Operations Management Paper

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Saint-Gobain Containers

Andrew Vaccarezza
Ryan Russell
05/17/2007

INTRODUCTION3
BACKGROUND3
STUNNING FIGURES4
OPERATIONS OF THE GLASS MAKING PROCESS5
RAW MATERIALS5
MELTING6
CONDITIONING6
FORMING7
ANNEALING8
INSPECTION9
PACKAGING10
CONCLUSION10

Introduction

Saint-Gobain Containers is one of the leading glass packaging companies for the food and beverage industry. Employing over 4,000 people and having 14 locations in North America, Saint-Gobain Containers has shown to be one of the main leaders of its industry. Ranking number one in the European market and number two worldwide, Saint-Gobain Containers has shown to have a superb base of Operations Management. Having a good chain of Operations Management usually comes from another aspect of the company which is passed on as it expands which is exactly the case with Saint-Gobain Containers. Background

Saint-Gobain Containers comes from a large group of manufactures in like industries. The base company is simply Saint-Gobain. Saint-Gobain was created in 1665 by Colbert and built the Hall of Mirrors at the Chateau de Versailles (Saint-Gobain). This group contains many different industries; such as glass, ceramics, plastics, cast iron, reinforcements, abrasives, construction materials, pipe, and gypse. The following diagram illustrates how much of Saint-Gobain Containers production accounts for: (Saint-Gobain Containers is the packaging industry) •BREAKDOWN OF SALES PER SECTOR IN 2005

(Provided by www.Saint-Gobain.com)
As one can see the packaging sector of this large chain of manufactures accounts for only a small portion of their broad product scope. Stunning Figures
As a whole, Saint-Gobain is operating in over 50 countries worldwide. Saint-Gobain employs a workforce of more than 200,000 employees. This is very large when compared to the 4,000 employed by Saint-Gobain Containers. Saint-Gobain is one of the largest leading materials companies in the world and is listed on public stock markets in Paris, London, Frankfort, Zurich, Brussels, and Amsterdam. In 2005 Saint-Gobain as a whole had over 35 billion euros in sales which lead to a net income of 1.3 billion euros. Saint-Gobain Containers accounts for 11 percent of these figures which is impressive due to its size. Employing only 2 percent of Saint-Gobain’s work force and accounting for 11 percent of the entire income is impressive. The following figures help illustrate Saint-Gobain Containers cash flow on a more directed level: KEY FIGURES

SALES
(in mns of euros)

OPERATING INCOME
(in mns of euros)

(Provided by www.Saint-Gobain.com)
As one can see their operating cost is relatively small when compared to their over all income. Operating cost only consumed 9.6 percent of their cash flow making their process very efficient. Also noted by this graph is the presence of continuous improvement. In 2005 Saint-Gobain Containers improved sales by 128 million euros (3.2 percent) and lowered operating cost by 74 million euros (16.2 percent). Lowering operating cost by improving the operations of Saint-Gobain Containers has been the largest factor in recent time better illustrated by the following figure: • KEY CONSOLIDATED FIGURES

(in mns of euros)

2004

2005

Sales

3,880

4,008

Operating income

459

385

Cash flow from operations

492

432

Capital expenditure

302

305

(Provided by www.Saint-Gobain.com)
Operations of the Glass Making Process
It is apparent Saint-Gobain Containers has a good Operations Management foundation in the process of making and distributing glass bottles and jars for the food industry, perfume industry, and pharmaceutical industry. The following will break down each process and how it has lead to the success of Saint-Gobain Containers. (All process drawings were taken from www.sbcontainers.com, a full diagram of the plant is on the last page) Raw...
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