Case Study - Turnaround at the Preston Plant

Ken Hjelmstad

December 12, 2010

Case Study Turnaround at the Preston plant

The Preston plant of Rendall Graphics was located in Preston, Vancouver. The plant was bought from the Georgetown Corporation by Rendall in March 2000. The plant produced Precision coated papers for ink-jet printers which accounted for the majority of the plant's output. The plant started to experience problems in the quality of their output of the ink-jet paper and had received feedback in late 1998 from Hewlett-Packard (HP) about the problem. The team at Preston worked to resolve the problem and in October of 1999 made recommendations for a revised and improved coating formulation. However in 2000, productivity, scrap and re-work levels continued to be poor. Operations Management team's response was to increase the speed of the line and made a number of changes to operating practice in order to raise productivity.

In the spring of 2000, two significant events happened to the Preston plant. Rendall Corporation purchased the plant, even though it was losing around $2 million a year. Rendall was not impressed by what they found at the plant and it seems that they did not do a very good analysis of the overall operations of the plant and the management of its operations. The second event that happened was that HP asked the plant to bid on a contact for a new ink-jet platform. The main concern that the operations management had with HP's observations and feedback was that, HP continued to have complaints on quality levels. However the attitude of the operations management team was that of ignorance in really looking into the problem. Although there reports were produced with each batch shipment, it seems that the Preston team did not pay as much attention to the reports as the HP team did.

Tom Branton, previously accountant for the business was named Managing Director for the Preston Plant in 1999. His response to the mounting crisis was to go back to the conditions and events that had taken place in late 1998 and into 2000. Tom, had the operations team working on ways to implementing unambiguous "shut-down rules" that would allow operations to decide under what conditions a line should be halted if they were in doubt about the quality of the product they were making. The current process is that production would continue regardless of the quality and once the product came off the line they would dispose of it and in one case it cost them $100,000 in lost product and in profits.

The plant really lacked a process where there was a continual quality check in place to ensure that the paper they were producing was flawless. The company did not have adequate guidelines in place for the employees and the employees did not feel empowered to make decisions even though they