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Best Practices: Naturally Vitamins, Inc.<br> Lean and Green

Fri, 03/12/2004 - 6:40am
Rick Carter, Editor-in-Chief

This company's Arizona-based manufacturing facility represents the owner's belief that environmental responsibility and the production of nutraceuticals go hand in hand.
Manufacturing quality takes on a new meaning when the product being made is for human consumption. This is true in any food industry, but it's especially true in the world of nutraceuticals, where products are designed to provide medical or health benefits. There is no room for quality lapses, which makes this manufacturing process among the most rigorous of any.

When Naturally Vitamins, Inc., opened its 80,000-sq.-ft. plant in April 2001, the company's 75 employees moved into a state-of-the-art, world-class facility for the production of nutraceutical tablets, capsules and powders. Located in a Phoenix, AZ, industrial park, the nearly new building (it had been built by a computer company that went bankrupt before it could take occupancy), offered Naturally a chance to not only boost its productivity, but design an efficient, environmentally friendly facility almost from scratch.

"We wanted to become an A-class manufacturer," says company president Joe Lehmann. "With all the imported products coming in from China and Europe, we needed to become much more efficient. For a company like us that had been structured like a boutique-type manufacturer, there was no future. We needed to move to the forefront."

It meant uprooting from the company's 10-year location in nearby Scottsdale, a facility less than half the size of the new one, and in an area where industry was being squeezed out. It was an influx of expensive restaurants near the plant, says Lehmann, that convinced him to abandon plans to build a new facility near the old one.

But by then, the privately held Naturally was both capable of undergoing and in need of a new transformation. When Lehmann and the late Dr. Karl Ransberger purchased the company in 1991, they took over a "typical vitamin plant," says Lehmann. "It was kind of old-fashioned, with nice machinery, but you could see that the owners were salespeople. They had no idea about manufacturing. They had people who knew how to run machines, but didn't understand the process."

Trained in Germany as a pharmaceutical specialist, Lehmann, 56, brought a solid understanding of both manufacturing and business to the operation. By using lean manufacturing techniques, upgrading machinery and training employees, he transformed the under-performing company. But after 10 years, "We ran out of ideas," says Meli Jelinic, Naturally's vice president. "The building wasn't designed for us and we had to really scramble. In the end," she says, "we couldn't move things around any more."

When Lehmann and Ransberger acquired the new facility, located near the Phoenix airport, they hired a team of architects who designed the interior with continuous flow in mind. "The idea was to build a facility where we don't duplicate functions," he says. "We wanted the perfect flow, where the material comes in one way, and leaves the same way. In between, it just goes around in a circle instead of going back and forth." Lehmann learned the continuous-flow concept from the four-story pharmaceutical and chemical facilities he had known in Germany "where materials flowed in at the top and finished product came out the bottom. To me, this was a very big issue."

Despite the demanding process of ensuring purity and quality and providing full traceability for raw and finished products in its operation, the new Naturally plant reaches what Lehmann says is a 99% level of continuous flow. "We deal with over 3,000 raw materials," he says of the mostly plant-based powders it uses from around the world. "It is possible that somebody doesn't return the job to the right position, but we put a lot of effort into this area."

A Naturally worker inspects vitamins as they tumble inside a machine that applies an aqueous coating to the tablets. To maximize health benefits, the company uses nanopure water in this process.
The flow at Naturally begins when raw materials in widely varying quantities arrive at the plant's secure loading area. After check-in, all materials used (including bottles, capsules, cotton, desiccant, packaging and labels) are quarantined so they can first be checked and, in the case of raw materials, tested. Using on-site laboratories, samples of every raw material are tested for purity and compared with pre-arranged specifications. Only when approved by the lab is the material moved to a secure warehouse, from which it can be taken to production.

Most production at Naturally takes place in individual, climate-controlled (low-humidity, cool-temperature) rooms. This is where high-tech machinery, usually one machine per room, is used to make and coat tablets, for example, or place powder into gel capsules.

The broad variety of powders used by the company to make its products are initially mixed in larger rooms and placed into stainless steel IBCs (intermediate bulk containers). These are mechanically hoisted to a second level and moved into position over a designated production machine located on the floor below. The gravity-based system allows the material to flow directly from the IBC on the second floor into the appropriate machine on the first. This reduces human contact with the raw material, which reduces the chance for contamination, and uses less electricity.

The energy-saving aspect of the gravity-feed system is joined by many other green initiatives at the plant across all operations.

"I've seen the downside of not taking care of the environment," says Lehmann. "It's very hard when you're making harsh chemicals. Much has been achieved, but it's very hard for them to balance the environmental needs. Even in our industry, with a finished product like vitamins, there are issues that are difficult to change. But being in this business, it would be awful if we did something to impact the environment or destabilize it."

As a result, Lehmann has gone to great lengths to ensure that Naturally remains on the friendly side of the environment, even if it costs more.

"From inside to outside, we do everything we can," he says. "We pay money to recycle our cardboard boxes, for example. We don't make money on this, we pay it. We recycle every paper. And we don't use solvents or alcohol in our cleaning processes. It would be much cheaper to use alcohol to clean bacteria, but we don't want this because so many people have allergies. We don't even have it in our facility. We use bio-cleaners and enzymes. And we always test with our micro testing system to ensure that the facility is bacteria-free."

Outside the facility, solar roof panels use the Arizona sun to heat the plant's water, while a NASA-developed ceramic roof coating keeps it from heating the plant. A highly efficient, non-freon air conditioning system cools the facility, using only one roof-mounted chiller. "When we bought it in 2000, it was the most efficient available," says Leh-mann, who adds that its efficiency is enhanced by the roof coating, by extra insulation he added throughout the building, and by 300 shade trees he planted around the facility at a cost of nearly $200,000.

Solar panels on the roof of Naturally's Phoenix plant heat the facility's water. A ceramic-based roof coating helps keep the building cool.
"We learned from the architect that in Arizona, these trees can lower the inside heat by as much as 10%," he says. "We happen to be the hottest spot in Phoenix and we don't feel hot here. We wanted to do it for the people who work here and for the environment."

The company's air-cooling efforts also help it control moisture. In Naturally's production processes, moisture would create havoc, not only with the mixing and blending of powders, but because it allows mold and bacteria to develop. To keep moisture levels low, a proprietary moisture-control system is also used. And to discourage the formation of mold and bacteria, absorbent material like carpeting is not used.

Though the plant has not taken the standard route for recognition of its advanced processes (such as ISO 14000), its environmental status is regularly checked by Maricopa County officials (regarding water discharge and rainwater runoff, among other issues), and is in a near-constant state of review, thanks to the many products it makes for other nutraceutical companies. Naturally's substantial custom business developed because of the company's reputation for quality and consistency, says Lehmann. According to Jelinic, each time a new partnership is forged, Naturally comes under review. One new partner "required that we be certified by two major agencies in the U.S.," she says, adding that her job includes the time-consuming responsibility to ensure that Naturally meets all criteria.

"The custom business came about from people who approached us who wanted specialty products but also needed specialty processes," says Lehmann. "They wanted to be sure that the workers at this company adhered to their philosophy, like not using solvents, having proper quality control, assuring the purity of the raw materials, and our ability to repeat the process. We don't just go out looking for someone who has a need. We look for someone who needs something special, where we both can benefit."

Jelinic has smoothed the certification process by helping to create company standard-operating-procedure (s.o.p.) manuals. Considered a food manufacturer by the Federal Drug Administration, Naturally operates under its GMP (Good Manufacturing Practice) Regulations. As such, it is required by law to take proactive steps to make products that are safe, pure and effective. The s.o.p. manuals ensure that employees understand and follow GMP regulations as well as the company's own environmental and quality policies.

"They are assigned by number," says Jelinic, "and every single procedure is held by our coordinator for the GMP. For example, we have an s.o.p. for the receiving manager. He has guidelines that he's supposed to follow from the moment the truck arrives. After him, the laboratory has an s.o.p. for everything they're supposed to do. Every individual knows what they have to do," she says, "including the people who clean the plant. They have guidelines for what to do, how to do it and what they can use."

Naturally's employees are also on the county's inspection list. "All food handlers are trained by Maricopa County," says Jelinic. "And our employees are considered food handlers, so they must get county training and be regularly updated." When employees pass the training they receive a card valid for a limited period. County inspectors can visit any time and ask to see the card of any employee.

Per GMP regulations, employees also receive specific training on their particular tasks, and, per Lehmann, are cross-trained. In addition, machine operators receive off-site training for the operation and maintenance of the company's many pieces of precision machinery.

"When we send out the operators for training, we send out the mechanical people too," says Lehmann. "In this business, it's all about machines. Operating them looks easy, but it's a complicated process. Taking the machine apart to clean, it's like an airplane. So many things can go wrong."

Lehmann has minimized complexity by buying as many machines from one maker as possible. "I learned this from Southwest Airlines," he says, "which only has one type of airplane. This way we don't have to stock millions of different parts, and it gives us a better chance when something breaks down."

Despite the company's dependence on high-tech machinery, Lehmann fully appreciates and recognizes the value of a well-trained, devoted workforce. When the company moved to the new facility, everyone made the trip from the old facility, even though the new plant was far more efficient than the old. Instead of laying off employees, which Lehmann has never done, he added workers and took the opportunity to boost production. "Now we can do more, and do it faster," he says. "We can be more competitive and more responsive to our customers."

Lehmann routinely keeps employees in the loop on company progress. Sales updates are posted daily, and regular lunch-time meetings afford them the opportunity for discussion and feedback. Lehmann is a believer in telling employees everything. "We don't have any secrets," he says. "We don't even have any doors here. I don't have a door. I don't have a lock. I don't have a filing cabinet. It's a very open policy."

It's also generous. Employees typically receive 5% bonuses at Christmas, as well as other perks, like recreational equipment in the employee cafeteria. New massage chairs were a recent addition. While Lehmann requires his workers to be "self-starters," he says that if they fit the company culture, they are likely to enjoy job security even as the company becomes more mechanized.

Naturally's main entrance is nearly obscured by shade trees, 300 of which surround the plant. They help trim inside heat by as much as 10%.
"This plant is a work in progress," says Lehmann. "We have continued purchasing equipment, making changes and implementing new ideas. This year alone, we'll probably buy over a million dollars worth of new equipment to replace any task which is a repetitive task by hand." This includes equipment that will automatically pack bottles into shipping boxes and direct packed boxes to shipping areas. It also includes new capping machinery that detects cap defects, and new scales that weigh each bottle to ensure accurate product count.

"We are using electronics to do quality control," says Lehmann, "but we will not eliminate people." Part of Lehmann's philosophy, he says, is to strike a balance between profit and quality of life, particularly from his perspective within the vitamin business.

"Not long ago, many of the big vitamin makers were in big trouble because they misjudged the market," he says. "They were trying to survive by making products at any price, so there was pressure from all sides. For us, it was to build a facility that could make an end product that would help people, that was of high quality, that would not destroy the environment, and would offer our people a future. We wanted to make sure our business would be in business in the years to come."

Jelinic credits the company's softer, educational approach to product promotion (it prefers to sponsor articles and books rather than purchase retail advertising) for helping convey Lehmann's philosophy to its customers.

"We do this because it's not just about a pill," she says. "There's no nutraceutical that will fix all of your problems. It's about a lifestyle change. We spend a lot of our time telling consumers about eating healthy and exercising, what you should eat, and what you can do to change some of the risk factors."

Jelinic, who came from managing a 300-room, four-star resort hotel to Naturally, says working at the company has given her a new perspective.

"In the hotel industry, I knew I had to make people happy," she says, "but I couldn't see why. Here, I'm helping people all over the world. I'm making them healthier. And I made myself healthier." She says the company's environmental initiatives are a key part of its mission to promote health.

"We want to make sure people understand it's all about nature," Jelinic continues. "We get the products from nature and we make sure that when people take them they feel better. We also know," she says, "that without protecting the environment, this business we have will not exist."

What's a Nutraceutical?
Company vice president Meli Jelinic helps ensure that Naturally's employees follow the FDA's GMP regulations as well as the company's own environmental and quality policies.
You won't find the term "nutraceutical" in most dictionaries. It was coined in the 1990s to describe a growing category of food and vitamin products that provide medical or health benefits, including the prevention and treatment of disease. In the broadest definition, nutraceuticals include the vitamins and dietary supplements produced by Naturally Vitamins and other vitamin makers, as well as so-called "designer" foods, herbal products and even certain processed foods in the cereal, soup and beverage categories.

But while mainstream manufacturers like Dannon, PepsiCo, Nestle and others have been considered part of the market, nutraceuticals are more often considered the domain of manufacturers who meet demands for homeo-pathic, non-prescription, natural-based products that can offer verifiable health solutions. Health Canada, for example, defines a nutraceutical as "a product isolated or purified from foods, and generally sold in medicinal forms not usually associated with food and demonstrated to have a physiological benefit or provide protection against chronic disease." In Japan, nutra-ceuticals are given the simple government acronym FOSHU, which literally means "food for specific health use."

Because of the great variety of categories that can be considered nutraceutical, market-value estimates vary. According to a 2003 report by Business Communications Co., Inc., the global nutraceutical market (vitamins, supplements and herbal products) was valued at $46.7 billion in 2002, and predicted to reach $74.7 billion in 2007.

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