Challenging Issues for Wood Shops

This thread tackles two issues at one time (listing the top issues confronting wood shops, and managing multiple different kinds of work), and beats both into submission. July 30, 2009

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.

From the original questioner:
I look at my market both strategically and tactically. Your reputation will always out succeed the best sales force. I have built my business here. Right now whenever I lose a job I put together bail you out, bid for the job, and send it to the contractor a month after the job starts. It’s amazing how many of the jobs I would have lost my shorts on, and now I make a killing on to finish up someone’s bidding to cover payroll. I am always trying to better my production and scheduling selling is the easy part, you make money getting it out the door on time, happy customer, and reputation. My biggest problem is cash flow, and then scheduling and delivery!

From contributor M:
Scheduling, scheduling and then scheduling. It seems everyone waits till the drywall is hung and starts looking for cabinets. We are custom only no box so we can't go to the warehouse and pull a set of cabinets. Another issue is getting the guys to change. This is how we have always done it, and it is the number one excuse.

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.

From contributor G:
Recently it was sales, only because of the economic downturn. I have no advertising except word of mouth. My problem is feast or famine. Either I have no work or I have too much, never a happy medium. Of course I'll take the too much work - but the long hours as a single operator can wear you down.

From contributor D:
I have many issues, but the biggest I guess would echo contributor G's. I either have too little work, or have so much I can't get it all out the door fast enough. Right now it's the latter, but as a one man operation I really don't want to take on the burden of trying to hire and train someone when I have no extra time as it is.

From contributor J:
Feast or famine is what's going on here too. As a one man shop it would be great if it was spread out. I would rather be working vs. sitting around, after no work for the last five to six weeks. Losing good jobs to the bid at any price shops to make the payroll and hang in there for just one more month types. With a local 9.5 unemployment rate shops with higher overhead will bow out sooner or later.

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.

From contributor P:
It is interesting to see that you give good importance to production scheduling for on-time delivery. Lean manufacturing methodology developed by Toyota primarily for repetitive production is not very effective for project-based job shop production.

From contributor Z:
To contributor P: I have agreed with most of your posts about protocol as relates to critical path scheduling Your statement, however, that: "Lean manufacturing methodology not very effective for project-based job shop production." is completely wrong. If anything, Lean Manufacturing methodology is a solution that minimizes the need for critical path planning software.

From contributor P:
Setup reduction, respect for workers, worker empowerment, practices like 5S, etc are universally applicable to production systems. However, methods based on takt time, heijunka and kanban are not effective for scheduling project-based job shop production which usually consists of heteroneous workload at any time with different due dates, priorities and process requirements of jobs. Lean does not offer workflow and bottleneck prediction, what-if analysis and proactive capacity planning (in advance) as required for managing numerous diverse jobs with limited resources.

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.

From contributor V:
I strongly disagree that takt time does not apply to job shops. There are only so many operations we can do on most machinery. Identifying, and working to match takt to demand is the biggest issue most job shops have, they just don't realize it, if they could work backward from demand then staffing would be better identified and more importantly what and where the staff are would be aided. I have always found that working backwards from demand to raw material ordering makes for a very accurate schedule and is extremely helpful in determining schedule.

From contributor P:
I see two types of job shops. Those that work on jobs sequentially, one job after another and those that simultaneously work on several jobs using shared resources. I see the value of takt time for assembly lines that produce a few products (with reasonable quantities) one by one.

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.

From contributor Z:
To contributor P: you give all of us a lot to think about. I suspect the type of analysis you recommend is above the paygrade of most participants in this forum (myself included). While the logic seems unassailable most of us are already overwhelmed by the exigencies of just getting through the day. Your software does intrigue me.

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.

From contributor G:
If you have 20K to spend today, forget software and look for a CNC. There are hundreds on the market now with all of the shops closing doors.

From contributor B:
To contributor P: you wrote: “The concept of a specific due date for each order/project, workflow prediction and what-if analysis are absent in Lean approach.”

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.

From contributor H:
I agree with contributor P that most small shops fall into the second class and lean is limited in that arena. I always have at least three jobs in various stages going on in the shop. The processes involved in prepping and bending stringers for a curved stair vary greatly from cutting up sheet good for cabinets or solid surface.

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.

From contributor P:
The most important requirement for using our scheduling software is the availability of job status information at the time of scheduling/rescheduling. We normally recommend such a scheduling exercise once a day. The software has a simple user interface to update the job status information and there is a provision to save new job routing by a single click. Jobs can be quickly created on the fly using the saved routing templates.

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.

From contributor P:
It is not easy to know how long it will take to produce a specific product when shared resources are assigned to various operations of multiple projects (with different due dates and priorities). The product may wait for resources at any stage of production. It is difficult to determine the total waiting time of the product which is a significant part of the product lead time. Since projects have diverse process requirements, value stream mapping does not provide a reliable estimate of product lead time when multiple projects are in progress sharing some common resources. VSM’s are good for sequential production of various products. By starting each project at a right time and strictly adhering to project priorities, we can ensure what you said while scheduling the operations of multiple simultaneous projects taking into account resource availability.

From contributor J:
The biggest issue facing my company is my learning how to do things I've never had to do before. My business has been completely by referral since day one. It's obvious that's got to change. We've still got a good stream of work coming in, but I've got to anticipate/get ahead of the alternative. Some of the new tricks this old dog is trying to learn are:

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!

From contributor Z:
I have the same problems contributor P does. Sales are my number one focus right now. My number two focus would be how to get the crew to understand that we need to stop thinking like craftspeople and start thinking like systems engineers. This is a very hard sell for workers who, for the most part, can only trade on their craft skills.

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.

From contributor Q:
The increase in customers can be easily accommodated by the excess capacity that is created when satisfying the first customer. Usually I don't create excess capacity by pleasing a customer. What do you mean by this?

From contributor Z:
Systems based companies are focused on the needs of the customer rather than the needs of the craftsperson. A good example of this would be one of our many local pizza parlors. If you go in there for a late lunch there is often more staff than customers. The music is usually so loud that you cannot enjoy a newspaper or hold a conversation with a business associate. The quality of your meal is typically dependent on who the cook is this day. This is a company that is focused on the needs of its craftspeople. Go in to the McDonalds restaurant around the corner and you'll get exactly what you come for, in the time frame in which you expect it and there won't be any surprises. The second restaurant sells their cabinet for 1/3 of the price but probably has three times more profit at the end of the day. Systems based companies focus on the needs of their customers. They typically can ship product faster and as a consequence provide a customer experience that is nearly 100% satisfactory.

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?

From contributor D:
To contributor Z: I wonder if you’re basically trying to establish your company as yet another large manufacturer of average quality cabinetry? I mean to satisfy clients as my first priority, but not at the expense of offering substandard product in large quantities (read McDonald’s). No offense to those who may like their food, but I dread the rare occasion when I'm traveling between states and may have no other option for a place to eat.

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?

From contributor Z:
To contributor D: I think you are absolutely correct about quality. I think that is the only niche strategy that is viable. Just because you build things that are high quality does not mean you cannot build them systematically, or fast. In fact systems do in fact produce better quality for lower cost.

From contributor Q:
To contributor Z: thank you for clarifying, it makes sense now. I think you are right on and I was thinking of the context of giving something away to keep a customer happy instead of an improved delivery/process system and this does make much more sense.
No surprises with a good system. Streamlined ordering , processing and on time delivery - I like that.

From contributor L:
The roller coaster used to be our big challenge. When the economy went sour we hit the pavement. We've doubled our customer base to survive, doubling our lows and highs. To survive this, we have great information systems and a flexible crew. Most shops have flexible crews but the information systems are lacking. This makes it impossible to manage a roller coaster. Get your systems in place and you'll have no problem (or very little) with the highs and lows.

From contributor U:
A shop is a production environment period. Without lean and basic production systems in place, you might as well shut the doors. The software you push maybe a solution for some, but this is not a place to do so. Solutions from owners or employees of shops are what is needed.

From contributor P:
Let us ignore the software issue totally and focus on Lean in custom manufacturing instead. Many Lean aspects like setup time reduction, waste reduction, WIP reduction, 5S, respect for workers, worker empowerment, team spirit, go-to-gemba, kaizen, continuous improvement, etc are universally applicable to all production systems. These certainly improve the efficiency of any production system and therefore, I recommend them to any production unit. However, in my view, Lean developed by Toyota is "insufficient" to achieve the best of certain production systems. Let me try to substantiate my view.

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.