Question
I was wondering if I am facing the same problems everyone else is. I would like to hear some problems you are facing in your company.
Forum Responses
(Business and Management Forum)
From contributor P:
We were kind of wondering whether we face the same problems you do. What's your list? I have three main problems: sales, sales, and sales.
We have relied on our 85 year reputation but when we took over six months ago, we started an aggressive marketing and advertising and now I see other shops in the area using more radio ads and competing with us offering "custom box" cabinets. We are fortunate to be in a microism that is very conservative and have not been hit hard by the economy.
Target the professionals, their income will not change. Doctors, lawyers, and dentists improve the quality of your product and offer what the others can't. Another thing we have found is we include all prices in our bid, cabinets, hardware taxes and installation. People want to know the bottom line, not be hit with a 3K install that they were hoping was 1K.
I'm thinking very seriously about getting back into a small furniture line and marketing it with a new website, maybe selling some of it wholesale to furniture stores. Before we got into custom cabinets we had a great selling furniture line that we sold in three states, so it's not crazy. I still have contacts even after ten years, and they still remember how well our products sold back in the 80’s and 90’s. Steady income could be small, but that with customers who still like my work and seem to have yet another project to do I'll hang in there (fingers crossed). I'm looking at one product that sells for a very good price online, what has changed is the internet. With almost everyone using high speed internet buying online and getting what they want is amazing. It’s a lot different than when I tried to sell furniture online in the 90's ( we did have some success with it, even then). The large job we are on now came in through my Craigslist ad. Some around here can still get there higher prices, but it's basically dog eat dog.
In my view, Lean brings improvements in manufacturing activities but it does not offer intelligent production scheduling along with what-if analysis capability in job shops that simultaneously process diverse jobs / projects using shared resources.
I guess many custom woodworking units belong to the second type, that is, they simultaneously pursue two or more distinct projects with different due dates, dynamically allocating finite capacity resources to those projects. The resources may be multi-functional machines or multi-skilled workers. Each project consists of many operations, which may not be performed in a strict sequence as those in an assembly line. But those operations will have some dependency relations. For project-based production, project cycle time and completion time are more relevant than the rate at which the items are produced in that project. In my view, we have to schedule all the operations of multiple simultaneous projects subject to dependency relations and resource availability in order to meet project due dates and maximize shop throughput. We have to determine a practical and rational due date and a right start time for each new project based on the process and resource requirements of the project, the existing workload and resource availability.
If you are matching takt time to demand for each product, I get the impression that you are producing products in a sequence, allocating a fixed time for the production of each product, irrespective of the demand. I am not sure custom woodworking units dealing with heterogeneous workload should work in that fashion.
Working backwards from demand to raw material must take into account the availability of resources for intermediate operations, particularly when multiple, distinct projects are in progress. We should also be able to reschedule operations in response to uncertain events. The concept of a specific due date for each order/project, workflow prediction and what-if analysis are absent in Lean approach.
Can you tell us anything about the learning curve involved in making this useful for everybody who might have to interface with it? Does it require a manager to interpret it (i.e. can anybody on the shop floor use it?)
This last question is significant because, for the most part, our crew does not consist of people who spend a lot of idle time thinking about database structure. Most of these people hail from the tribe that does not know how to operate a fax machine (and are proud of that fact.)
What are the demographics of the shops (in this industry) that actually run that software? How much installed base does there currently exist for this application? In other words, if I had $20K to invest today, would I make more money buying your software or buying a Diehl Straightline rip saw? My hunch is that I could use both but only have time for things that do not require huge learning curve.
If properly implementing Lean I make product on demand. I know how long it will take to produce a product, my suppliers are on board with me, and I have a very good idea that I will meet my profit goals by adhering to the value stream. If I start and stop work on a project numerous times, changeover equipment, finishes, and any other of a number logistics and intangibles I add time and labor to each compromised element of production. Unless I am working time and materials, I lose money on every change, even if I make delivery.
My biggest challenge in the coming months is not getting work, it’s getting paid when I'm done. I run a cash business, no accounts receivable, and still I get strung along. That final check is always the toughest to get. I feel most smaller guys like myself are in the same boat. Final payment on completion is getting to be more and more delayed. I am thinking about doing what the larger companies do (box stores and lumber yards), which is payment in full in advance.
If the input data is ready, the user can schedule the entire workload subject to all relevant constraints by clicking just three buttons (for reading the data, committing the data and scheduling) on the computer screen. He has to spend only a fraction of a second to see the schedule output even for 1,000 operations. A dispatch list can be printed for any resource for any selected duration.
It is very easy to construct a weekly resource calendar (like a shift) using our interface. An edited calendar can be saved as a new one. It is also easy to specify calendar exceptions for any resource. Drag-and-drop option on Gantt chart is available for manual adjustments (when the user wants). The merit of any software lies in how easily the user can use it.
However, while implementing the tool initially, we do a little bit of production modeling by considering the mapping between all possible operations and work centers and a mapping between work centers and resources (machines and workers).
Although the software is based on advanced finite capacity scheduling logic, any person with high school education and some exposure to Windows-based PC’s and Windows Explorer should be able to use our software without any assistance.
Marketing - I've been trying to figure out how to spend a very limited budget on advertising. This is scary because it's very easy to pour a lot of money down a black hole. Everybody claims their forum is best. What do you do when everybody's lying to you? I think my investment will go into a well laid out website. That's in the works. I've also been on the streets stopping at every job site I see. That's been extra hard for me but, in the end I think it will pay off.
Offer the customer some flexibility - I've always received fifty percent down and fifty percent after installation. Nowadays many potential customers are afraid to take that step. As an alternative, I've started offering ninety day and twelve month same-as-cash financing with a one third deposit. We're just getting started with this but it looks promising. We live in Katrina country and there's still a lot of damage to be repaired here. This is a tool I think customers will use if I can figure out how best to get the word out.
Commit heresy - in addition to my custom stuff, I started selling factory cabinets. I don't like it! In fact, I'd prefer to eat broken glass, but selling these things provides an avenue to customers I'd never get otherwise. It also allows me to compete at a volume level I'd never be able to achieve, such as apartment complexes etc.
Lastly, I worry about my guys a lot more. I've got good people that I don't want to lose. It's gotten more important than ever to make sure they're ok. It used to be that if you laid-off or ran-off somebody, they could get another job pretty easily. Not so today!
Systems based companies are customer centric. As a consequence this produces happy customers, which produces more customers. The increase in customers can be easily accommodated by the excess capacity that is created when satisfying the first customer. How to sell the idea that if we build it quicker we can build more of it is tough when workers perceive that surrendering dominance in the shop is tantamount to surrendering market share. My number two priority is to change the mentality of our organization. We need a new imperative.
Quicker turn-around makes happier customers. Happier customers become repeat customers (and recommend their friends to you as well). Quicker turn-around is a capacity generator. Assume a craftsman based company takes until Friday to complete a work order. The systems based company can ship by Thursday. This leaves Friday to work on a new project for more dollars. Besides being a capacity generator, systems based companies are also marked by improved return on investment. The resources are in play for a shorter period of time but the dollars stay the same. This all makes perfect sense to a businessman. How do you explain this to a woodworker?
I'd rather sell quality over quantity any day of the week. I want to be the Smith and Wollenski's of the cabinet world, certainly not the fast food fix. I don't think you can realistically offer speed, quality, and price. The larger semi custom shops have been attempting that for years and fall short. McDonald’s with all its billions can't do it, so I just can't see it being a realistic goal. But then again maybe I'm just misinterpreting what you’re trying to get across?
In many job shops (including custom woodworking), we see several distinct jobs/products/projects/ in progress at any time. The due dates, priorities, quantities, customers, and the process, resource and material requirements vary with jobs. Two or more jobs keep moving through the system simultaneously. The workload on the shop floor is heterogeneous most of the time and the composition of diverse jobs keeps changing with time and creates moving bottlenecks. Job shops make products only against customer orders which arrive at random time points and they do not produce and store products in anticipation of future demand. Job shops cannot smooth the unpredictable demand in order to apply some simple production control methods. The production in many job shops is not like an assembly line production where all jobs pass through the same sequence of operations and no two jobs compete for the same resource at some stage. Toyota developed Lean mainly in assembly line systems.
Job shops can gain more business when it can fix rational and practical due date for each new job such that the due date can be practically met (without firefighting) and acceptable to the customer. Job shops can reduce WIP when it can find a right start time for each job with a given due date when the job has to share some resources with some diverse jobs that re are already in process. Job shops need some prediction of workflow so that they can make proactive decisions to meet job due dates and enhance resource availability over certain intervals if necessary. Job shops need what-if analysis of production plans to deal with uncertainty. For example, if major changes like worker absenteeism, machine breakdowns, material delays, etc take place in the system, job shops need to reschedule the entire workload subject to all constraints to minimize the adverse impact of those changes.
