee training has been complemented with process improvements and other adaptations.
“A challenge we face is how to make a job that is typically setup for a sighted individual and make it accessible for a blind person to perform,” Houser says.
For example, Carlo Basile, quality control/project supervisor, itemizes how LHB has adapted the equipment and environment to ensure worker safety and ease of operation at the organization’s Trenton medical kitting plant:
•Cameras were installed on the labeling machines so a legally blind person can see inside the machine to place the labels in the correct spot, as well as see misalignment, damage or other issues;
•Machine guarding safety rails have been added or upgraded;
•The Multivac packaging system was retrofitted for tool-less changeover. Bolts were replaced with hand knobs so employees who are visually impaired can change vacuum molds, sealing plates, punches and package cutters without using wrenches;
•High-contrast lighting in the Multivac filling stations allows employees who are visually impaired to detect the edges of the pouches for more exact loading of product;
•A “talking scale” for weigh counting materials enables employees who are legally blind to hear weight and count information rather than relying on a digital screen;
•A portable closed-circuit TV system enlarges printed material for visually impaired employees so they can better see work instructions. In addition, LHB collaborated with a computer interface company for more than a year to develop a program that allowed the liquid-fill department manager, an individual with limited sight, to be able to set up the machine from a CCTV screen instead of the machine’s LED screen. The CCTV allows the manager to increase the programmable logic controls size 10 fold, thus allowing him to be able to comfortably read the screen and control the output for any liquid product manufactured;
•Assembly line tools and fixtures have touch-sensitive centerlines and alignment features for the visually impaired;
•Windows installed near the ceiling add natural light to the area to help the workers have better visual acuity. And high-intensity lights are used where necessary to show contrast and better visual acuity by the workers; and
•All aisles and exits to the building are installed with grid plate materials for visually impaired employees to feel with their canes and feet to safely find their way throughout the plant.
Safety is paramount
Lighthouse has gone six years without a loss-time incident, defined as a work-related injury that requires a missed work day.
Scott Lemmons, LHB’s environmental, health and safety manager, says, “Many factors have contributed to this success. First and foremost is a true and sincere commitment to ensuring that safety is our top priority. This commitment starts at the board of directors and permeates the entire organization and our culture.
“Additionally, we have a good working business relationship with our occupational medical provider,” Lemmons continues. “They have visited our locations, and are aware of our typical operations and our adherence to their recommendations. They feel comfortable with ‘prescribing’ restrictions rather than days away from work. Our relationship with them is truly a partnership; we will send employees for evaluation when it is not 100% certain if an injury warrants involvement of medical professionals. They are prudent in their selection of appropriate treatment.
“Also our workforce is second to none in their desire to perform an assigned task in the safest method possible,” Lemmons adds. “If they have questions or concerns, they feel comfortable asking beforehand rather than putting themselves in jeopardy.”
Planning for growth
LHB’s new Quake Kare business is adding to the bottom line. A total of 84 employees work at the organization’s two manufacturing locations in Missouri, and 43 of them are legally blind. According to Karen Nelson, LHB’s human resources director, as a result of the acquisition, “We have been able to hire one additional employee who is legally blind. We anticipate the addition of several more as business grows through the rest of the year.”
LHB president Thompson expects that the new product line will add $2 to $3 million to the agency’s revenue in 2014, with annual increases thereafter.
“The acquisition has brought new energy into the facility and has facilitated tremendous teamwork and commitment,” Houser says. “From the president on down to our blind community enrichment manager, all levels have been on the floor building kits and picking orders. It’s been a fun addition.”
What are the benefits of hiring people who are legally blind?
Brian Houser, director of sales and marketing at Lighthouse for the Blind-St. Louis, answers:
“More than 70% of blind people are unemployed. By giving them a job, they appear to be more devoted employees as they are so thankful for the opportunity to have a job, as well as to be considered an asset to an organization. There is very little absenteeism and employee turnover is virtually nonexistent.
“In addition, by employing blind individuals, we are taking a ‘tax taker’ and turning them into a ‘tax payer.’
“National Industries for the Blind conducted an extensive analysis of this very subject and determined that, for every dollar the federal government spends on supplies and services through a blind agency such as the Lighthouse, $3.33 is returned to the Federal government via decreased transfer payments (such as Medicaid and Social Security) and increased income and FICA taxes, thereby saving taxpayers money while fulfilling an important social mission.”