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Maximizing return on assets

Since signing up for a Web-based subscription service from Maxager, Owens-Illinois has dramatically improved its visibility into profitability in its glass container-making business.

A global leader in its field with revenues of $7.46 billion, O-I has 100 manufacturing plants on five continents. Management needed a way of maximizing cash generation and return on assets (ROA) for its widespread manufacturing operations. Complicating this quest was that each functional area—sales, marketing, finance, manufacturing—had its own data and metrics, and therefore its own view of profitability. The company also was unable to look at profitability by customer, individual product, or market segment.

Developing a method of providing a simplified view of profitability through internal resources proved impractical. So O-I conducted a Web search and came up with Maxager, a company founded in 1996 to focus exclusively on providing a "profit velocity" solution to complex manufacturers. Initially, O-I was attracted to Maxager's SaaS (Software as a Service) hosted model because they liked not having to buy their own hardware or spend time and money on internal software implementation. Though initially nervous about sending financial data offsite, O-I was reassured after their IT people looked at Maxager's SAS 70 Type II secure data hosting. Shortly thereafter, O-I began getting the profitability analysis it wanted from Maxager's hosted application.

O-I has now moved forward with implementing Maxager for their entire North American $1.98 billion business with 24 plants, including five in Canada. The firm also hired a dedicated manager in their Pricing & Profitability Group to coordinate the use of Maxager within the organization, to work with the data, and to train new users of the system.

It all comes down to visibility into profitability—where is profitability generated and where is it stalled. Kevin Stevens, VP marketing and sales at O-I North America, puts it this way: "Maxager is helping us focus our efforts and realize the enormous potential we have by better understanding our mix."

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ANNOUNCEMENTS

Hear renowned quick-changeover packaging experts, in person, at CP 07

Be there as Brian Wagner and John Henry present "Today's Speed to Market Imperative: Quick-Changeover Packaging Capability" at CP 07: Succeeding with Contract Packaging. Plan to attend this new event for contract packagers, coming this fall to the Chicago Marriott O'Hare.