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David Weldon

Quality Insider

Sweet Surroundings

NECCO’s move brings efficiencies, savings, and new customers

Published: Monday, August 6, 2007 - 21:00

This article is reprinted with permission from the July 2007 issue of ExecDigital.

At age 160, the New England Confectionery Co. is the oldest multiline candy company in the United States and one of the newest. Four years ago, the popular candy manufacturer embraced lean manufacturing practices, relocated its antiquated facilities, consolidated its operations, and re-emerged as a state-of-the-art production facility that is now a showroom for ultramodern processing perfection.

It was a move that turned out to be one sweet deal.

“We have a lot more capability and more capacity,” says Bill Leva, vice president of operations at NECCO. “We also have better working conditions, better work flow, less product handling, and our cycle times to the customer are better.”

In short, everything about the move paid off in spades, Leva says.

The move and the lessons that the company has learned since also provide a textbook example of how a long-standing manufacturer can make what’s old new again, and do so without sacrificing quality, slowing sales, or missing a day on the production floor.

Launching the candy trade
Now located in the North Shore city of Revere, Massachusetts, just a few minutes from the city of Boston, NECCO was established in 1847 by Oliver R. and Silas Edwin Chase of Boston. Oliver had just invented and patented the first American candy machine, a lozenge cutter, and with it, the two set about establishing the first commercial candy manufacturing company.

Over the next several years, the company rapidly patented a number of new inventions, introduced a number of new candy lines, and acquired various other businesses along the way.

By 1927, the company had grown to the point that it moved from Boston across the Charles River to Cambridge, and settled into a new production facility near the Massachusetts Institute of Technology.

The then-new facility, designed in the shape of a letter H, was considered to be state-of-the for its time, and was built to welcome in as much sunlight and air as possible. With the entire facility devoted to candy making, it was also the largest such facility in the world.

Times change. So do technologies. What had been a progressive layout 80 years before had become inefficient.

“The building lacked a sanitary design, was six floors, and had a less efficient work flow,” Leva says.

Sanitary design, in fact, wasn’t even in the thought process when the building was laid out. It goes without saying that there was no allowance for nonallergen vs. allergen room designs for actual candy processing. Those factors weren’t considered by regulatory agencies in 1927.

Time for a change
So, in 2001 company executives decided to take the company to the next level in its evolution by expanding product lines, making the manufacturing process more efficient and less expensive, and acquiring new customers.

Their heart was in the right place for that era,” Leva says, “but the building’s age was a problem for reaching out and impressing new partners. So management decided it was time for a move, and the appearance of a new facility would be a major criterion in the selection process.

“The thought was, if we are going to grow and attract new customers, we would need a showplace,” Leva says.

Other items on the location check list included the ability to consolidate three buildings into one. The company had also made an asset purchase of a second facility for a few of its lines—such as the Haviland brand of chocolates, malted milk balls, and thin mints—and had a warehouse miles away in Woburn. Each building had different processes in place.

The new location would have to accommodate current and future warehousing needs; it would have to be totally air conditioned; it must allow for both allergen and nonallergen production processes; and it needed a dramatically improved layout for moving products through the pipeline.

The solution quickly became a new site in Revere. Construction began immediately, in 2001 a second floor was added to make the facility 818,000-sq ft (the 1927 building was approximately 500,000-sq ft). In 2002 the first manufacturing equipment was moved in. By February 2003 construction was completed, and by May 2003 the company officially opened up shop at the Revere address.

“A move is never easy,” Leva notes, especially one involving a company the size of NECCO. “Once you move it, some equipment won’t run the same. There were some growing pains.”

Still, the move went off without too many hitches.

Looking inward
Most important, the move enabled the company to completely reassess every step of its production processes, including work flow and staffing, and to come up with a new layout design that moved candy more quickly from the factory floor to customer with fewer employees. Various phases of the manufacturing processes that had previously been on different floors were now all together, enabling the company to better manage and move product. What had filled six floors now filled two.

“Most of the processing operations are done on the second floor, and then gravity fed to the first floor for packaging,” Leva explains.

A key in cutting cycle times was establishing more efficient work cells, so that the workers have access to everything they need. Also, not having to snake assembly lines from floor to floor cut time in the processes, especially in packaging, labeling, and sorting for distribution.

“In order to make the move transparent to the customer, the company had to build large amounts of inventory in advance of the move,” Leva says.

Another advantage of the move was the ability to totally air condition the new facility. While excessive heat will make any worker uncomfortable, it’s absolutely deadly to chocolate.

“The new plant give NECCO the ability to now run full operations year round.” Leva says.

“We can also have allergen rooms when we are panning chocolate,” Leva says, meaning the company can totally separate production lines that are including nuts in the process from those that aren’t. This is vital to prevent cross-contamination. “You have to isolate the runs,” Leva says.

The increased capacity is certainly appreciated as well. The company has 14 production lines, with over 700 stock keeping unit (SKU) items in those lines. All told, Leva says, the plant is manufacturing 70 million pounds of candy per year.

Have another chocolate
Moving such a large company, even just to a few towns over, is never cheap. For NECCO, the largest expense was, of course, the new building. That didn’t leave as much money as company executives might have liked to invest in new technologies.

Still, Leva says some candy-making equipment was replaced, a new peanut-roasting machine was added into the line, and some robotics were introduced in certain steps.

With consolidation into one facility, Necco’s delivery time to the customer has improved. To put that into context, Leva says, the company puts each of its top candy lines into one of three categories, based on ABC analysis. The three categories require five days (A Items); 10 days (B Items); and 15 days (C Items).

And, as is the case for many manufacturers, NECCO follows the 80/20 rule—80 percent of the volume is made for 20 percent of the customers.

“NECCO has now settled into a very comfortable routine at the new facility,” Leva says, “and is looking forward to growing.”

“Visitors to the plant are really impressed with how clean, how well-organized, and how well-designed the facility is,” Leva says. “All of the processes that went into designing the new building were intended to help us better meet regulations, to grow, and to impress customers. We wanted to show it off, and we have been adding new customers ever since.”

Discuss

About The Author

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David Weldon

David Weldon is editor-in-chief at ExecDigital. Contact him at dweldon@whitedm.com.