Implementing What You Learned at BCMC: Plan Where You Are Going

If you fail to prepare, you prepare to fail,” said Donnie Powers, President of Panel Truss Texas, Inc.

Powers was joined by Aaron Roush, General Manager of Villaume Industries, Inc., at BCMC to present their best practices for increasing production in an educational session entitled, “Gearing Up for Growth.” Their philosophy for running and growing a successful business came down to having four simple things: the right people, the right customers, the right vendors, and most importantly, the right motives.

The Right Everything

“In order to know if you have the ‘right’ everything, you need to have a short- and long-term plan to know where you want to grow to,” said Powers. “Those roadmaps will give you the criteria you need to evaluate what is right for your business.” Roush elaborated on this concept by pointing out that your direction and motivation
will dictate the kind of culture you want to establish with your employees, which will then determine who fits and who doesn’t. “If you determine you don’t have the right people, make sure you’re developing a pipeline to find and train the right people,” said Roush. “Do you train the right people from within, or do you go to the local high school, technical college or university?”

“Choosing and developing relationships with the right vendors for you takes time and effort,” said Powers. “What are you doing personally to engage in that process to ensure you are successful?” Powers stressed it’s important to reevaluate those relationships on a continual basis, always asking the question, “What am I doing on a continual basis with my vendors to improve my business?” The same proactive approach is needed in establishing the company’s motivation. Powers explained, “As a leader, you need to not only be an example, but be able to articulate where you’re going, why you’re going there, and why it’s a good idea everyone follows you.”

Finally, developing a short- and long-term plan means evaluating the methods you are going to use to grow. Roush asked the question, “Are you going to go at it the same way you did the last time you tried, or are you going to try something new?” One intriguing idea was to contemplate partnering with a competitor. “Sometimes the best way to take on big challenges is to bring someone with you,” said Powers. He suggested possible benefits could be sharing a salesperson, sharing the large capital expense of a new saw or table, cutting lumber for each other, and even sharing truss designers. “Try to do as much as you can with as little debt as possible,” said Powers. “Debt is death!”

Continuous Improvement

Once you’ve developed your short- and long-term plans, and have a goal of where you want to eventually go, “it’s dependent on everyone in the company to strive for continuous improvement,” said Roush. Both presenters suggest first identifying the seven types of waste in your organization: defects, over production (bottlenecks), too much inventory, over processing (too much material handling), efficient task motions, transportation, delivery wait times and repairs. Next, focus on how each area of waste will be uniquely reduced. “In production areas, start with the ‘5S’ approach,” said Roush, “sort, straighten, scrub/sanitize, schedule and finally, score the result.”

Another key to ongoing improvement is defining what improvement looks like. “Continually define what is the next step to take,” said Roush. As each step is reached, the improvement is evaluated and the next step is defined. “Defining and following through on your continuous improvement is just as important as having the right people or equipment,” Powers said.

They both stressed that taking this step-by-step approach to improvement breaks change into manageable pieces. The evaluation helps ensure each step makes sense, given how the improvement occurred and what additional challenges were identified through the process. “Incremental change allows for savings to be realized from small, no-cost or low-cost bite-sized improvements over time,” said Roush.

Pros & Cons of Automation

Powers and Roush concluded their presentation by walking through an example of how a company could evaluate whether to buy the latest automated single-blade saw. In this example, they assumed the typical residential roof used 3,021 board feet (BF) of 2x4 lumber. The automated single blade saw would take six man-hours to cut all of the necessary pieces, while it would take two conventional component saws 35 man-hours. At an average wage of $10/hour, and assuming a cost of $1/BF, total labor costs are reduced from 11.6 percent ($350/$3,021) versus 2 percent ($60/$3,021).

“Now, a 9.6 percent labor savings is likely on the extreme end, but if you reduce that to a more conservative number, say 5 percent, a company going through 2 million BF annually can realize a labor savings of close to $100,000 per year,” explained Powers.

Beyond labor savings, the automated single blade saw can also contribute material waste savings. In their example, the average waste for a conventional component saw is eight inches, but for an automated single blade saw, the average waste is 2.4 inches, giving a 5.6 inch waste savings per piece cut.

For the typical residential 3,021 BF roof, there were 564 pieces needed to construct the roof trusses, or an average length of 5.36 BF (3021/564). For the plant doing 2 million BF annually, that would represent 373,134 pieces cut for an annual material savings of 2,089,552 inches of 2x4. (373,134 X 5.6). The material savings would total 116,144 BF (2,089,552/12=174,130 lineal feet X 0.667). In this example, they assumed an average price of $400/m, for an annual material waste savings of $46,458.

“Adding the labor savings ($100,000) to the material savings ($46,458) gives you a total savings in the first year at $146,458,” said Powers. “If the cost of a new automated single blade saw is $200,000, then it would take less than a year and a half to recover your initial investment.” (See graph.)

They were quick to add that there are many additional factors each company needs to consider before running out and purchasing an automated saw. However, their example did drive home the type of evaluation that needs to be undertaken for any kind of capital expense. “You must know all your costs,” said Roush. “If you’re going to change something up, calculate how it will affect all the downstream aspects of your business so you can calculate your true return on investment.”

Conclusion

Powers and Roush reiterated that, in order for a company to grow successfully, it needs to evaluate its current situation and costs accurately and be able to articulate what the company wants to become. Having a plan in place will help the company ascertain if it has the “right” people and resources to achieve its goals. Finally, by taking on growth in a step-by-step manner, the company’s ability to evaluate its incremental success will be maximized, and it will be far easier to continually revise its short-term plan to navigate successfully into the future.

Bo Powers, a co-owner of Panel Truss Texas, added a powerful insight at the conclusion of the presentation for everyone to consider, “It comes down to doing the right thing. Treat your employees right. Treat your customers right, and nurture your relationships. Your true success doesn’t come from how much money you make, but how you impact people’s lives in a positive way.”