BM Packaging Ltd. Case Study

Background:

BMP is a Botswana based manufacturing company specializing in polypropylene bags, bulk bags and cloth. In 1999 the CEO, Eugene Matitkiti contacted SMI as the company had not realized a profit in 5 years and the Australian owner had given a 9 month ultimatum for BMP to turn a profit or else face closure.

There was a lot of divisional rivalry and the general manager had little confidence in the ability of his department heads. This resulted in a culture of upward delegation and very little accountability within the various departments.

Program Launch:

Mr. Matitkiti established that the company would have to move from a gross profit of 43% to 60% in order to become profitable.

He then outlined what would be necessary to reach this goal by department. The next step involved presenting these goals to the department heads who would be participating in the SMI program. At this meeting the goals were moderated with input from the participants so that they could personally commit to and take responsibility for the achievement of each of their goals. In the past the goals were not meaningful and were merely dictated to them without any participation from the department heads. Each department now had a target goal within in the context of reaching a 60% gross profit level.

Below are the 10 goals that were adopted by the company:

• GP of 60%
• Scrap rate reduced to 10% by 21st of February 2000 and then further reduced to 8% thereafter.
• Output of 43,200 square meters in weaving per day.
• Output of 3.6 tons in extrusion per day.
• Sell, deliver and collect payment within 30days net of statement; sell 1.2 million bags per month.
• Output of 40,000 bags in conversion per day.
• Transform into a reliable supplier of AA Mines and Portland Cement in Zimbabwe.
• Introduce systems to achieve and sustain all of the above by 21st February 2000.
• Implement training for BMP staff through Productivity Center.
• Minimize downtime to 4 hours per day/120 hours per month, (no machine should be down for more than 4 hours in any given 24 hour period). 

Having set these goals, each department head took responsibility for reaching them, and reporting progress to the general manager each week. The general manager worked closely with the SMI distributor and ran the weekly program workshops. The 45 minute workshop meeting included:

• A report from each department head on the progress of their weekly goals – Personal and Business (2 minutes each - total time allowed 20 minutes)
• Financial report from the GM (5 minutes)
• Review of each goal for the coming week ( 5 minutes)

Discussion of how to apply ideas from the program to their departments (15 minutes)

Results:

After 8 weeks all but one of the ten listed goals had been achieved or was on target:

• Gross profit 59%
• Scrap rate reduced by 8% and reducing weekly
• Output of 43,200 meters in weaving per day
• Output of 3.6 tons in extrusion per day.
• Sell, deliver and collect payment within 30days net of statement; sell 1.2 million bags per month.
• Output of 40,000 bags in conversion per day.
• Transform into a reliable supplier of AA Mines and Portland Cement in Zimbabwe.
• Introduce systems to achieve and sustain all of the about by 21st February 2000.
• Implement training for BMP staff through Productivity Center.
• Minimize downtime to 4 hours per day/120 hours per month, (no machine should be down for more than 4 hours in any given 24 hour period).

By the fourth month, the output had been increased to 43,200 meters in weaving per day, thus all goals were accomplished well within the 9 month time frame.

The company was now functioning as a cohesive unit with improved communication between departments. The department heads each had a clearer sense of their role in the overall goals of the company and how by working together as a team and achieving those goals they could realize their personal goals. This increased the productivity and morale within the company.