Peter DuBrule

Synchronous Solutions

There were once two entrepreneurs, Harry, and Keith. Although they didn’t know each other, they had very similar circumstances. Both Harry and Keith had remodeling backgrounds and decided to become countertop fabricators. Both companies got started and sales began to grow rapidly.

Just starting out, both men worked diligently converting stone by day, and doing the books, scheduling, administration, and ordering supplies during the evenings and weekends. Both added personnel to meet demand, but all was not well with the two fabricators. The more the business grew, the more complex the business became. Customers demanded unheard-of levels of performance with ridiculously short lead times. Large retailers entered the market and drove pricing down while creating huge swings in demand by offering “specials” and “promotions.”  New competing materials were introduced to the market which confused the businesses, and eroded pricing. Other “upstart” fabricators appeared, operating out of garages, installing out of pick-up trucks and offering even lower prices. Both Harry and Keith knew that something had to change.

 What Harry Did

Harry was an excellent fabricator. He could do every operation from beginning to end and was probably the most competent person in the business.  Because he did virtually everything, he was needed everywhere all the time. Harry decided that the growing demand meant that overtime was the only viable solution.  His folks just needed to work harder.  His expertise and presence on the floor, including lots of “verbal encouragement,” did work for a while.  He broke up the manufacturing process and assigned teams to fabricate tops completely from beginning to end. He thought this would allow him to maintain “control” over individual performance. He lowered his price a little, hoping that the increased volume of orders would make up for any losses developing due to excessive overtime. He took more orders and got a line of credit from the bank to finance the increased cost of the inventory he now carried. This inventory was to be sure that he could respond quickly to customer demand and lower his cost by purchasing in larger quantities. Harry began looking for larger space into which he could expand his operation and fit more product through the plant.

Harry concentrated on being sure that everyone understood that “we all must work harder.”   That was the only way he could imagine that his business would improve.  But this approach resulted in increased turnover when his best people left due to burnout.  Increasingly, all his problems just got worse.

 What Keith Did:

Like Harry, Keith also was an excellent fabricator. But unlike Harry, Keith just was not ready to spend more time on the floor. Not that Keith had a problem with being on the floor, far from it, Keith hated the tons of paperwork that were required to run the business. Keith longed for the old days of fabricate and install. Life was so easy then, and so much more fun. Keith remembered the original ideas for getting into business for himself, wanting independence, flexibility, and income. Also, Keith had always thought that one day the business would be an asset that he could sell to finance his retirement. Now, as Keith surveyed all the changes going-on he was no longer having as much fun.  His profits were fair but not what he had expected when he started the business.   And his accountant stated that the business really was not worth anywhere near what he had thought it was. The accountant had told Keith that the company was probably worth somewhere between four and six times the annual earnings. Keith knew that with a price calculated on his performance, an industry typical eight percent on sales, the sale of the company would never generate anywhere near what he’d need to retire.

Keith wondered if there was not someone who understood small manufacturing that could assist him with redefining his company. Someone who could help him really create value. 

An article in the Slippery Rock Gazette Caught Keith’s eye and he made a call to Synchronous Solutions.

An assessment of Keith’s company was the first step in the process. The discussion of control and stability in manufacturing excited him.  The simplicity of a planning and scheduling system, based on financial value added, made lots of sense to him.  He spoke with many other fabricators across the country who had implemented this system with great success.  Overall, this gave Keith the confidence that he could operate a successful manufacturer.

Finally, at last, Keith felt that he’d be able to get his hands around the pricing and profitability issues that had been haunting him for so long. Of particular interest to Keith was the discussion around change. Simply put, the system being described was a clear and direct way to relate focused change to improved net earnings. In the past there had always seemed to be so many things that needed to be fixed. This was the first time that he’d ever seen the “cause and effect” approach to bottom line improvement.  Keith brought in the folks from Synchronous Solutions.

What Happened to “Work Harder” Harry:

Initially things at Harry’s plant improved. The presence of Harry on the floor brought a bit of motivation to the production team. The boost in sales generated by the reduction in price caused an increase in business.  Harry even added a couple more people to handle the load. Overtime went up, but cash from new orders was sufficient to cover the mounting expenses, and Harry reasoned that, once things stabilized, the increase in sales would deliver greater profits. 

The profits, however, never materialized. After the initial sprint, the workforce began to complain. The frenetic pace coupled with the overtime necessary to maintain lead times was just too much, and soon people began complaining about the work schedule and the increased demands. Two key employees left, and lead times began to slip out longer and longer. Customers began to complain about the poor on-time performance, and several customers began second sourcing from other vendors. The new “work harder” approach that Harry had put in place didn’t work as well as he had hoped, and production volume output actually fell to below pre-change levels. A brief dip in orders and a three-week drop in demand, below plant capacity, put the company in a cash crunch, and Harry had to factor some of his receivables to meet obligations. Finally, Harry had to lay off several people to make ends meet. 

What happened to “work smarter” Keith:

After a couple of days doing the initial staff orientation, things began to change. Implementation of the new Drum, Buffer, Rope system went relatively smoothly, and for the first time, production personnel could really see the impact of their contributions. The amount of product going out the door rose dramatically. At first the reduction of work-in-process on the floor spooked the fabrication personnel, but repeated assurances kept people moving until the first performance measurements were collected. Best of all, the chaotic boom and bust cycles that had been the norm began to even out. 

From a business standpoint, the news was especially good. Lead times began a downward trend and the on-time completion performance improved dramatically. A clearer understanding of the true production capacity of the company allowed more accurate completion commitments, as well as providing a far more accurate way to calculate cost and profitability. Earnings began a steady rise. Chaos all but disappeared. For the first time in a long time, Keith felt good about where his company was going, and his bright future.

The stories are true, the names have been changed. Keith is happy and still profitably fabricating tops.

Pete DuBrule is an associate of Synchronous Solutions. After a career in Automotive and Aerospace manufacturing, Pete began consulting with small and medium sized manufacturers. Using the principles of Constraints Management, in the early 2000s, Pete worked with DuPont Surfaces Division and launched the Performance Optimization Program (POP) for fabricators. He is a former partner in a fabrication plant. Pete now resides in Western Maine and continues to develop and implement improvement strategies in stone and solid surface conversion companies around the US.