Pretium Packaging

Business Problem Statement

The subject Company, Pretium Packaging, LLC, has inherited through acquisition, a number of legacy IT systems, processes and applications that promote redundancy and inefficient decision making due to a lack of system integration. This redundancy has even affected customer perception of Pretium. Pretium's web presence gives the customer a sense of many different companies that do not communicate with one another. This paper will discuss and address Pretium Packaging's web presence and the potential opportunities for systemic improvements by implementing a more ubiquitous web strategy, comprised of a higher degree of business application integration.

Introduction

Pretium Packaging, LLC, is a private rigid plastic container manufacturing company headquartered in St. Louis, MO. Pretium Packaging was formed in 1992, and has 1,000 plus employees spread across ten plants in North America; two plants in Canada, and eight plants in the U.S., with annual revenues of $180 million. The company has primarily grown over the years through acquisition. The company provides blow molding capabilities of rigid plastic bottles and containers, and offers other value-added services such as engineering technical resources to customers to assist them with new packaging design projects, beginning with concept generation via the use of 3-D CAD tools such as Solid Works and Pro-E, continuing through the developmental process of final packaging design, labeling and silk screen artwork, and developing the necessary molds and tooling required for the project. In addition to engineering project management, other value-added services include customer inventory management programs. Pretium Packaging offers blow molding processes that encompass several industry platforms: Injection Blow Molding (IBM), Extrusion Blow Molding (EBM), Injection Stretch Blow Molding (ISBM), and Injection Molding (IM).

Pretium Packaging's business model consists of focusing on five primary industry market segments: Pharmaceutical, Personal Care, Food and Specialty Beverage, Household-Industrial-Chemical, and Agricultural Chemical. Pretium markets its services through a direct sales force, and also has strategic alliances with key industry distributors that afford greater reach into potential new projects and opportunities. In addition to focusing on its five primary market segments, the company's business strategy is aimed at the mid-volume needs of tier-one and tier-two companies. This is further defined as target accounts that have rigid plastic container annual usage rates of 1,000,000 units to 25,000,000 units per SKU. Through the use of Pretium's historical data combined with the capacity capabilities of Pretium's plants and equipment, the defined annual volumes represent Pretium's "sweet spot" in terms of maximizing efficiency and profitability. Pretium makes its profit by costing out all of the expense items required to manufacture a particular container that includes engineering, direct labor costs, overhead and burden rates, then adds an appropriate mark-up to arrive at a market price that consists of an acceptable contribution margin and profit level.

Current IT/MIS Systems and Applications

Pretium Packaging's current IT systems and applications that are utilized to manage its operations and monitor its progress toward achieving corporate strategic goals and objectives include the following: A central server at the corporate headquarters in St. Louis that includes an Oracle OFA database used for financial and sales analysis. The main modules of OFA include: Express Applications - Sales Analyzer and Financial Analyzer, Express Tools - Express Analyzer and Express Objects. The organization also uses other software tools and databases to manage its business. These include some of the Microsoft Office applications (Excel, Word, and PowerPoint). Excel is used as an interface application to OFA via downloaded financial data and sales data into spreadsheet format for distribution of reports and performing data analysis. An example of this involves the task of monthly sales forecasting. Actual YTD shipment data for each customer, sorted by SKU, is downloaded from OFA into an Excel spreadsheet and distributed to each account manager. The account managers use this data, combined with any new information gathered from their account contacts, and update their 12 month rolling forecast, which is then submitted to management and uploaded back into OFA. This data is utilized for two purposes; it drives the production planning at the plant level to determine the necessary raw material and machine capacity requirements to meet the projected forecast demands, and the data is also provided to Pretium's financial institutions for the purpose of securing lines of credit to fund ongoing operations and procure new capital equipment to expand and grow the business.

Another application tool that is utilized is IBM's Lotus Notes. Lotus Notes is utilized for email communication, meeting and event planning via its calendar, and includes numerous customized databases for various departmental functional disciplines such Engineering to manage and track new engineering projects, Quality Assurance for managing and tracking reported product non-conformances, Customer Service and Sales for managing and tracking special pricing requests, Operations for managing and tracking continuous improvement projects and cost reduction initiatives.

Another application used by the company is a web-based Sales Force Automation (SFA) tool called Salesforce.com (SFDC), used by the Sales group. The SFDC application is used for customer relationship management (CRM), and to manage and track identified sales opportunities. This SFA tool enables accessibility from anywhere there is internet access and a web browser. It consists of many sales reporting functions, and can be custom tailored to suit the specific needs of a particular organization.

The newest addition to Pretium's IT improvement efforts includes the creation of a private web portal intended to be a more customer-centric strategic tool by allowing Pretium's customers the ability to access their purchase order information 24/7 via an assigned user name and password. This enables access to both currently open P.O.'s and their P.O. history that allows them to stipulate a specific date range they wish to access and review. Pretium also maintains a web presence via their website located at pretiumpkg.com.

Despite the significant strides Pretium Packaging has made in recent years to improve its IT infrastructure, MIS databases and reporting capabilities to enhance decision making, there remains significant room for