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Component Manufacturing dverti$er
Don’t Forget! You Saw it in the
Adverti$er
October 2019 #11243 Page #28
The Vast Majority of Component Plants Have Too Much Lost Productivity Todd Drummond
P
eople make the common mistake of thinking that if they have been doing something for a long time, occasionally have made improvements over the years, and they are working hard and consistently, then they are doing it the best way possible. But the truth is, approximately 80% of truss and wall panel component manufacturing (CM) suffer from far too much lost productivity. This loss of productivity can be defined as a cost and as a waste (the Lean Manufacturing Japanese term for it is muda). This waste is exhibiting itself in the net profit results. As a percentage of sales, single-digit and low teens net profit should be totally unacceptable during good times. It is not just the big things, like equipment, that make a big difference in efficiency and profitability. During the BCMC show, many attendees are seeking some type of improvement, but too many are focused on new equipment and do not put enough emphasis on process improvement. The Japanese reference process improvement as “good change” (kaizen), which most companies who embrace lean manufacturing practices refer to as continuous improvement. Recently, a former lumberyard CEO of 17 lumberyard locations explained to me that his two CM plants had made up only 10% of their sales yet contributed 30% of his net profits. The larger company failed during the downturn, so they lost all of their lumberyards, and now they only have a single CM, which is very profitable again. They are in an area of the country that was among the first to experience the devastating ’08 crash. This situation gave him a unique perspective of having a CM operated by a lumberyard versus independently owned. Since that time, their one operating CM plant has reestablished itself, and they have no intentions of getting back into the lumberyard business. Over the last three years, they have increased their capacity by 40% and their total net profits by a considerable amount because they improved their processes and made a modest equipment investment following my advisement. He stated to me that, looking back during their time when they had all of the lumberyards, their CM plants had seemed to be functioning so well that they gave it very little thought. Now he understands they were not anywhere near as good as they could have been and he wishes they gave it more focus. He added that he is delighted they hired my services to get them on a much more profitable path. Continued next page PHONE: 800-289-5627
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