A few months ago I had an opportunity to attend a “sales seminar” for one of the more popular CAD/CAM programs in the cabinet/store fixture/millwork industries. The participants in this particular group were predominantly small-shop cabinetmakers. I have to admit to being a little surprised by the limited level of automation currently employed by some of the participants. However, the fact that they were in attendance indicates they are interested in implementing technology and automation in their operations.
My surprise at the lack of automation being employed by many in attendance forced me out of my normal arena to look more closely at these smaller shops. My research found a huge range of productivity and apparent automation across the industry. Annual sales per employee for kitchen cabinet manufacturers range from less than $40,000 to over $300,000 for larger companies with very high levels of automation and CAD/CAM integration. It should come as no surprise that the shops with lower productivity have very high labor content in their products; some indicate more than one-third of their costs are labor. Labor is actually the largest single component of their total production cost. On the other end of the productivity spectrum, the large companies are producing cabinets with labor content on the order of 10 percent; in those companies material is the largest single component of cost.
Clearly there is a huge range of productivity and production costs across the cabinet industry. I believe it is safe to say a similar range applies to virtually all areas of the wood products industry.
Looking at selling prices, which the market ultimately sets, shows there simply is a practical ceiling to the price most producers can demand for their product. Obviously, as that price ceiling is reached, higher production costs ultimately limit the potential profit margin. As you move down the pricing scale, high production costs simply become more burdensome and the margins disappear more quickly. So, if you happen to be in the 33 percent plus labor content group, you might well be an endangered species. To remain in business over the long run, production costs must shrink at very least to the level of your competition.
Most manufacturers have limited potential to substantially reduce material costs. Generally, the cost component that can most likely be reduced is the labor costs. A key element in accomplishing that is through effective automation and efficient handling of information (data ) — beginning at the order entry stage. A commonly accepted number often applied to a shop utilizing minimal CAD/CAM technology and one not utilizing those tools is twice the output per employee with minimal CAD/CAM utilization. As the degree of CAD/CAM and electronic data management increases, the output per employee continues to increase.
Introduction of automation and CAD/CAM technology represents an intimidating step for most, especially for the first step. There are some basic elements that should be kept in mind to leverage the greatest benefit from this investment. Prior to committing to any software or hardware purchase, develop an overall strategic plan. I cannot overstate the importance of this step. Too often the first steps into CAD/CAM and electronic data management are taken without a strategic “enterprise” plan. The painful results are often costly and time consuming. For those of you already on this path without a long term strategic plan — please take the time to create this long term plan; it will yield great benefits going forward. If you need help (and most do) in developing the plan, get it because a poorly developed plan, or worse, none at all, is a formula for costly failure. The most common result is islands of data and automation that are unable to communicate and cooperate with each other. This is as true for a first implementation as for an expansion project. At what point(s) you begin implementing the plan is less important than having a clear understanding of how all the components cooperatively support the overall plan.
Base your plan on clearly defined goals and incremental milestones to accomplish the overall plan. Part of the good news is that so many have already traveled this road it is no longer “pioneering” — it is far more like going to grandmother’s house on the interstate, and just like going to grandmother’s house, you do it one mile at a time.
One goal that should always be included in your plan is to minimize manual data entry and manipulation. The “golden ring” is a system that based on the information entered at the point of order entry would require no additional data entry. All the required functions including: inventory management, material requisitions and purchase order generation, shop orders, machine programs, shipping documents and invoicing — can be done seamlessly from the original order information entered in the system — only once.
Keep an eye to the future when developing your plan. At your current volume, you may not see a benefit to applying labels and tracking individual parts through your shop—and you may well be correct. However, looking out 5 years, you may be at a volume that makes part tracking highly beneficial. It will be far easier and less costly to add that feature if the original system architecture is designed to accommodate the feature.
If you are producing standard cabinets and do not have drawings in CAD format, there is software available that does not require CAD drawings be created before you introduce CNC machines and CAM. These programs generate all the information necessary (including drawings) based on a rules-based configurator. Beyond the ability to generate the detailed bill of materials and a drawing of the cabinet, the entire program is parametric based — so if the order calls for a 24 ½-in.-wide base cabinet instead of a standard 24-in.-wide cabinet, all that needs to be done is for the width to be entered and all the impacted parts are adjusted for the new width. Generally, these programs are available with vast “libraries” of standard products which greatly simplify the implementation.
Independent of how much CAM integration you have, these software tools have tremendous value. Let’s assume you currently utilize a single CNC machining center. What value is electronic data management for you at a sliding table saw? The value lies in the accuracy of the information contained in the automatically generated cut list — it is correct —t here is no figuring or remembering the dimensional changes required for a 24 ½-in.-wide cabinet. Parts aren’t cut wrong — unless the saw is set up wrong; material is not wasted and labor is not lost.
As you evaluate the interface between your information system and your machines, don’t lose sight of the fact that your machines are both expendable — and expandable. Today you may have only one or two machines, and those machines are from the same manufacturer and have the same configuration. That presents one level of complexity for a CAD/CAM system — but is not likely to be long term. Over time, you will add machines and they most likely will not match the existing machines; that represents a higher level of complexity. It is best to maintain the CAD/CAM programs on a central server and not utilize machine specific programming software. This allows better maintenance of data. If you maintain part machining programs at the individual machines and you make a change to those programs, you have to be certain to change those programs in every location. Maintaining them on a central server requires the change only being made once, thus ensuring better data integrity.
This article obviously cannot be a “How To Booklet” for information technology and CAD/CAM, but I would hope that you go away with two keys thoughts:
- Navigating the maze of CAD/CAM tools and electronic data management should only be undertaken after developing a long term strategic plan for the needs of the entire business — and you will be well served to seek advice in doing this.
- Failing to embrace these tools for reducing your labor costs will ensure long term failure for all those not in the most secure “artistic niche."
And one last thought: reducing your labor content does not mean you will have to fire your brother-in-law — most likely your increased sales, improved quality, reduced lead times and lower production costs will force you to hire your cousin!
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