IW Best Plants Profile - 2002

Keeping The Postman Busy DST Output's high-volume, quick-turnaround printing operation helps speed clients' cash flow. By John H. Sheridan DST Output, El Dorado Hills, Calif. At a Glance

  • Plant size: 360,790 square feet (undergoing expansion to 576,000 square feet)
  • Start-up date: 1988
  • Special Achievements
    • Earned 26 patents for software engineering and equipment modifications.
    • Five-time winner of State of California waste-reduction award.
In his 23 years in the printing business, Scott Shelton has learned quite a lot about paper -- like what can happen to it when the moisture content isn't right. "Paper is a living organism," he says, calling a visitor's attention to a series of nozzles installed high on his plant's walls, injecting a fine mist into the air. "You need to keep the humidity between 40% and 60%. If the paper's too wet, you get toner adhesion problems. If it's too dry, you have static electricity problems." As senior vice president and general manager of West Coast operations for DST Output, Shelton is responsible for the firm's El Dorado Hills and Rancho Cordova, Calif., facilities, which print 105 million billing statements a month for clients -- more than 3.5 million a day -- and get them quickly into the mail. With volumes like that, the last thing you need is uncooperative paper stock or envelopes that may warp and get twisted in the high-speed printing and insertion equipment. But the misters on the walls hint at only one of the challenges that DST Output, a subsidiary of DST Systems Inc., of Kansas City, Mo., must contend with on a daily basis. A glimpse into the El Dorado Hills Data Control Center, which evokes images of a NASA mission-control room, provides a visual clue to the intensity of the information-technology backbone that keeps this complex humming. Their eyes peeled to several tiers of computer screens, control center staffers monitor plant operations as well as the status of dedicated T1 phone lines carrying massive data streams from clients. Relying on the skills of some 500 software engineers -- a major segment of the 1,646-member workforce -- the plant accepts customer data in virtually any format and converts it into a format compatible with DST Output's systems, which print customized billing statements, merge them with various marketing inserts, stuff them into envelopes and whisk them into the mail -- typically within 27 hours after a customer releases its data. "It is a finely orchestrated symphony of people, processes and technology," observes Bob Logue, director of business operations. The statements that the facility generates for cable-television providers, wireless telecommunications companies, financial services firms and other clients last year represented nearly 2% of all first-class mail in the U.S. -- making DST Output's West Coast operation one of the U.S. Postal Service's (USPS) biggest customers. But, with an eye to the future, it also offers an "electronic billing" option. In 1998 it created one of the nation's first electronic-delivery divisions to allow clients to split their data streams and send some customer statements over the Internet rather than mailing out paper versions. It now generates more than 18 million electronic statements each month. In pre-processing operations, the software that handles a given customer's mailing is tweaked to customize the appearance of the data and to accommodate demographically targeted marketing messages or inserts. The software also applies various business rules -- for instance: "Don't bother to send a bill if the account balance is zero." In addition, bar codes are embedded in the data stream for job-status tracking and quality assurance purposes -- to ensure that the right billing forms, inserts and envelopes are used. Postal processing software, developed by DST Output in collaboration with the USPS, not only addresses and sorts the mail down to the carrier route, but also ensures that the system is compliant with the latest postal regulations. When first-class postage rates went up on July 1, for example, the system automatically converted to the higher rate at the stroke of midnight. "The wheels never stopped turning here," Shelton emphasizes, "because we run 24 hours a day, seven days a week, 365 days a year." A chief selling point in luring business away from in-house mailing operations is DST Output's rapid turnaround capability -- coupled with its ability to ship pre-sorted mail directly to the airport, bypassing local postal operations. "I tell people that they can drop a letter in a local mailbox down the street, and we can send something through our mail stream -- and ours will get there two days ahead of theirs," Shelton says. From a client firm's perspective, the faster the billing statements reach their destination, the sooner they're likely to get paid. So the speed that DST Output offers can have a positive impact on its customers' cash flow. Despite its huge printing volume, the operation boasts a high level of accuracy. Based on reports received after statements leave the plant, 99.86% of the mailings meet all customer requirements. Internally, random sampling and automated systems catch and prevent "defects," such as use of the wrong billing form. Due largely to corrective-action measures, the in-plant defect level was reduced by 64% over the last three years to just 382 ppm. Large customers also conduct their own audits. For example, Ford Motor Credit Co. visits the plant twice each year. "During a site visit, we'll look at jobs coming off the machines," says Charles Pratt, director of global process management for Ford Motor Credit. "In addition, we get 200 phantom invoices sent to us each month -- so that we can verify the print quality and the messaging." He gives DST Output a "very high" rating for its accuracy. "We think they're an excellent vendor -- one of our best." Clearly, one of the keys to the impressive performance of the DST Output operation, located just east of Sacramento, is the accent it puts on hiring -- and developing -- top-caliber employees. "I don't want a place where people have to check their brains at the door," says Shelton. "I want an environment where they feel they can make a difference." About 40% of the plant's work teams are self-directed, he estimates, with team members playing a role in hiring, skills certification and performance reviews. "We use 180-degree peer reviews, where associates get input from each other on their performance," Shelton says. "But it varies throughout the plant. Some groups are farther along than others." A heavy dose of on-the-job training -- an average of 80 hours a year for production employees -- reinforces the emphasis on employee development. Fully 51% of production-floor associates are multi-skilled. The plant also offers tuition reimbursement up to $5,000 a year -- for any employee -- for college coursework that's related to the current job or a potential future position. Shelton, who began his career at DST Output as an 18-year-old mailroom employee, exemplifies the "promote-from-within" philosophy that he now ardently advocates. He enjoys walking through plant departments populated with "white-collar" professional positions -- such as client services, graphic design services, or the data center -- and pointing out associates who've advanced from the production floor. "It's damn near everybody," he grins.
Web-Exclusive Best Practices
By John H. Sheridan Benchmarking contact: Bob Logue, director of business operations, [email protected], 916/939-5735 Bar Coding Curbs Waste A bar code scanning system, using software developed internally by DST Output, plays a significant role in reducing waste--primarily paper waste. It is one reason why the facility has earned a State of California Waste Reduction Award five times since 1995. Bar codes embedded into the data streams that arrive from customers help to identify which printing forms, envelopes and inserts are to be used. Matching bar codes (trimmed off at a later stage) are printed along the edges of the huge rolls of paper containing as many as 50,000 pre-printed customized billing forms. As the paper feeds into the high-speed printing equipment, a laser scanner reads the bar codes "to verify that the right type of paper and the right form is being used," notes Naveed Choudry, manager of the Laser Print Department. "If it doesn't match properly, it will lock up the printer." As the statements are being printed, the laser printer adds a new set of bar codes that govern the subsequent insertion operation, where statements, advertising inserts, and return envelopes are automatically slipped into outgoing-mail envelopes. A bar code reader on the insertion equipment ensures that the proper items are being inserted. Prior to development of the bar code system, explains General Manager Scott Shelton, "we would have rather large runs where ... they would get all the way through the run and then discover that the wrong form had been used. And we'd have to throw it all away. "Now it stops instantaneously. If they have the wrong forms in the printer or the wrong envelopes in the hopper -- Boom! -- it stops. So in addition to making sure all the components are correct, it reduces waste." From an environmental standpoint, DST Output has reduced waste going to landfills through an extensive recycling program. Scrap paper -- including bits and pieces cut out during envelope-manufacturing operations -- is sucked up by an extensive vacuum system and pneumatically transported to a recycling room, where it is baled for shipment to a recycling plant. Over the last 12 years, the facility has recycled more than 73,000 tons of paper that otherwise would have wound up in landfills. Bullet-Proofing Managers DST Output annually identifies about 15 high-potential individuals as candidates for accelerated advancement through its managerial ranks. They are invited to participate in a "Bullet Proof Manager" (BPM) training program, which is offered worldwide by an outside training firm. "The program is targeted to management and supervisory people -- the people who are going to be running this company five years from now," explains General Manger Scott Shelton. The training covers 24 content areas such as team building, empowerment, recognition, recruiting, retention, strategic planning, communications, facilitation, presentation skills and leadership skills. Intense, four-hour classes are given on each topic. One requirement of the BPM program is that each participant must make a presentation at one of the quarterly West Coast management meetings. "I tell people, 'Your teeth might start chattering, but you can do it. We're going to build your confidence, because we want to move you forward,'" says Shelton. "And, down the road, it's your confidence that's going to help you sell yourself for promotional opportunities." Since the training is tied to succession planning, last year's participants were instructed to identify their likely successors -- thus making them candidates for this year's BPM program. "And where do you think they pulled them from? They pulled them from their departments -- whether it was the production floor or whatever," Shelton notes. "So, this year, we have mechanics and people from the plant floor in the program." For graduates of the BPM program, additional training opportunities have been developed. Currently in the works is a three-day program on strategic planning, which will delve into that topic in greater depth than the BPM course permitted. Wellness And Safety Pay Off In the last three years, the lost-workday rate for the DST Output complex has declined by 80% and is well below its industry average. Among the reasons for that are engineered ergonomic improvements in the plant and an array of fitness programs available to employees. The El Dorado Hills campus includes a well-equipped fitness center, staffed by a full-time fitness expert. The center has aerobic and weight-training equipment and offers fitness classes-free of charge -- in the early morning, at lunch and after work. In addition, employees have access to a six-person medical team, headed by a full-time physician -- T. Warner Hudson -- who serves as director of health, safety and environment. He supervises three full-time nurses and a support staff. The medical team performs vision and hearing examinations, conducts health-risk assessments, offers physical exams and blood pressure monitoring, and conducts annual flu clinics and smoking cessation programs. Hudson, long an advocate of preventive health measures, contends that there is a strong correlation between employee health and safety and customer satisfaction -- and he has data to support his argument. Studies he's conducted at various work sites strongly indicate that plants with the best safety records tend to have significantly higher customer-satisfaction ratings.
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