Big Sky Woodcrafters Cuts Production Time

Komo Solutions, an American-made CNC router, is the latest piece of equipment helping Big Sky Woodcrafters in Laurel, Mont., be more competitive and profitable. Acquiring it was one of a number of positive outcomes after owners Kathy and Gerald Barta began using business assistance available to companies across the state.

The couple purchased the custom woodcrafting business 10 years ago, operating it in conjunction with their brick manufacturing business. Because the brick business was seasonal, they began pouring more effort into the plaque, showcase, and custom wood products business, which had been serving a limited, local market under previous owners. They eventually sold the brick business.

Data Needed

“When we bought BSW in 1995, we had no clue how to price items and struggled every year. We tried comparing competitor prices and looking at costs, but we were not sure how to break it down by product to determine where to put our energy. We struggled along for a while before we realized we needed help,” Kathy explained.

A cost of goods study done by MMEC several years ago to provide Kathy with a financial management tool made her aware of how minutes turn to hours, turn to days and push up costs. Faced with competitive pressures, more would need to be done to optimize productivity.

"We compete with companies using migrant labor, not necessarily located in Mexico. We also struggle with the increased cost of hardwoods; bunkers of it go overseas and push our cost of materials up," Kathy said of the pressures pushing them toward change. "We knew if we didn't do it right we would fail, so we reached out and got help.”

" So much is out there to assist businesses; now, I utilize it. I talk with other businesses who still don’t. We tend to think we can do it ourselves here [in Montana]. I was one of those," Kathy said.

But not any more. For instance, t he beginnings of their LEAN journey started with this simple question, "What happens if you turn this saw around?” posed by MMEC Field Engineer Dale Detrick who was invited to do a walk through of the plant. The essence of the question was this: What will it do for the footprint needed by this saw (the amount of workspace taken up by the machine and its operating space as it relates to flow through the plant)?

Footprint Changes

“It was quite obvious that we would no longer have to walk all the way around it to get to other equipment, and it was the beginning of becoming LEAN for us," Kathy said. "When we moved it, the footprint changed, productivity increased, and we began getting organized.”

Since then the owners began making other changes in the 10,000 square foot shop. They expanded into what had been their brick manufacturing space, and with MMEC’s input were able to avoid knocking down a wall by thinking through the process flow, Kathy said. She added that it is always challenging to work within all the city codes and still expand as needed.

I wouldn’t remodel again without MMEC," Kathy said. " Dale helped us practice LEAN."

Data from an MMEC cost of goods study was used in building a more recent costing model that Kathy uses to manage the business every day.

“The cost of goods project timed the shop's products, 100 items in all,” according to Brian Pendergast from MMEC's University Technical Assistance Program that developed the costing model.

Costing Model Helping

"For the costing model, we looked at wood costs, dimensions, time – what it costs to make each product. I then built in sensitivity analysis and scenario building using a spreadsheet so Kathy can see what it will do to costs if she adds an employee or makes other changes. She can also look at how the business is doing overtime, how it is doing vs. the budget. This tool has given her a better look at costs per each product based on wood, labor and overhead, making her more accurate with bids on customer inquires."

Kathy agrees. "If a customer wants a large quantity, I can input and can see my best price based on costs, add a percentage and compare with competitors to see if making it is realistic. I now know which products make best profits, to focus marketing efforts on our most profitable pieces."

With that tool has come important information the Bartas are using to grow their business.

The costing model provided other immediate gains like better accountability of waste when cutting wood, according to Gerald. "We used to estimate 20 percent waste when in some cases it is 35 percent. That’s a big difference.”

The model has given them the ability to give feedback to employees about why they need to do certain things differently. It has helped improve the utilization of employees – reaching 77% utilization. "Now, we share that with our employees; if it dips below, we can ask why."

The Bartas were also able to evaluate several pieces of new equipment to increase productivity.

A new clamping system used for gluing selections of wood to make larger pieces was added that cuts gluing time in half. A shape and sand machine for processes that used to be done by hand paid for itself in three months.

Information Is Power

Empowered by Lean to cut wastes and armed with specific time/cost information, the Bartas then began exploring another, more expensive piece of equipment, the new CNC router. MMEC/UTAP helped with an equipment justification for the CNC, Kathy explained. "We were able to show the lender a solid picture of the value of the CNC router to the business based on past sales, sell price, costs, and increased profit on pieces with CNC. With that information, we were able to land a loan."

As of early June, the new router had been operational only a few weeks but was running customer pieces after first week. It has increased productivity four-fold, producing 16 pieces with clean, consistent cuts in less than an hour including drawing time. Previously each piece took 15-20 minutes plus drawing time, according to Gerald.

He expects the router to replace two full pieces of equipment -- the copy shaper and band saw -- after he explores and becomes proficient with its expanded capabilities. The couple expect the machine to pay for itself within three years and will allow them to pursue new product niches.

“Improved productivity with our employees enabled us to purchase equipment that saved time. With MMEC and Dale’s help and improved tooling we have increased productivity 50 percent,” Kathy estimates.

“Dale is like a mentor. He’s the reason why our business turned around, sales, productivity, everything. He understands our business,” commented Gerald.

"The CNC will allow us to grow. Our goal is to have 98 percent of our wood touch that machine and to keep our staff of nine by allowing them to work on new things and increase production. We anticipate that it will change our price structure on some pieces," the owners said.

Niche Marketing

In a growing awards industry, BSW serves a wholesale market nationwide with 80 percent of its work being custom items beyond what they feature in their catalog and website. The main customers for its hardwood products are awards/engraving stores, bronze foundries and other wholesalers plus high school associations, and corporate accounts. BSW also works with retail marketing companies providing displays for their products. With all the different markets, sales consistently grow annually.

Because their business is directly affected by overseas imports, BSW sought assistance from another resource, the Northwest Trade Adjustment Center that provides grants for companies hurt by NAFTA. NWTAAC funds are not paid outright to a company but to support bringing in experts to assist with improvements and marketing projects. The grant enabled BSW to utilize the MMEC University Technical Assistance Center marketing service.

"During a brainstorming session with Fraser McLeay, under contract with UTAP 1, a recommendation was made to site visit other companies with similar manufacturing processes. He said we could really learn from observing other companies and looking at various equipment. Kathy did that and asked many questions while she was site visiting. “It is extremely amazing what you can learn from others in manufacturing,” stated Kathy. The Bartas also toured customer facilities and saw how they receive goods from BSW. “It gave us ideas on how to help them (enhancing our customer service) – and it increased productivity for both of us and increased their sales, too. That was extremely valuable."

The couple is tapping other resources to strengthen business. Their accountant built a sales trends tool that shows them if sales are increasing each year. Through a Job Service Training Program, they were able to hire a new marketing employee, Lisa Hagel. And the business has partnered with Better Business Systems to handle all employee issues and payroll.

“They receive a percentage of the payroll; the better we do, the more they are paid; so they work with us to improve. This helps me utilize my time better as I get paid for manufacturing efforts not for writing paychecks,” Kathy said.

Footnote:

1) a UTAP cooperative agreement between MMEC and the marketing graduate program at the University of Montana through the Montana World Trade Center. McLeay has since returned to private consulting.

-2005-