O'Sullivan Industries: Fast, Flexible and Focused
Investing in the latest technology, finding creative ways to configure equipment and an emphasis on quality in all areas of its operations, help fuel continued growth.
by John Koski
Every day at around noon, a trainload of 10 to 12 boxcars pulls alongside O'Sullivan Industries' manufacturing facility in Lamar, MO. Inside those boxcars is the particleboard needed for one day's production of ready-to-assemble furniture. That's a lot of particleboard -- and a lot of RTA furniture.
As one of the largest RTA furniture manufacturers in North America, O'Sullivan is using particleboard in increasingly larger amounts, a fact that is reflected in the company's dramatic sales growth. In fiscal 1999, O'Sullivan had sales of $379 million, 12 percent ahead of 1998. And for the first nine months of fiscal 2000, the company reported a 12.1 percent increase in sales compared with the same period a year ago.
What is fueling that sales growth? According to Richard Davidson, president and CEO, it is the recognition of O'Sullivan as a leader in the design and manufacture of quality RTA furniture.
"What differentiates us from our competitors is our quality," says Tommy Thieman, vice president of manufacturing. "In addition, we produce an average of one new product a day. As a result, our customers see a new, fresh look frequently. That's important because we deal with a broad base of RTA customers, probably more so than most other RTA manufacturers."
"One of our top issues is how to make our individual customers different than their competitors," says Tom O'Sullivan, vice president of sales. "To accomplish that, we sell many similar items, but not exactly the same."
O'Sullivan sells its products to the three office super stores -- Office Max, Office Depot and Staples, O'Sullivan says. "We also sell to the three largest national discount chains -- Target, Wal-Mart and K-Mart -- as well as to Best Buy and Circuit City. Basically, we are selling to every major national retailer of RTA furniture, with the exception of Sears.
"We sell to over 500 different customers every year, but the top 20 customers dominate our volume, accounting for 90 percent of our business. We also do some exporting," O'Sullivan says, "less than 10 percent of our product."
Managing Growth Creatively
"One of the biggest challenges we've faced as the company has grown is the ability to automate within the space we have available," Thieman says. "The Lamar facility has not had the space we've always wanted and has had to grow in sections. Fortunately, our engineers and suppliers have been very creative in working within the existing building."
O'Sullivan's Lamar plant is its largest and also its corporate headquarters. The company also has plants in South Boston, VA, opened in 1988; and Cedar City, UT, opened in 1995. The combined facilities represent approximately 2 million square feet of manufacturing, distribution and office space. Of O'Sullivan's 2,600 employees, approximately 1,600 work in Lamar.
O'Sullivan's Lamar plant is housed in a former lawn mower manufacturing facility. Through expansion, the plant now occupies about one million square feet -- about three times as large as it was in 1965, when O'Sullivan purchased it.
U- and Z-Cell Configurations
"Our softform strip process uses a configuration that looks like two U shapes," says John Cox, director of manufacturing engineering. "This configuration is used many times in our plant. In this configuration, we use an Anthon strip saw, Homag double-sided softformer with a Wemhoner feeder, Anthon cross-cut saw, IMA profile edgebander with a Wemhoner stacker, Wemhoner feeders, Nottmeyer drills and Wemhoner stackers.
"The biggest challenge in an older plant, such as the one in Lamar, is trying to work around columns. The second challenge is to have the proper queue between the segments of the line so that the product flows smoothly, since all the machines do not have the same cycle time."
Laminating at Breakneck Speeds
For example, O'Sullivan's newest piece of equipment is a Hymmen laminator, installed in October 1999. The machine replaces two older laminators and currently produces about 75 percent of the laminated panels used in the Lamar facility.
"We had some equipment that we had used for about 15 years and it was old and worn out," Cox says. "We were looking for something that would give us faster run rates and provide no more than a one-inch gap between boards."
Minimizing the gap between boards has resulted in significant cost savings for O'Sullivan. "The laminators used prior to the installation of the Hymmen laminator typically had gaps of up to one foot," he says. "Reducing the gap to a consistent one inch results in less laminate paper being wasted." As a result, he estimates the new laminator will save O'Sullivan about $300,000 a year.
"We also wanted a machine that provided 'first board good' capability," Thieman says. "Although we had been very effective in our scrap rates, when you can take it down from one or two percent scrap to 0.01 or 0.02 percent, you're talking about major gains in the process."
The Hymmen laminator runs at a rate of around 130 feet per minute and handles boards of varying widths and lengths. Changing rolls of laminate paper takes about one minute, allowing the machine to run nearly continuously, Cox says.
"The new strip line will operate at 330 feet per minute," Thieman says, "compared to our current rate of 100 feet per minute."
Producing High-End Products
"The machining centers have a 70-position toolholder that can edgeband, softform, foil, drill, cut and bore," Cox says. To further increase capacity, O'Sullivan is currently installing additional Homag BAZ machining centers in the Lamar plant.
Training Well-Rounded Operators
"The real key to our operating efficiency is training," Cox says. "Ten years ago, an operator needed to be a good mechanic, now he needs to be a technician. He has to be well-rounded. He has to have PC proficiency and he has to know something about electronics and electronics troubleshooting. He also has to do a certain amount of maintenance and preventive maintenance because he's the one who best understands the problems. Our operators are involved in all of the activities of the work center. Things are far more specialized than they used to be.
"For example, we used to have a machine setter who could handle five or six work centers. But the higher speeds we're using today demand more attention to quality checks and all the other activities that take place. This means that the operator has to be right there on the spot."
"We also cross train our people so that they are able to work on all of the lines," Thieman says. "That's especially important for a machine like the Hymmen laminator that operates continuously. When one person goes on break another person can step in without any loss of production."
Meeting the Challenges
"We are currently installing a TigerSoft finite scheduling system that will allow us to plan and schedule workload on the shop floor," Thieman says. "The system will automatically load the shop for the lowest-cost routings while optimizing throughput from all departments. Once the system is online, we anticipate not only improved throughput, but improved customer fill rates as well."
"The new system will help us to synchronize our work centers within their schedules and capacities," says Joe Whyman, plant manager. "This will allow us to increase our machining capacities within the same space."
Quality Control a Top Priority
"Every part throughout the plant has a pattern piece approved at the start of the manufacturing operation," Whyman says. "Then, throughout the production run, there are periodic tolerance checks on every piece at intervals of 15 to 30 minutes. We also do test assemblies before we begin packing a particular piece of furniture. For larger orders we do test assemblies at specific intervals throughout the packing process.
"Each check along the way examines everything that has been done to the part to that point. Each part is checked completely, not just the operation the part has just gone through."
"We also perform sample cross-hatch testing," Cox says, "where we take a corner of a sheet and cut it with a razor knife in a cross-hatch pattern and then do bond testing on the laminate. It also gives us a chance to look at the underside of the panel carefully."
"Although we have mirrors and lights on all of our laminators," Thieman says, "we can only view the tops of the panels as they come off the laminators. So we take a sheet off of every third bundle and examine it completely to make sure there aren't any problems.
"We also have an approved vendor program," Thieman says. "Our approved vendors have to go through a rigorous process to achieve that status. Once they are approved, we expect them to do their own checking. If they fall from grace, it's hard for them to get reapproved.
"Although we do spot-checking on all supplies that come in, we don't do statistical processing on incoming raw materials -- that would take too much of our time; that's why we rely on approved vendors."
Nothing Goes to Waste
"Some of our product is extruded into pellets and sold to tarpaper producers," Thieman says. "Some of it is ground into fine sawdust and mixed into a plasticizer to make sheets of composition building materials. Some is mixed with a compost and used as a soil substitute. We also sell scrap to a company that mixes it with chicken and turkey droppings and uses it to make a fertilizer blend."
"We recycle other materials as well," Whyman says, "such as cardboard, styrofoam waste, plastic stretch wrap and steel banding."
"The most significant changes I've seen in the RTA industry in the last 25 years or so," Thieman says, "are the high-speed processes that are coming online. Another change is the strip lines for sawing and flat-banding. Also, tying the panel saw and the strip line together is a process that -- although it has been around for several years -- is just now being perfected so that it can produce at 300 to 350 feet per minute."
"Even some of the processes that have been around for a long time are being automated with advanced technology," Cox notes. "Computer controls that allow us to control the processes more closely at faster speeds with shorter set-up times are the biggest thing that I have seen. Integration between machines is also a critical issue."
"The complexity of the machines has moved into woodworking in a big way," Whyman says. "The products have changed also. We had only one laminate color 25 years ago, now we have so many colors that the only way to track them is by part numbers that identify the color."
"Some of the niche products we've come out with recently include storage units for garages, bathrooms, golf clubs and just about anything else you can imagine. Storage is a big category that we are now just touching on."
"We've also introduced a new line of bedroom furniture," Whyman says, "dressers, headboards, nightstands, mirrors and teen-focused products, such as a loft bed and a mate's bed that goes with it." Last year, O'Sullivan's line of teen-focused bedroom furniture won a Pinnacle Award from the American Society of Furniture Designers.
"We think that we will turn over our product line every three years on average," Thieman says. "Product planning is much shorter than it was 10 years ago. It takes tremendous engineering resources to stay on top of the new product introductions. You have the blueprints, machine specifications that need be checked all along the way, even down to the details on the instruction sheets and carton labels. There are a lot of people involved in developing a new product."
"Ultimately, what we're trying to do is to be fast, flexible and focused," Whyman says, "all centered around customer satisfaction. We want to be our customers' vendor of choice. Our customers are trying to stay close to the constantly changing needs of consumers and we try to stay in tune with that as much as we can."
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