Capel Rugs Inc., a company built on innovation, understands the need for a quality, consistent product. The company enlisted the help of North Carolina State University’s Industrial Extension Service (IES) to improve efficiency and their competitive edge. The results are more than $2 million in economic benefit.

The Capels are part of the fabric that is Troy, N.C. The Capels didn’t start out in the rug business, but the business of agriculture. A. Leon Capel Sr., owner of Gee-Haw Plowline Company back in 1917, produced plow lines used to steer horses or mules in the fields. But soon after the invention of the Model T, which revolutionized transportation including the introduction of the tractor, the need for plow lines became almost obsolete. Capel needed a new use for his materials.

He fashioned those raw materials into a continuous yarn, braided them and manufactured the world’s first continuous yarn braided rug. Ninety-two years and three generations later, Capel Rugs remains one of the largest manufacturers and importers of area rugs in the country. The second generation of A. Leon Capel Jr., Jesse S. Capel and Arron W.E. Capel used their own unique expertise to build a multi-million-dollar company with international acclaim.

Handing over the reigns

Richard Capel stands in front of a building that has beared his family's name since 1917.

Richard Capel, director of manufacturing and third generation, credits his grandfather, father and uncles for the innovations they bestowed to the company. Richard’s father, Arron, led the initiative for retail stores, of which Capel Rugs now claims 11. And Richard’s uncle, Jesse, designed the air tables used to spin the rug as it is sewn, reducing the need for manual handling. This, as well as other innovations, helped this company to prosper through the Great Depression and other economic downturns.

As far as Richard’s contribution – it just may be the incorporation of lean. The “a-ha” moment for Richard occurred after attending an event sponsored by IES describing principles of the Toyota Production System (TPS). TPS organizes the manufacturing and logistics processes while stressing the importance of quality interactions between suppliers and customers. Understanding and incorporating TPS is key to building a lean organization.

Change begets results
Richard brought home the principles of lean and began to implement them throughout the manufacturing operation. He trained the manufacturing department supervisors to recognize inefficiency and waste and to bring solutions to the table. He initiated a pull system where output is factored on customer demand vs. operational capacity. He also improved the inventory system with a kanban or triggering system that initiates a reorder or refill of supplies, ensuring availability of parts while simultaneously reducing inventory. Shipping performance improved and customers were able to take advantage of the Zip Ship program, allowing one-day turnaround on some orders.

Less inventory lessens the need for warehouse space and, subsequently, rent and utilities. For these and additional waste-reduction measures, the company saved $890,000 annually. Cost savings and increased and retained sales were part of the more than $2 million in economic benefit the company reported at the completion of the projects with IES.

Pliability of lean

Jeanette Blue has been sewing for Capel since she was 16.

Processes in the creation of their products had been streamlined due to the incorporation of lean, so a logical approach included applying those same principles into the corporate office of the operation.

“Lean works anywhere,” said Capel. “It works in the hospital, the office, the plant.” With leadership support, Amy Roberts, purchasing manager, brought the expertise of IES on-site to regulate raw material and supply inventories.

After receiving a training grant from the Workforce Incumbent Act grant from the Pee Dee Workforce Development Board, Lean Office was applied to the corporate office in Troy. One process addressed was the set-up of new customer accounts so they could start ordering rugs right away. Formerly, the process of receiving the initial request, to granting the credit and database set-up, could take weeks to facilitate.

Steve Laton, lean extension specialist, conducted a value stream mapping (VSM) exercise, which is a lean tool that demonstrates visually the flow of raw materials, information and finished products or services through all production steps from receiving to shipping. Applying the VSM to the credit process, Laton helped identify the current state, which brings to light all of the inefficiencies and bottlenecks.

“Once you visualize the problem areas, only then can you begin to resolve them,” said Laton.

He and the Capel team mapped the future state, or the ideal flow, which removed 90 percent of non-value-added work from the process. They now typically grant credit and finalize the process within 24 hours.

This substantial reduction allows the order to be placed much quicker, the product to be manufactured and delivered to the customer quicker, and ultimately billed and paid for in a more timely fashion – all adding to the bottom line.

Even though this lean event was an office initiative, it runs parallel to Richard’s vision of further lead time reductions – continually improving and building a true customer-focused organization.

At Capel, innovation lives on.

About Capel Rugs Inc.
Capel Rugs Inc. is based in Troy, N.C., where the company still does the spinning, dyeing, weaving, braiding and sewing for Capel’s American Original braided rugs. From original braided rugs and the finest hand-knotted rugs to innovative indoor-outdoor and youth-friendly collections, Capel offers more rugs in more categories than any other rug company.