The ins and outs of efficiency — today!
You may “love logistics,” as current UPS ads insist, but you may be lonely in your amour. In fact, according to Bob Armstrong, president of Armstrong Trade and Logistics Advisory Services (ATLAS) and president of the Chartered Institute of Logistics and Transportation North America, “I’m not sure if a lot of manufacturers even know what logistics means, or even a lot of us so-called experts.”
Nevertheless, most businesses in the wood industry know they want streamlined operations that are efficient at transforming raw materials into finished goods at a low cost. That’s a relatively specific definition of logistics, as well as a common goal of most value-added wood producers.
Armstrong has been consulting in Canada and across the globe for decades, including in the wood sector. He believes that one very important factor in pursuing the goal of logistics in our industry is dealing with the very nature of the kinds of products being produced. According to Armstrong, “Many wood manufacturers produce goods that take up a lot of space but don’t weigh as much in comparison to other shipped goods — products like furniture and cabinets. This constitutes a basic logistical challenge for these businesses. In my experience, overcoming it is the first step towards streamlining a business.”
So how does a wood business overcome this basic challenge? Armstrong believes the formula for logistical success involves a combination of knowledge, planning and communications. According to him, “Whether you’re on your own or hire consultants, you have to know how your products go from point A to point B, and then communicate with the people that make that happen.” Such people include shipping carriers, freight forwarders, customs brokers, or anyone else that is outside your company but still presiding over a crucial component of your business.
As Armstrong explains it, “If you’re not constantly communicating with these people, you’re putting at risk the viability of your operations. Pick up the phone. Meet with them. It will help solve problems down the line.”
Armstrong’s years of experience in logistics have, in large part, been focused on these factors that are outside a company’s jurisdiction, or physical space. Yet, streamlining a company’s operations also involves narrowing in on what happens on company premises. That’s where someone like Jim Lewis of Grand Rapids, Mich., comes in. Lewis’s expertise is in consulting on both sides of the border to make their places of work more “lean” — and it doesn’t have to involve any investment in machinery, either.
Lewis’s approach is unique, and perhaps even innovative. Whether it’s the floor shop, or the administrative offices, Lewis believes that simply reorganizing the flow of work and materials can be a game changer. According to Lewis, “Without spending one dime one new equipment, business owners can analyze every aspect of their workplaces and make changes that create significant efficiencies, and, more importantly, save a lot of money.”
Lewis also believes getting everybody in the company on board with the idea of creating workplace efficiencies is crucial to making improvements. He says, “The culture really has to be instilled from the top down. If the leadership gets involved, and the employees get involved, then improvement will be an ongoing process. Being efficient becomes a company-wide habit.”
One company where such workplace efficiencies are occurring is Signature Wood Systems in St. Thomas, Ont., where Lewis has served as a consultant. According to Lewis, Signature’s c.e.o., Brad Cairns, came to him despite extensive knowledge of logistical practices.
According to Lewis, “Brad Cairns certainly didn’t suffer from a lack of desire to learn about lean business practices. But even after doing all his homework, he needed some help. It depends on each individual circumstance, but there are steps that any wood shop can take in order to become more productive and, as a result, more profitable.”
At Signature Wood Systems, a key step toward better productivity was defining what Lewis describes as in-process work materials. Lewis says, “After analyzing their work flow, we found that too many pieces were being bottled up at any one particular machine at any given time. This is undesirable because it means materials are not moving efficiently from one machine to the next.”
Lewis continues, “So what we did is reorganize the work flow so that there was only one piece between processes at a time. This not only substantially reduced the amount of space being used up to produce product, it increased the amount of product being produced from about 10 cabinets per day to over 40. That’s significant.”
What Lewis is describing is a reduction of bottlenecks that occurs when moving product from one machine in the shop to the next. So, what moves from, say the CNC machine to the edgebander, or the sander to the finishing booth, is done in a way so that backlogs don’t occur, or so materials aren’t languishing on the shop floor.
Like most aspects of logistics, these kinds of improvements can really only occur through analysis, followed by the implementation of proper controls. According to Lewis, “You really have to observe and record what’s happening in your shop, devise ways of improvement, and then follow up to make sure these improvements are actually happening.”
One piece of advice Lewis has for wood industry shops across Canada is to assess critical operations. For example, at Signature Wood Systems, a broken-down beam saw led to critical work stoppage. The result at the time was that crucial materials were bogged down in-process between machines, and the entire shop was shut down for the day.
As Lewis describes it, “That was before we reduced the in-process piece work-flow to one between each machine. To make improvements, we had to get everybody cross-trained so that you can continue to function even if one machine goes down. Or, if one person leaves the company, another should be able to step in and fill that gap.”
From a broader perspective, Armstrong believes that seeking out more markets in which to sell product is another way of achieving productivity and profitability. In his words, “I think all companies should try to think big when trying to make improvements to their business.”
As an example, Armstrong cites doing one’s homework when it comes to foreign markets like China or India. He says, “In China, Hong Kong can serve as a gateway to streamlining one’s operations into China. I recommend it to many clients seeking access to that market. Hong Kong has a long history of capitalism, and even the Chinese government relies on that city as a bridge to foreign investment.”
China gets talked about a lot in reference to expanding operations and markets. But what about India? According to Armstrong, that country has a lot in common with China. It has a burgeoning middle class with a taste for many things western. However, Armstrong says, “Unfortunately, India’s supply chain is a bit weak. That’s one area to be cautious about if you’re taking advantage of opportunities in that country.”
Going to China or India might constitute thinking outside of the box globally. Yet there are also ways of thinking outside the box internally within your existing operations. According to Lewis, “What we recommend is creating internal customers within your organization. In other words, make the various departments independently accountable for their exchanges with other departments.”
Another example of thinking outside the box involves simply labelling the materials that flow through a company, and this can be done within any department. Lewis uses office administration as an example. As he describes it, “Instead of piling up office supplies on a desk or table or, conversely, having them buried in a cabinet somewhere, we recommend itemizing them, storing them somewhere, but have labels placed outside so that you know what’s inside by just looking at it, instead of digging through a cluttered storage space.”
How long does it take for a wood shop to get its act together logistically? From Lewis’s experience, it can take about six to eight months to get the initial improvements worked out and implemented. However, changing the entire culture and habit of doing things can sometimes take from three to five years.
Says Lewis, “First, you need a 100-percent commitment to making improvements. This starts with the leadership, and flows down to every employee in the business. If you’re doing it right, eventually everyone will be on board. You no longer have to oversee people to become efficient, they will already be in the habit of being efficient.”
Going back to the shut-down that occurred at Signature Wood Systems, Lewis says the company ended up relying on competitors for help during that crisis. According to Lewis, “I don’t think I’ve ever seen anything like it. Brad ended up calling some of them, and they agreed to provide access to machinery or whatever they could. It really pulled him out of a jam.”
Relying on improved internal and external logistics is an obvious pathway to success, but there also isn’t a substitute for the ingenuity and generosity of Canadian wood industry professionals. All these factors can help a wood shop get out of a jam and headed down the road to success and productivity.