PBN Manufacturing Awards 2021
Excellence in Lean Management: Colonial Mills Inc.
Are you shopping online to make your “nest” cozier and more comfortable while you’re housebound due to the COVID-19 pandemic? If so, you may have purchased some of Colonial Mills Inc.’s home décor items, which include decorative storage baskets, ottomans and oval braided rugs.
Originally manufacturing only oval braided rugs, the second-generation family-owned business now makes additional items and has amassed some 25,000 stock-keeping units, or SKUs, which President and Chief Operating Officer Gregg Scarlata anticipates eventually increasing to 100,000.
“We lived in a small niche in the oval braided rug market,” said Scarlata, whose father, Donald, co-founded the company in 1977 and remains CEO and board chair.
Previously located in Pawtucket, Colonial Mills now operates in a 72,000-square-foot building that the company purchased in East Providence.
As the braided process offers additional applications, Colonial Mills works with designers to create custom products, which are sold to wholesalers, including Room and Board and Wayfair, and to consumers via its website.
With higher costs associated with domestic sourcing and production, Colonial Mills is a rarity in the rug manufacturing industry, which is dominated by imports from China and India. The company competes by offering a vast array of customized products, finding efficiencies and maximizing improvements, said Scarlata.
“We’re never going to win … on volume, but on manufacturing profitably,” Scarlata said, which is why lean manufacturing processes, which began with Donald Scarlata, are so meaningful. With efficiencies and overall processes increased tenfold due to lean manufacturing, Colonial Mills has grown its gross margins by more than 8% in the last three years.
“Just-in-time inventory gives us better, faster output, and we streamline the flow of process operations by striving for less waste, minimizing the distance each product has to move and shortening the walk times between different processes,” said Director of Manufacturing Operations William Guzman. “Every year, each department has a continuous improvement process analysis.”
From teaching lean manufacturing improvements, continuous improvement processes and a technique to train sewing machine operators faster, consulting firm Polaris MEP has been very valuable, Scarlata said.
“They taught us a World War II-era training technique … that reduced our six-month training time for our sewing machine operators to four months,” added Guzman.
Beyond assistance from Polaris MEP, Colonial Mills received federal aid in the form of Paycheck Protection Program loan funding. Although Scarlata declined to disclose the amount, he said, “I can’t explain how important it was to have the cash on hand to continue to produce. We were at 50% capacity at one point, with an extremely high 28-day backlog,” with some employees staying home for family obligations or due to COVID-19 exposure.
Colonial Mills can employ up to 100 people and currently has 85 employees, who represent 16 different nationalities.
“Our employees are the lifeblood of this company,” Scarlata said. “All the manufacturing staff received pay increases last year, and we offered extended leave and financial assistance for those in need. We’re paying attention to people’s needs; lots of our employees have children. We told employees: ‘We understand that you have to take care of your life at home. If you need to take any time to be with your family, your job is not in jeopardy.’ ”
Scarlata gave credit to the company’s employees for how well Colonial performed last year. “The company’s success – even amidst COVID-19 – was all due to the unbelievable effort and heart our employees bring … all the credit goes to our employees,” he wrote in the PBN Manufacturing Awards application.
Before 2020, about 90% of the company’s sales were in the wholesale market. Having more than doubled its direct-to-consumer sales to 25% of overall business last year, Colonial Mills has a goal of doubling that yet again in 2021, while continuing to capitalize on increased wholesale orders such as the ones it has received in the past several months.
