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Earle M. Jorgensen's Schaumburg Renovation
The following article is reprinted from the September-October 2005 issue of Forward Magazine. This article was written by Ross Foti, and appears on pages 17 and 18 of that publication.

Earle M. Jorgensen’s Schaumburg Renovation
Project: Business reengineering and technology upgrade
Cost: $40 million over 5 years
Drivers: Performance improvement/growth and expansion
Financing: Internal cash flow and existing capital expense allotments
Business Lines: More than 25,000 different metal products, including carbon steel, stainless and aluminum bar and tubing, specialty plate and brass. Provides value-added metal processing and inventory management services from its distribution network of 37 service and processing centers in the United States and Canada.


Since 1923, Earle M. Jorgensen Co. (EMJ) in Lynwood, California, has supplied metal to manufacturers across North America. In recent years, EMJ management felt that process issues were holding the company back. “As an industry, we don’t put enough emphasis on our process control,” says Kenneth Henry, EMJ executive vice president, stationed at the company’s regional office in Dallas, Texas. “We have detached processes. To operate properly, you have to look at the entire process holistically, and project management enables you to look at how your processes interface. Based on this philosophy, we’ve learned at EMJ that to grow and expand, we had to fix everything through a reengineering of all of our processes.”

To lead the improvement effort, EMJ executives selected a team from across its commercial, administrative and operations units. “We originally defined our goals and our inhibitors that kept us from being successful.” Henry says. “Most of our orders went out on schedule without fail, but we felt we had to improve in the instances where we did fail.” EMJ set ambitious goals: 100% on-time delivery at the lowest total cost.

“I don’t think a project approach to our industry is common,” Henry says. “We never connect the dots: If we have a problem in the saw department, we fix the saw department. We don’t look to implement better operations in the plate department at the same time.”

The team determined that process flow was the overriding problem, predicated by lapses in technology and software. The overall solution, which involves streamlining operations and repositioning equipment in the Schaumburg depot facility into a cell manufacturing system setup, had three stages. In the first phase, dubbed the Center Bay project, the team reengineered the Schaumburg facility with a more efficient materials flow and processes to match that flow. Because the 600,000-square-food plant operates 24/7, a single scheduling issue could have cascading repercussions with business disruptions.

“We diagrammed the current state of the facility with a basic flow chart,” Henry says. “That’s when we realized that we had trucks traveling 5,000 feet around the building to be loaded. So we drew another chart of how we wanted it to work, and shortened that distance to just 400 feet.” The revised site design includes zone loading with drives on either side of the building as well as a center drive.

The second phase involved technology improvement to support the process redesign. The new materials flow required a loading and shipping manifest, order management system and software that allows easier, paperless organization of orders. “Technology was the tool that delivered us,” Henry says.

In addition, this phase included the installation of a 160,000-square-foot by 60-foot-tall Kasto-Racine automatic-storage-and-retrieval system with customized automatic bundling. This was the largest automated service center system Kasto had ever installed. “Chicago is the inter-company depot, so this made sense,” Henry says. “You certainly don’t want to experiment on the mother ship, but once we saw it could work in Kansas City [where a similar system had been installed 3 years earlier], we felt confident that we could move forward with Schaumburg.”

Phase two concluded in October 2003, and phase three (further expansion) has begun. Improvements implemented in the first two phases alone have doubled output and reduced man hours by 40%. Henry says the only thing he would have changed was to build the facility bigger at the outset.

As a result of the reengineering project, EMJ was ready to profit from the booming market of 2004. Revenues increased 61.5% to $401.7 million, and operating income increased 11.6% to $16.4 million for the third quarter of fiscal 2005, compared to $248.8 million and $14.7 million, respectively, for the same period in fiscal 2004. In addition, EMJ’s tons shipped from inventory increased approximately 14% from the prior year’s quarter. “We couldn’t achieve the stunning results we achieved without project management,” Henry says.

Here is a list of upcoming shows and exhibitions that KASTO, Inc. will be attending. New events are always being added, so check back frequently.

Date: Title of Event: Location: Booth No. September, 13 - September, 18, 2010 International Manufacturing Technology Show (IMTS) McCormick Place, Chicago, IL N-6851 November, 2 - November, 4, 2010 FABTECH 2010 Georgia World Congress Center Atlanta, GA 3140