Increasing manufacturing capacity/productivity

[MusicMan]

A lot of excellent advice here, which you can adapt to your own situation. My own experience is at Director level in starting, managing and growing small businesses, some from zero; one went public, two went bust and the latest one is at 32 employees and looking very good. Though this is in the scientific/engineering field the business fundamentals apply all round. When I was in the USA starting up a subsidiary (of the one that went public) I joined a group of small business CEOs for discussion and advice of mutual problems, with an experienced mentor. The group included a couple of 'high science' companies, a small accountancy group, an undertaker, a florist and yes, a kitchen cabinet maker. Hardly any of the discussions or topics was irrelevant.

Really, the choices you have are expansion, which include increased productivity by scaling, or keeping around the same size but increasing margins. Just staying still is only rarely an option (e.g. Morgan cars).

You have made a really good start by identifying your work flows. You do have to get timings in somehow, or you do not know where the productivity bottlenecks are. I heartily second those who have urged you to involve your staff. They may well know how to do things smarter (hence faster and cheaper), and anyway you need them on your side.

Then you need to work on your costs, as every improvement in yield goes into the bottom line. This should not involve loss of quality, but a big item will be purchasing of materials; worth spending good quality time on sourcing and negotiating supplies.

Investment on machinery is good if - and only if - it can be paid for by increased production or lower ongoing costs. The CNC machine you already have is a good example. You can look at each machine purchase with those eyes.

I would urge you never to stint on training, or indeed on any management activity that allows others to take over one of your tasks and allows you to develop the next stage.

all the best!

Keith

 

[andthatwasthat]

Just want to thank Lons and Keith for your comments – this is really helpful and I appreciate you taking the time to reply.
Thanks to everyone else for their comments – lots to work through and think about!

 

[RobinBHM]

There is a quick way to improve productivity that involves no capital investment:

5S (this is a component of lean construction, as mentioned above)

this book is the easiest and best to get started:

I did a bit of this in my joinery factory.

We started with a pilot project: the spindle moulder.

here is a summary (you do this with the team -workers must take ownership, not have it imposed)

1. sort
-put a big board of ply on 2 trestles near the spindle moulder
-go through everything, sort out the rubbish like broken blocks etc
-then go through the good stuff and sort it into order from most often used to least used

2. set in order
-then make a shadow board and start to populate with the most used stuff nearest to the machine.
-stuff like rarely used cutters, put away in the stores

3. shine
-here is where you set a routine so the shadow board is checked every day to ensure it is kept fully populated.

Here is the key to shadow board design: if its easier to put the tool back than left off, then the machinist will do it.

Not only does this increase productivity it saves stress -because shadow boards and cleanliness allows easier visual clues with less decision making in the brain.

seriously its fantastic, give it a go -take a day to do it, you will get the time back easily.

 

[maznaz]

Apply for and try and get on the Goldman Sachs 10k small businesses program. There's loads of good answers here but that will give you a crash course with enough info to choose between these suggestions. I personally think you need to process map for a couple of days and work out your bottlenecks better then use some of the cheap money around to remove them. Try the course though, if you can get on. It's free and amazing.

 

[TheTiddles]

Outsourcing drawings... I’ve tried several times, every single time over the last 15-years, I’ve ended up fixing it myself. Maybe I’m too fussy, but some people are almost too dim to imagine. My favourite was an inspection dimension on a section of an elliptical feature, a radius! That was the last time he ever did any work for me.

Aidan

 

[Terry - Somerset]

I spent a large part of my career working in manufacturing and engineering mainly on business improvement, pricing, projects including implementation of just in time manufacturing, investigations, acquisitions etc.

One manufactured products with a typical unit value below £10. The emphasis was on getting the processes slick, utilising machinery efficiently, reducing labour content, minimising out of tolerance components, improving designs.

The other was a manufacturer of capital equipment with a typical order value up to ~ £1m. Each order needed design and costing input - the core skill was design and specification to meet unique customer specifications.

Much of the very good advice already given relates to the "manufacturing" business which is about how to make large quantities of standard products efficiently.

However I get the impression that your business is more closely related to "engineering" - custom built orders of individually material value requiring design input. If the latter, the emphasis may need to be put:

- on initial design and how that is integrated in the manufacturing process
- efficiently scheduling projects may take priority over optimising process flows.
- rationalising sub-contractors and suppliers to reduce complexity

The other consideration is pricing - I don't know how competitive your marketplace is, but if space is a real constraint it may be better to increase prices a little.

A SMALL TALE
One engineering company I worked with had a policy of getting 3 quotes for every component (motors, limit switches, guarding, bearings, belts etc etc) and picking the cheapest - good practice you may think!

The result - lots of administration for trivial purchases, frequent production delays due to a shortage of a few low value components, and as a customer we were of no real importance to any of our suppliers.

In order to get machines out the door to the customer they would often be shipped incomplete or untested. Consequences were predictable when we tried to install them on customer premises.

All because we thought we could save a few pounds on some small components.

 

[doctor Bob]

For all the replies are useful and possibly helpful, I'd say something is majorly wrong.
You have 5 full time staff (including you and gF), your turnover is very low for the staffing levels.
A good cabinet maker is probably a min of £30-£35000/ year, yet per head your turnover is £50000.
A rough rule of thumb is 1/3 labour, 1/3 materials, 1/3 profit, on the above you are way off that.
Are you sure your pricing is not the issue?

 

[bourbon]

I work in Automotive supply in a very lowly level. (flt driver). I have also done a bit of lean training. It's al very well doing that, But you totally loose your ability to be nimble and flexible. Also, don't get sucked into an Ivory tower. Things don't always go to plan. It's the real world. My biggest bug bear is when companies say ' It's not our core business' No wonder UK manufacturing is screwed.

 

[andthatwasthat]

Thanks again for the further replies;

@RobinBHM thanks will have a look. Certainly the s/m needs some order !

@maznaz – not heard of that program, thanks for the suggestion

@TheTiddles – on the drawing outsourcing, the idea is that I do the site survey, then the adhoc drafter does the 3D model from my survey information, I then do the cabinetry/kitchen design, then pass back over to the drafter to layout the renders and technical drawings for approval. Thus it saves me time doing the elements that are not essential to manufacture. They are not doing any of the cabinetry design itself–I would have to employ an experienced cad designer for that. We are only starting to trial it. We tried two ad hoc drafters and one was useless the other one was good.

@Terry thanks very much for your insights, that's helpful.

@doctor Bob
– Most experienced cabinet maker is on £34,000, next is less experienced on £26,000 (£13p/h) and junior on £10p/h. My g/f is not on salary yet (she has had two other jobs but left one last month to work more here) I am on directors salary so only around £12,000 per annum. Staffing levels have increased this year on last so if these levels were maintained that's projected £92K wage bill.

– Our cost of sales last year were ~£60K (27%) Gross Profit £158K (73%) with a net profit of £48K (22%)
– I think this FY so far we are on 14% cost of sales and 86% Gross Profit with a net profit of 19%. I think labour would work out at about 35% this FY

– Our pricing does need improving on kitchens as we don't usually get near to what we want to charge for them.

 

[doctor Bob]

@doctor Bob
– Most experienced cabinet maker is on £34,000, next is less experienced on £26,000 (£13p/h) and junior on £10p/h. My g/f is not on salary yet (she has had two other jobs but left one last month to work more here) I am on directors salary so only around £12,000 per annum. Staffing levels have increased this year on last so if these levels were maintained that's projected £92K wage bill.

– Our cost of sales last year were ~£60K (27%) Gross Profit £158K (73%) with a net profit of £48K (22%)
– I think this FY so far we are on 14% cost of sales and 86% Gross Profit with a net profit of 19%. I think labour would work out at about 35% this FY

– Our pricing does need improving on kitchens as we don't usually get near to what we want to charge for them.

Thanks for that, great to see someone who actually knows their figures.
Next thing is how big an order book do you have?

 

[gmgmgm]

Not to distract from the financials, but a great way into six sigma/lean/constraints is Goldratt's book "The Goal". It's a "business fiction" book about a manufacturing plant and very easy to get in to. I think every client I have recommended it to have had an "ah-ha!" moment when reading it. e.g. large pieces of equipment (read as CNC) sitting idle, large stocks held, do you prioritise jobs or not?

And SMED (single-minute exchange of die) is a good technique too: realising how much time is spent setting up / changing tools vs. actual working.

 

[andthatwasthat]

Thanks for that, great to see someone who actually knows their figures.
Next thing is how big an order book do you have?

Thanks.

Our current order book is just short of £220,000 which will probably take us until November, plus the inevitable extras might add another £10,000 on.

 

[andthatwasthat]

Not to distract from the financials, but a great way into six sigma/lean/constraints is Goldratt's book "The Goal". It's a "business fiction" book about a manufacturing plant and very easy to get in to. I think every client I have recommended it to have had an "ah-ha!" moment when reading it. e.g. large pieces of equipment (read as CNC) sitting idle, large stocks held, do you prioritise jobs or not?

And SMED (single-minute exchange of die) is a good technique too: realising how much time is spent setting up / changing tools vs. actual working.

Thanks for this, will look into

 

[doctor Bob]

Thanks for that, great to see someone who actually knows their figures.
Next thing is how big an order book do you have?

Thanks.

Our current order book is just short of £220,000 which will probably take us until November, plus the inevitable extras might add another £10,000 on.

Well I'm missing something, You have £230,000 worth of work for the next 3-4 months, this is a t/o of £690k to £920k. So either your t/o is wrong or a lot of customers are going to be dissappointed that they won't get their furniture for a year if you are only capable of making £250k worth in a year.
Or is your t/o increasing rapidly? if this is the reason, get more space this increases productivity massively. Do you have any managerial / boss presence on the shop floor or are the guys on there own, I find productivity in a small business increases if you muck in an set an example, I'm first in last home. Had a period where I rocked up at 9am for a few years, checking cctv proved very little got done whilst I was not there.

 

[andthatwasthat]

Well I'm missing something, You have £230,000 worth of work for the next 3-4 months, this is a t/o of £690k to £920k. So either your t/o is wrong or a lot of customers are going to be dissappointed that they won't get their furniture for a year if you are only capable of making £250k worth in a year

I should have clarified, the order book value I gave includes work in progress, both on site and in the workshop. Some of these orders have been in the order book for a while. One of them is even from over a year ago as the project was postponed twice by the customer in mid manufacture.

Does that clear things up?

Maybe this makes it look artificially larger than it is but from our monthly P&Ls we are averaging at £20k p/m.

Our order book in April was probably around £100,000 then in May and June we got £110,000 in new orders and I took on the more experienced cabinet maker.

We usually advise 12-14 week lead times and now I will have to be booking into next year which seems a bit crazy. It is quite likely that we will get another £150,000 order for a kitchen and full house fit out in the next few months which would take us probably to next April. This is really making me seriously re-consider how to manage it all, hence my original post on here.

Or is your t/o increasing rapidly? if this is the reason, get more space this increases productivity massively

Yes, it's good to hear this. Our predicament re space is that moving is not a great option, as you can imagine. We have spent thousands over the years on 3ph electrical installation, clip ducting system, compressed airline, sheet and stock racking for, etc. Plus we receive a lot of custom due to our location. So we either have to wait for one of the adjacent units to become available which is possible within the next 6-12 months, which leaves us exposed until then, or leasing another workshop, which doesn't make a lot of sense to me.

Do you have any managerial / boss presence on the shop floor or are the guys on there own, I find productivity in a small business increases if you muck in an set an example, I'm first in last home. Had a period where I rocked up at 9am for a few years, checking cctv proved very little got done whilst I was not there.

I do but I think room for improvement so will take this on board, thanks.

Thanks for your input and time replying

 

[doctor Bob]

Re the unit next door, I was in a similar situation. In the end another unit became avaliable on the industrial estate and I paid for the guy next door to move to that unit and gave him an insentive to do it. Increasing my floor space by 50%.
Sometimes you have to make things happen, not sayin g you can but it's worth thinking outside the box.

Do you fit your own furniture, we have self employed fitters, means the workshop never slows down.

 

[andthatwasthat]

Re the unit next door, I was in a similar situation. In the end another unit became avaliable on the industrial estate and I paid for the guy next door to move to that unit and gave him an insentive to do it. Increasing my floor space by 50%.
Sometimes you have to make things happen, not sayin g you can but it's worth thinking outside the box.

Thanks that's a good point.

Do you fit your own furniture, we have self employed fitters, means the workshop never slows down.

Yes we do fit all our stuff. That's a good suggestion. A colleague of mine might know a fitter but otherwise tbh I wouldn't know where to look or how to advertise. Did you advertise or are your fitters ex employees / part of your network?

 

[doctor Bob]

Yes we do fit all our stuff. That's a good suggestion. A colleague of mine might know a fitter but otherwise tbh I wouldn't know where to look or how to advertise. Did you advertise or are your fitters ex employees / part of your network?

Just picked them up over the years from contacts, we have 5 fitters who we use. You get to know them and work out what jobs will suit them, which clients want the same fitter etc.
The good ones are expensive but worth it. My requirements are simple, they need to be competant, have the ability to problem solve and be polite.
I now pay a day rate as I know them and know none of them take the piss.
The good thing is the workshop is never short of staff, seems pointless having expensive units and machines sitting idle.
We use a delivery man and van for the same reason.

 

[andthatwasthat]

Thanks I will look into how we can do this.
We do use the same delivery company and on bigger jobs get them to do all the lifting in etc. to the awkward properties which saves a lot of stress.
Thanks again for your input.

 

[RobinBHM]

1,100 sq feet is your biggest constraining factor.

You've outgrown that by a long way, I assume you have a panel saw -they take up 250sq feet alone