Do You Need a Swiss Army Knife?

You don’t want a Swiss Army knife when a good sharp blade is all you need, and vice versa.That’s the consensus of Rod Wasserman (Wasserman & Associates), Jay Halteman (Wood Truss Systems) and Steve Shrader (Hundegger USA). In May (see “Manual Labor”), these three industry equipment experts shared how cracking open the owner’s manuals of your existing equipment and focusing on retraining may be the most effective short-term strategy for maximizing your current production capacity. This month we asked them, “What should a component manufacturer consider when developing a long-term production capacity strategy?” Not surprisingly, their answers were complex, but boil down to the following: know your need, get input from multiple sources, and evaluate all your equipment options before pulling the trigger.

Know Your Need

“Buying equipment can’t be about what you want,” said Wasserman. “Given the significant capital investment equipment now represents, you should only purchase what you truly need.” Okay, so how do you know what you truly need?

“First you need to know who you are, and possibly who you want to be,” advised Halteman. What he’s getting at is do you primarily produce long span trusses for agricultural post frame buildings or a large volume of standardized components for production home builders? Would you rather be producing components for large multi-family projects or for single-family custom home builders? Have you considered producing components for light commercial applications?

Shrader agreed. “The more you know and understand about your core business and the makeup of the market you want to compete in, the better your ability to evaluate your production needs for the future,” he said. All three experts were quick to point out your business and your market don’t have to be what they currently are. “If you are confident there is greater sustained growth potential in an area beyond what you currently do, then your evaluation process needs to be focused on what you have to do differently to get there,” said Halteman.

You also have to look at your unique situation. What are your current strengths and weaknesses, and what are the greatest threats you face in the market? Going back to the idea of putting your expertise on a pedestal (see “Find Your Niche,” April 2014), are there ways you can tailor your products and services to meet your customers’ needs in a way no one else can? Positively differentiating yourself from your competition is one of the best solutions for sustained success.

“When you are evaluating, don’t just think about how can I do more of the same,” said Shrader. “Really think about whether doing things a little differently may make your whole operation easier, faster and more cost effective.”

In the end, knowing who and where you want to be in the future is essential in determining what you need from your equipment. The next step is gathering input from your employee teams, those who know your processes the best and can help you identify and quantify your strengths, weaknesses and opportunities for enhancement.

Gather Internal Input

“I would start with your sales and design department,” said Wasserman. “They are the best situated to tell you about your current market and where the greatest potential for improvement exists.” This group of individuals should help you identify what you currently sell that works well and what you sell that creates either unnecessary headaches or has the potential to lose the company money.

“Your sales force can tell you immediately what makes them really frustrated,” said Halteman. “Most times, their frustration is directly related to situations where your customers’ needs and expectations aren’t being met.” All three agreed it’s vital to explore those frustrations. Those conversations can raise simple questions about your operations no one’s asked before and discovering an existing strength or a possible opportunity previously hidden from view.

Beyond this group, you want to gather your production leadership together to help you analyze your current manufacturing process. They can help you identify inefficiencies, pinpoint real and potential bottlenecks, and brainstorm the many ways those obstacles to throughput could be addressed. “In the end, this team is about helping you deduce if equipment can either solve your current problems or help you achieve future goals,” said Shrader. Yet, these employees need to be challenged to keep it simple and forthright, because equipment may not be the answer at all.

Through these conversations, your employee teams may determine different or additional equipment is necessary to meet your current customers’ needs, or the potential demands of the market segment where you want your business to grow in the future. “Having their buy-in on the front end will have a dramatic impact on their investment in maximizing its use once it’s purchased and installed,” said Halteman.

Gather External Input

After evaluating your needs internally, the experts agreed it’s a good idea to seek outside opinions. “You can get great advice from component manufacturers you don’t compete with,” said Wasserman. “Ask the original equipment manufacturers (OEM) for references outside your trade area.” If you find yourself interested in purchasing a particular piece of equipment, it makes sense to talk to other manufacturers who already have experience installing and using it.

Of course, attending the BCMC show in Charlotte, NC in October is a great place to meet other CMs and discuss production strategies. After all, building a community is the main purpose of BCMC, and between the OEM vendors on the show floor and all the CMs in attendance, it’s the best opportunity to learn directly from others what they do and how they do it while simultaneously developing long-lasting relationships.

Beyond the annual BCMC, SBCA has three Open Quarterly Meetings (OQM) throughout the year that give CMs an opportunity to connect with peers across the country. By participating in these meetings, your new network of friends can give you valuable insight into innovative ways to structure your production and material handling processes. “It’s hard to put a price tag on the value of being able to pick up the phone and ask someone you trust how they would handle a problem you are struggling with,” said Halteman.

While a phone call or face-to-face conversation at an SBCA event can give you valuable information, nothing is more effective than a plant tour. A fellow CM can talk about what they do, they can even send you diagrams and photos, but they simply can’t do justice to the real thing. “I’ve walked through truss plants on three continents and there aren’t enough words to describe how different they all are,” said Shrader. “You have to walk through their production line, and see the material flowing through the facility, to truly understand what they’re doing.”

“The best part about plant tours is the ability to point to various aspects of the business you wouldn’t think to ask about over the phone,” said Wasserman. “You see something someone else is doing and wonder, why?” Many times, answering the “why” question leads to both CMs learning something new.

Evaluate All Your Options

In the end, this approach to evaluation should enable you to articulate what you need, and more importantly, why you need it. You should have a good handle on the labor percentage you are aiming for, the extent to which you want your employees touching material as it flows through the production line, and to what degree you are willing and able to reorganize your facility layout to incorporate new equipment. Further, whether it’s an automated component saw, roller gantry table, laser projector, component conveying and stacking equipment, or any combination of machinery you require to meet your identified production needs, you should have clear expectations on what you want to get from the equipment you buy.

That brings us back to the original premise: you don’t want a Swiss Army knife when a good sharp blade is all you need, and vice versa. Halteman advises CMs to ask themselves, “Do I need everything this particular piece of equipment can do?” You’re going to pay for all of those features, even if you don’t need them. Sometimes a simple problem only requires a simple solution. On the other hand, if you’re trying to do more to differentiate yourself in the market or meet an additional customer need, equipment that improves your versatility and capabilities may be exactly what you need.

Knowing where a new piece of equipment will fit into your production process and how it will affect throughput is another factor to consider. “If your current saw is causing a bottleneck, will a new, faster saw truly improve things, or will it simply shift the bottleneck farther down the line?” asks Shrader. He gave an example of a lumber mill that purchased a new high-end planer that could plane boards at twice the speed of their previous planer. On paper, their throughput capacity should have doubled. Instead, they ended up having to shut the mill down for several shifts because their drying kiln couldn’t keep up. You need to have the ability to rebalance your workflow with the new equipment in order to realize a favorable return on investment (ROI).

Conclusion

Speaking of ROI, the three experts agree the recent housing downturn has ensured everyone is more in tune with the importance of this concept. They also agree the days of simply throwing new equipment at a problem don’t work anymore. “The playing field has changed,” said Wasserman. “You need to be more surgical in your response.”

In the final article in this series, we will talk with this industry’s OEMs and get their perspectives on ROI. We will also explore the pros and cons of brand uniformity, changes in equipment life-cycles and the opportunities for CMs to be a better consumer and influence the equipment produced by the OEMs.