For more than 100 years, Glatfelter comfortably enjoyed its niche as a small, regional supplier of commodity paper products, holding court east of the Mississippi. With the late 1990s came the era of globalization and specialization, however, and Glatfelter's tried-and true-formula — like that of many small paper mills — came under fire as larger companies began to trample on its terrain.
Glatfelter cast a hard look at its options. CEO George H. Glatfelter and the board eventually settled on a survival plan to reinvent Glatfelter as a specialty paper provider and join the others on the road to globalization. In 1998, Glatfelter acquired Germany-based Schoeller & Hoesch GmbH & Co., which expanded the company's operations into Europe and the specialty paper market. The deal also set in motion a major transformation effort, dubbed CLEAR, that included an overhaul of Glatfelter's new product development (NPD) processes in a quest to facilitate growth.
Glatfelter's accomplishments in this transformation effort have earned the company the High Achiever award in Innovation Mastery in Managing Automation's 2007 Progressive Manufacturing awards program.
"Companies with equipment of our size were going out of business trying to compete with the big boys," says Scott Mingus, Glatfelter's global director of product development, who came on board in July 2001 to lead the "A" piece of CLEAR, which stands for "Accelerate new product development as a primary engine for growth."
"Faced with commoditization of our core product lines and declining business in our traditional markets, we began to rethink aspects of our research and development strategies and practices," he says. "It was apparent that long-term growth and profitability would depend on creating new, commercially viable products with enduring customer appeal."
To pull off its metamorphosis, Glatfelter had to get far more aggressive about inventing new grades of paper. The company had historically not prioritized innovation and product development, having only a handful of sales and technical folks focused on the problem. In addition, product development processes were not standardized; rather, each business unit ran its own effort, which resulted in little cross-pollination of ideas and even fewer new product introductions — typically only one or two per quarter. In fact, at the time, new products accounted for only 10% to 15% of Glatfelter's portfolio of paper grades — not a suitable benchmark for a company looking to define itself in the vanguard of specialty paper providers.
"Too few people in the company were involved in new product development; a couple of scientists and a few sales guys drove it," Mingus says. "In reality, we needed the company's operations, finance, purchasing, and senior leadership — along with the technical and sales people — involved in new product development. We needed to make it a business function, not a technical function."
That's where Mingus, in his role as global director of product development, came in. He was charged with increasing the amount of revenue Glatfelter could generate from new products, not to mention reducing the time required to bring products to market. He was also committed to reducing the number of products submitted to development that ultimately never made their way to market or failed their revenue and profit objectives because they were ill-defined or ill-conceived.
The only way to accomplish all of the goals, Mingus believed, was to develop common NPD processes and automate the practice. The company tapped Sopheon's Accolade PLM system in 2002 as the enabling technology platform for the "A" piece of CLEAR. Its best practice, central repository, and dashboard and reporting capabilities, among other features, provided just the right level of automation and shared information access required to bring standardization to the Glatfelter divisions' NPD processes, Mingus says.
Accolade serves as the central portal for all data and activities needed to move product development projects through the system. The software automatically populates charts and creates reports that help executives make better decisions related to project selection and prioritization, he says.
"Accolade helped people focus on the projects, the deliverables, the milestones, and the methodology of getting to results," he says. "As we added new people in new product development, we wanted to archive the work they and others were doing. We didn't have a good method corporate-wide to capture what happened in NPD projects. With Accolade, we now have it."
In addition to deploying Accolade, Glatfelter made organizational changes. It staffed up its NPD team, which now includes some 20 people exclusively focused on the practice. It also had to reorient its workforce, which traditionally had been trained to focus on long runs of relatively few grades of paper, to being comfortable with frequent changes, shorter runs, and familiarity with thousands of paper grades. And the company deployed an SAP ERP system as well as myriad hardware and milling changes.
"It was a tremendous change for a company not used to making changes," he recalls. "We went from several hundred grades of paper to several thousand just as many companies in our sector were streamlining their grade offerings and reducing the complexity of what they do."
A couple of years into the transformation, Glatfelter is seeing significant results. The company has achieved a 25% reduction in the average time required to deliver a new product to market, along with a 55% decrease in the number of product failures, Mingus says. One of the key targets of the CLEAR initiative was to ensure that 50% of Glatfelter's corporate revenue would come from new products by 2006. The company met that goal two years ahead of schedule, in 2004, he added. In fact, Glatfelter generated more than $500 million in sales from new products in 2006, out of total sales of nearly $1 billion. Of those sales, $200 million was derived from markets in which Glatfelter didn't even participate in 2001.
As a result of this transformation, Glatfelter is in a far better place to compete in a global and changing market. Says Mingus: "The NPD shift has made us better positioned to weather any downturns. We're one of the largest employers in the county and we're among the last bastions of major-league paper makers in Pennsylvania."