LEERDHAM, THE NETHERLANDS — With one side weighing heavily on R.&D. and the other touting operational excellence, the synergies between VSI and Hearthside Food Solutions are quite clear.

For example, as nutrition bar consumers drive the need for flavor innovation, layers are the hottest thing going. In Leerdham, The Netherlands, VSI’s Sollich bar lines come equipped with roll-in layering equipment that can easily add a shmear of caramel. The newest line to-date, installed in 2012 when VSI built its third production facility, can make bars with as many as five layers, including caramel, crisped rice or any type of chocolate. It also can enrobe in real chocolate, a huge draw in the European market.

As the bar trend boomed in past years and VSI continued to innovate new formulations, the company found itself out of capacity not once, not twice but three times. From 2002 to 2012, VSI acquired a building for storage space, added onto it with the installation of a third line and built a third facility to accommodate its fourth and fifth lines.

But all this growth often meant placing more emphasis on developing new products and expanding capacity than it did on operational efficiencies.

Enter Hearthside Performance System (HPS).

“We don’t own any brands,” said Dwayne Hughes, senior vice-president of supply chain, Hearthside. “All we own is our trust and capabilities. HPS has to do that for us.”

It goes back to the “co-man’s conundrum.” A company that sells another’s brands must rely on its process efficiency as the point of differentiation. In other words, Hearthside’s fast and flexible model is the bread, and HPS is what butters it.

“Hearthside is obviously very experienced in manufacturing,” recalled Gerard Janssens, president, VSI. “The first time I saw a Hearthside facility in the U.S., I immediately saw how experienced they are in production. I am a ‘production man,’ and it was obvious how well organized it is. Everything runs smoothly.”

Since the acquisition of VSI, Hearthside began construction on VSI’s fourth facility — No. 25 for the company overall — located on the same industrial park alley as the first three. It will house two new Sollich makeup lines with room for another. Scheduled to open later this year, this new facility will bring VSI’s capacity to around 300 million bars and will soon be fully integrated into the HPS system of continuous improvement.

HPS is the beating heart of Hearthside and its pursuit for world-class status. By the company’s own standards, it does not yet consider itself world-class but rather operates on the principle of kaizen, or sustainable continuous improvement. Think of it as a perpetual quest for operational excellence. For example, setting a record for meeting KPIs requires a root cause analyses at Hearthside.

“We have a saying, ‘Today’s records are tomorrow’s standards,’ and that’s the process of continuous improvement,” Mr. Hughes said.

Despite the fact all Hearthside plants are SQF Level 3 and the company has a 1.4 overall OSHA incident rate, Hearthside identifies “world class” as a <1.0 OSHA rate.

“It takes two things to be a world-class manufacturer,” Mr. Hughes said. “One is your internal metrics, and the other — and most important — is how your customers view you as a manufacturer.”

Every Hearthside plant subscribes to the HPS model. Because of this, HPS dictates that, through a series of best practices and eight guiding principles, any customer could walk into any one of the company’s 24 plants and find it operating exactly the same way, whether bars are being produced on one of its Sollich, Tanis, Hosakawa or PTL makeup lines.

For each newly acquired plant, Mr. Hughes develops a specific baseline for KPIs and teaches plant management how to measure them. With established baselines, Mr. Hughes estimated that it takes a plant about three to five years to achieve world-class status.

The top five KPIs — safety, quality, service, cost and culture — are measured and reported on leadership boards in each plant. Reporting is simple: green or red. Green means the plant met its KPI goals in the past 24 hours; red means it did not. In Hearthside facilities, there’s no such thing as “yellow” when measuring KPIs.

“Yellow is the grey area,” Mr. Hughes said. “In that case, yellow eventually becomes acceptable. But the reality is, you’re either meeting your goals, or you’re not.”

This speaks directly to one of the company’s eight guiding principles: Satisfaction is the first step toward failure.

“When yellow is an option, people tend to say, ‘I’m not red, so I won’t worry about it,’” Mr. Hughes said. “But if you have equipment that’s red, you can do something about it.”

Tools such as “drumbeat” meetings are mandated in each facility for every shift change. While leadership boards track trends a day at a time, drumbeats drill down to the specific happenings on each shift. A drumbeat meeting includes every department, from line workers to maintenance, sanitation and quality. Not only can the staff see what happened on the shift, but they also can understand how their shift plays a part in the KPI results on the leadership board and, if necessary, offer solutions or a root cause analysis.

At VSI, which is considered a “mirror site” by HPS definition, tools like the drumbeat meetings are already improving operational efficiency.

“It’s a first-information run for the new shift coming in,” Mr. Janssens said. “It’s a structured way to make sure all the information is transferred from one shift to the next. Drumbeat meetings improve performance because people really know what’s going on.”

Mr. Janssens highlighted HPS as the key factor in how the Hearthside acquisition has improved VSI’s bar production.

“We are looking at production in a much different way,” he said. “Our focus was much more on growing the output through development — more bars, different bars — but with Hearthside, our production is much more streamlined.”

As VSI continues the same journey toward world-class manufacturing, Mr. Hughes expects the new facility, scheduled for startup by Q1 2018 to set the tone for the other three.

“We’ll teach them the standards, and they’ll have a live example for the other plants to follow,” he said.