540 CASES FOR CHAPTER 6
N Lii LI I] 6.4 DIVERSE INDUSTRIES INTERNATIONAL
By Til?! Tat tersall and John Hayrvood-Fanncr
In4y2O00, Mike Paterson, operations manager of the Diverse Industries
lnternational DII) plant in London, Ontario, was mulling over the idea of restruc
turing the automatic dishwashing gel line. Dli’s industrial equipment cpkrcgr
had recently suggested this $40,000 chang,Alth2g Mr. Paterson was fairly sure
UintmeitxvágdWidea, hkiew that he would have to justify the cost to
the finance department and, if the proposal was approved, decide whether to real
locate direct labour on the line.
In 1988, Dli’s parent company, Universal Products (UP) of Toronto, Ontario,
deciçfrd to..enter the North Arnerkan coercfL2ani,n&products market as a
result of an industry report from a reputable source. The report predicted strong
grZwthuii’ihëà mmercial damijpipducts market and increasing popularity of
fhigkretail outfiiu?lra Coslcoahd Price Club that offered to sell consumer
clning products in unusually large packages.!paE!, although dish,ipiip
was_ypcally acked in 250 to 1,000 millilitre bottic bigbox stores would sell
?bntainersas large as four litres at much lower pricesper millilitre.
After careful consideration by a team led by
chased an 18,000-square-metre plant in London Ontario, 200 kilometres southwest
the city, had
a large Aericá Fivate’th}k&injRoffijãfi to produce its èxten
sive line of cosmetic and household cleaning products. DII installed equipment to
mix and package its consumer products in larger packages and produce a full line
of industrial cleaning products.
IjP through DII, had
become one of the world’s largest industrial_cleaning products cornppies with
dii1nEuMiaZaaWthe UnitetSfäiei. In 1999, DII_Canada
employed nearly 800 people and had sales of roughly $120 million.
I Tim Tattersall prepared this case under the supervision of Professor John Haywood JJ3 Farmer solely to provide material for class discussion. The authors do not intend to
illustrate either effective or ineffective handling of a managerial situation, The
authors may have disguised certain names and other identifying information to
°QQ’ protect confidentiality. Ivey Management Services prohibits any form of reproduc
tion, storage or transmittal without its written permission. This material is not cov
ered under authorization from CanCopy or any reproduction rights organization.
Copyright © 2000, Ivey Management Services. Version: (A) 2002-09-18.
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BACKGROUND
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Case 64 Diverse rdustres r.temoi;onol 541
LINE I AND THE
ADG CO
PACKING
ARRANGEMENT
In late 1999 Laurie Peters, president and founder of Peters Industrial Equipment “ “
(PIE) visited 4Mr. Paterson. A month earlier DII had acquired a new shrink
wrapper from PIE; Mr. Peters was interested in its performance and in cementing
the relationship with Dli. This investment had dramatically reduced packaging
costs on line 3 of the plant.
After spend ing some timohservine line 3.ithe two men walked €ickjoward
the front offices. As they passed line 1, Mr. Peters stopped Mr. Paterson and,
shouting over the noise of the line, said: œYou know Mike, a bottle hopper like the
one you have on line 5 could really help on that line. We took one out of another
plant a couple of weeks ago.
Once back in the office, the two spoke more about the idea. The more Mr.
Paterson thought about it the morej ntQbglieethat it wan lent
suggestion. Mr. Peters explained that an investment of1O,Qinj used hopper,
plus $15,000 for a lift conveyor, $5,000 for a small hopper and $10,000 for installa
tion and modifications to the line, would draiiThRcallJ1j rove the line’s.produc
tivftyIxhibitfoiRins photos of Uw&jiupment that Mr. Peters described. “
Line I was the busiest line in
a50dysyear. The semi-automated equipment ofj acket3 litre
bottles of automatic d she el(ADG).ADt,TEoncentrated cleaning agent,
was very effective in automatic dislnvashers, even when small quantities were
used, and was a popular alternative to traditional powder detergents. UP mar
keted and distribuld ADG throughout the Unitejtes and Canada and pro
moted it as a more effective, less messy alternative to traditional pow4jg4 soap.
dI?ferentiationon quality, convenience
