I’ll pick up where I left off with the sofa factory. I’m using this second installment both to describe cellular manufacturing layout and the trade-offs that bedevil every kind of manufacturing. The layout was the least of the problems. The owner, uncommonly bright and hard-working, contacted me to find out how he could let his customers follow the progress of their customized item “like a pizza.” The obvious answer was a Material Resource Planning System, or MRP. The fellow had no idea what that meant.[2]
He was relying on a close friend, who created custom sofas in his small workshop, for advice on what to do. The friend had no experience with manufacturing, simply knew how everything was done. For example, he had a collection of hand saws used to saw lumber, a collection of seven sewing machines to do custom stitching, etc. My client was planning to get a big building, put a bunch of people inside with supplies and tools, and tell them to make custom sofas. It wasn’t going to work, as his goal was to reach eight figures in income in three years.
He was out of town for a while, studying Lean. This is a holistic approach to businesses of all kinds, although it was pioneered by Toyota to apply to manufacturing about 40-odd years earlier. All he had to do was mimic the actions of Toyota and he would get the same results. Acceptance of conformity is a hallmark of Japan, and its workforce recognizes a compact with employers that implies lifetime employment. Toyota had been practicing Lean for more than 40 years. It was ingrained deeply into Toyota’s culture.
He would also need machinery. This is where things ultimately went off the track. Most pillows are advertised as “fiber-filled.” The machine that filled the pillows cost more than $100K. It could fill well over a thousand Dacron shells for the pillows every hour. But that required 3 workers, and since it was one machine, he had figured on one operator. The machine sat idle more than 95% of the time. There was no clear way for the shells to be created and placed at the machine output. Once created and filled, the shells had to be sewn shut and then put into a kit identified as going to a specific order. Then they had to be upholstered.
He offered both cloth and leather options. The many options had to be stored in quantity somewhere. But the sawing operations emitted a lot of sawdust, so the valuable cloth and leather had to be protected. Canvas-covered areas had to be created. Easy access to each type of sofa covering was needed, meaning aisles between spools of fabric covering in quantity times many types and colors. The problems kept multiplying.
He needed cutting machinery to create both pillow covers and upholstery for the sofas. Few machines can cut both leather and cloth in quantity, and they typically are imported from China. They cost up to $200K+ and had to be installed, tested and training conducted and maintained. That was the first successful fix. I found reconditioned and remanufactured cutters with warranties, $40K delivered and installed. I tried with other machinery further along in the process, and fixing each acquisition took significant time. Ultimately, he wound up with a mixture of new and used machinery.
This also revealed some important things.
· Raw material had to be stored near where it would be used.
· If kitting was needed (kitting is collecting all the needed parts) it needed to be completed and delivered ahead of the shift. This led us to another discovery – kitting was best done by high-functioning autistics.
· Movement of both raw materials and subcomponents across traffic aisles needed to be scheduled since it was virtually impossible to have vendors deliver within ten-minute windows. Thus, twice a day all activity was stopped for collection and distribution of raw materials and subcomponents across traffic lanes.
· A large area needed to be available at the delivery door to store incoming materials until a break was scheduled.
The next issue was materials. He was focused on unit cost, but without revenue that’s difficult. He was negotiating with a leather hide exporter in Brazil, turn-around time three months. That would require about $500K tied up permanently because of re-orders. I found a local supplier of colored hides and arranged for him to perform vendor-managed inventory. He was paid to keep items in stock and deliver them as needed. That freed up a huge amount of cash. Then he selected a limited number of fabrics and arranged for vendor-managed inventory. More cash preserved. The importance of cash cannot be overemphasized in a startup. Run out of cash and you’re done.
There were other issues. Power had to go to individual machines, but it could not lie loose on the floor. The ultimate solution was powering everything with dropdown from the ceiling. Everything needed to be carried on jacks or forklifts, which meant batteries, which meant pallet jack and battery-charging secured space. Chargers and batteries are often small and thus easily pilfered.
Separate and secured space was needed for tools as well. Power tools are expensive, and the plant manager would need to decide on a family of tools he wished to use. They had to be kept with their batteries and rechargers. The reason for a single family of tools was obvious: interoperability.
Eventually we got to packaging, shipping and receiving. Packaging and receiving needed to be far apart, with standard-height doors for loading and off-loading. Packaging turned out to be one of the most difficult pieces of the puzzle. I asked the world’s largest freelancer site’s talent finders for a packaging engineer. They recommended a flower arranger from Argentina.
We finally got to the issue of marketing. He had a bank loan plus a financial whiz investor. The investor insisted on maintaining a prime image, and vetoed use of a configurator. He insisted on a photography-based imaging system that represented highest quality. The problem comes in dimensions. Every time a dimension changed (for example, from a 7-foot settee to a 9-foot sofa) it required a new set of photographs. The only change possible in a photography-based system was upholstery. A configurator can adjust every possibility and combination.
Software selection was another consideration. Having won the battle for an MRP, one had to be selected. There were hundreds available. I created a functional specification for the system, and insisted that everyone communicate only with me. That was because I knew the systems, and how the demonstrations and brochures were very flashy, but failed to meet expectations.
Microsoft said they would only communicate with me, but would have to have the identity of the end client. I warily provided it, and the next thing that happened was arrival of a detailed implementation proposal for an expensive bit of software that was overkill. My client threw it away. I wrote to the person who had sent it, and said Microsoft had failed to follow my instructions, which were intended to help each candidate prepare to deal with my client. I told her it was not her fault, but I would never recommend a Microsoft product to another client. She understood.
It finally came down to a choice between a well-known web-based suite and a job shop system. Job shops are specialized manufacturers that accept small orders and create the tooling and molds needed to produce prototypes and short runs. The web-based suite was flashy and had all sorts of bells and whistles, while the job-shop system was pretty utilitarian and plain. It finally turned out that the web-based suite had no ability to handle manufacturing. I was floored.
My client loved the flashy demonstration and hype. It took a while before he understood that it couldn’t possibly help him in his core business. The job-shop system, which had basic ERP functionality, on the other hand, could handle everything with ease; it just wouldn’t be flashy. I got both sales reps on the phone and told them that the client wanted the famous flashy system, but it needed the ability to support manufacturing. They agreed to a joint program, wrapping the unneeded flashy system around the manufacturing system. The stratospheric price ended that.
An internet platform, for e-commerce, was needed. The financier wanted the flashiest, most expensive platform in existence. The fellow planning to implement it had no idea about MRP, but he proposed duplicating the MRP process in the e-commerce platform. That never got off the ground. I recommended a far less expensive system, which the financier never liked. We were at a stand-still.
I hired a CAD operator in the Philippines to turn the PowerPoint slides into CAD, and an electrical engineer to sort out power distribution. Then I left, having done all the good or bad I was going to do.
My client defaulted on his bank loan, lost the retail store he had begun and built on his own by bootstrapping intelligence, drive and purpose. Sometimes life sucks.
[2] MRP is a generic term; it has largely been replaced by ERP (Enterprise Resource Planning, which includes personnel, payroll, finance, vendor management and other pieces in addition to MRP)
Thanks for the education, Bill.
You reinforced my decision to forego any initiative and risk-taking and to become a State employee.
By 2025 at the latest I suspect we all will be employees of the all-powerful state.
Except for those in re-education camps, prisons, or mandatory "Mercy Homes".
This will be the last free article in the Manufacturing Thread. Going forward some will be paywalled because of the amount of effort required.
I have clients that were crazy as well. Sometimes you really need to walk away.
This client wasn't crazy. Those, I have lots of experience. Lots.