Continuous Improvement in the Aerosol and Liquid Packaging Industry
Aerosol and liquid contract packaging company Aerofil is now in its thirtieth year of business. It specializes in four segments of the market: personal care products, household products, automotive products, and insecticides, which include both aerosols and liquids. Aerofil has seven aerosol packaging lines and four liquid packaging lines to offer its customers. In 2007, the company began a journey to become heavily involved in lean manufacturing and continuous improvement.
Bob Maher, Bob Dunaway, and Jack Shelby created Aerofil in 1988. Bob Dunaway and Jack Shelby were the two majority owners, and Bob Maher was a minority owner until last year in October when the company was acquired by HBM Holdings, a privately-held holding company based in St. Louis, Missouri.
The company’s primary customers in the personal care industry are industry-leading companies like High Ridge Brands which sells products under brands such as White Rain, VO5, Salon Grafix, and Rave. In the automotive industry, it serves companies like ITW Global Brands and Zep, and in the household care industry, it provides packaging to customers such as S.C. Johnson and Prestige Brands. Insecticides only make up a small percentage of the business these days, although Aerofil does partner with Spectrum Brands.
The company has its manufacturing plant in Sullivan, Missouri with 400,000 square feet of production space. It owns a warehouse of 30,000 square feet across the street, and it leases an additional three warehouses surrounding the manufacturing facility for another 90,000 square feet of space.
The company has grown consistently every year and has reached a point where its production needs are exceeding those of its existing facility. It plans to add an additional high-speed aerosol line in the next year, and soon after that, there are plans to acquire a second site. The location of the expansion is still to be determined, and the company is considering its options.
“We are looking for opportunities with some existing aerosol packagers and trying to find one that complements our capabilities and fits with our culture,” says Ryan Montgomery, Director of Sales and Marketing at Aerofil. Another benchmark for the company is that it recently constructed a new trailer drop lot to improve shipping efficiency for its customers.
Thanks to its many capabilities and outstanding culture, Aerofil has received recognition for its hard work. It won 3M’s Supplier of the Year award in 2016, has been recognized multiple times by ITW as a Supplier of the Year and its newest liquid packaging line was recognized by Packaging Digest as one of the Top 6 packaging lines in the United States. The company was also recently named as one of the St. Louis Business Journal’s top 150 privately-owned companies.
The challenges faced by the company are not unusual in the general manufacturing industry, and the labor shortage is the biggest dilemma of all. “Finding people that want to come to work, want to grow with us and then retaining them. Labor is our biggest challenge by far. It’s our most valuable resource here at Aerofil,” says Ryan. Increased automation is one way to offset the shortage in the workforce.
This was the first company in its industry to begin the transition towards lean manufacturing and implement a philosophy of continuous improvement. Since the company’s transformation, lean manufacturing and continuous improvement have become a way of life here, and its early start has put it farther ahead than its competitors. “Knowing that we started so much earlier than them [competitors] and the amount of work it takes, we know it would be difficult to fathom possible for anyone to catch up to where we are in our journey,” says Ryan.
Privately-owned HBM Holdings has four companies in its portfolio, and Aerofil is its most recent acquisition. HBM aims to acquire and support middle-market businesses in the manufacturing field and has a long-term buy-and-build approach, which is quite different from a typical private equity company. Private equity firms generally look to purchase a company, build it up, and sell it pretty quickly, whereas HBM believes in patient capital and really building companies up over time. HBM Holdings wants to be the last owner of any company that it acquires, and it found that the company values of sustainable growth and performance of Aerofil aligned with its main principles. HBM Holdings appreciates the value that Aerofil brings to its customers and its emphasis on creating a positive work environment for its employees.
Aerofil does not own any of its own products or brands. Rather, it provides packaging services to its customers. The company is known to assist its customers in the development of their products, although it has no interest in actually owning any of the created formulations or products. It has an extensive research and development team with many capabilities and significant experience in designing and developing new products and tweaking existing ones.
The research and development department finds innovative packaging solutions. If a customer wants to improve the performance of a particular product or reduce the cost to manufacture a product, the research and development department will test chemicals, formulations, and packaging concepts to achieve whatever goal the customer may have, whether it is performance improvement or cost reduction. It has a 2,500-square-foot state-of-the-art technical center with the tools to perform these tests and achieve those customer goals.
When the company is developing a product from scratch, it first must get an idea of where the gaps in the packaging industry are. “We go out and talk with customers to try to get the voice of the customer and understand what kind of challenges they’re facing, what type of products they’d like to see, and what they think their customers would be interested in, that we can develop and they can take to market with their brand,” says Ryan. The next step is for the company to develop these new products for its customers, with the understanding that the products will be packaged here, but all the intellectual property and formulations will belong to the customer.
It is important for the company to maintain good supplier relationships since the aerosol industry is very small. There are only a handful of suppliers for each component and a small number of distributors for specific chemicals. “Having a good relationship with the suppliers is key. We establish that relationship with the suppliers, the customers, and ourselves and manage the relationships between the three,” says Ryan.
The vast majority of its suppliers are in the North American market, and there are only a handful of items that are shipped from overseas. For the most part, its suppliers are based in the United States, although some are global companies with manufacturing facilities throughout the world that supply Aerofil from their U.S. facilities.
With the support of its suppliers, the company implemented a new process that it calls the supermarket program. It is a pull system that the company would not have been capable of providing to its customers if its suppliers did not approve of the outlined request.
These pull systems were established to drastically reduce the lead times for its customers from weeks to days, as well as lower inventory levels and increase inventory turnover and cost savings. The customers that choose to implement supermarkets at Aerofil develop products at a rate based on consumption, a system that Toyota began using in 1953 and called Kanban. It uses the rate of demand to control the rate of production. The efficient pull system improves manufacturing schedules and also enhances the quality of supplier and customer relationships.
Safety is a priority. “Safety goes above all else. The number one goal is to make sure that everybody goes home the same way they came in. To us, there is absolutely nothing more important than safety,” says Ryan. The company will sacrifice on cost, delivery, and even quality before it would ever sacrifice the safety of its employees or its customers. The owners and senior staff understand that employees come to work for a job, and at the end of the day, there are many more important things in life.
To ensure that the staff return home safely after work, the company has put a variety of safety protocols in place, and it regularly updates those standards as a part of its continuous improvement philosophy. In the last year, one update that has taken place is the requirement for steel-toed shoes in the factory, which was not required before HBM Holdings came onboard and acquired Aerofil.
“We were able to learn from a lot of the great safety programs HBM’s other portfolio companies have implemented, and we were able to share best practices among the four other companies that relate to safety,” says Ryan. The ability to gain knowledge from the various safety practices of different companies is highly beneficial for all subsidiary companies of HBM Holdings.
Customers can feel and see the difference in the way the company operates by coming into the manufacturing plant. “If a customer is walking the floor, they would see employees that are engaged; they are not shy about answering customers’ questions, and they love to interact with customers,” says Ryan. The plant is also extremely clean and well organized; it is far more visually appealing than customers expect for a manufacturing facility in an industry that works with messy chemicals and dyes. Another reason that the plant shows very well is that Aerofil is clearly an enjoyable place to work where employees are involved and interested in the operation.
The team of approximately 475 employees has developed a great reputation in the industry for its unique attention to service and quality. The company strives to create a great product and to treat everyone with a high level of service. Customers are given a dedicated customer service representative to increase service effectiveness.
Every employee, from the sales team to the production workers on the line, takes pride in the work they do and the product they create. “The employees take a lot of pride in what they do here. It’s pretty neat knowing that, when you walk through a Walmart or a Target, there are products on the shelves that you know you had a hand in creating. It gives a sense of pride for the employees, and it shows in their work,” says Ryan.
This passion is passed on to the customer and leads to the exceptional customer service provided at Aerofil. “From the bottom to the top, every person that is involved with their product or touches their product truly cares about giving the customer the best product possible and the best experience possible,” says Ryan
The company is one of the largest employers in the rural community of Sullivan, Missouri and that leads to a family-oriented, close-knit atmosphere. “All these people live in the community together and also work together at Aerofil, so there’s a lot of husbands and wives that work here and extended families, and that kind of translates over to the relationships that everybody has with each other,” says Ryan. As families do, the employees look out for each other to keep everyone safe and to make sure that they all succeed as a team.
The company feels responsible for giving back to the small community in which it operates and its employees live and raise families. It sponsors many events at the Sullivan High School including the athletic club and the yearbook club. Any time that the high school reaches out for a donation or a sponsorship, the company obliges with no hesitation and is proud of its ability to invest in the lives and futures of the students in Sullivan. The same applies to the local hospital and other community organizations.
In the future, the company plans to invest in more automation across the plant that will allow it to remain cost competitive while avoiding some of the labor shortage challenges. “It will allow us to allocate those labor resources to jobs that are more value-added and provide them a better sense of accomplishment or contribution,” Ryan explains. Aerofil is installing new robotic palletizers in the manufacturing plant to cut down on the labor required in a position that has much repetitive motion and heavy lifting. From a safety point of view, it is a great advantage to be able to eliminate the manual labor that is needed for that position. The robotic palletizers also allow the operations to run much more efficiently.
Moving toward more automation is a large part of the company’s strategy over the next three years. The company is also excited about its new, high-speed aerosol packaging line that will be fully developed in the next year.
Aerofil has a reputation as one of the most responsive, collaborative and operationally excellent independent aerosol contract fillers in the North American market. Time after time, Aerofil has proven the most attractive option when a company looks to exit the manufacturing side of the business and outsource their aerosol and liquid production. Aerofil’s lean manufacturing, and continuous improvement philosophy set it apart. Its responsiveness and commitment to service and quality keep its customers coming back.