Hamilton Steps Back to Look Ahead
Hamilton Fixture, one of the nation's largest store fixture manufacturers, has consolidated its operations to create a leaner, more efficient company.
BY LARRY ADAMS
THREE YEARS AGO Hamilton Fixture, a successful company with more than $70 million in sales at the time, took a long, hard look at itself -- warts, wrinkles and all. This cathartic action has led to climactic change.
The company's introspection focused on two key questions: Who did it want its customers to be and what products and services would satisfy them? The answer to the first question was simple. It wanted national retailers as its clients. The answer to the second question was perhaps simple in theory, but in practice required some tough choices. Plants, products, production and management methods were scrutinized as the company looked for ways to be a "low-overhead, efficient manufacturer focused on providing excellent services and value to our customers," said John Schlegel, CEO of the Hamilton, OH-based company.
In the end, hard choices would be made including closing less-efficient facilities and merging them into two plants, including a new state-of-the art facility the company built.
Addition by Subtraction
By focusing on store fixtures, Hamilton Fixture began to grow rapidly through the 1970s and in the 1980s took several leaps forward with the founding of an architectural woodworking company, a plastics fabricating company and its California operation, Hamilton Fixture West -- a division that would later serve as the model for the consolidation of its Ohio manufacturing operations. With each business move sales grew, but by the early 1990s the company had become "unwieldy," according to Schlegel, with too many plants producing too many products. Success had brought inefficiencies and redundancies into the process.
In 1995 Schlegel and the Hamilton management team reviewed the company's operations and structure. They ultimately determined that having four divisions with 900 employees spread throughout seven separate facilities in the Cincinnati area was a problem. The company acted quickly to streamline operations.
"We had to decide what we did best," Schlegel said. "We weren't an architectural woodworking company and we couldn't keep producing products that couldn't be built in high-production. While this dropped sales by some $13 to $15 million, it also made us a leaner, more profitable company."
By reducing overhead, and increasing production efficiencies, Schlegel said, "We can now compete for jobs with very competitive pricing which we couldn't compete for because we couldn't meet their prices."
In considering the consolidation, Hamilton Fixture looked to its California division for inspiration and direction. The company tried to make the Ohio operations mirror the Califronia divisions' logical, production-enhancing workflow. Schlegel said he wanted Hamilton Fixture to be one company working out of two locations. "That meant implementing the same systems and running the same equipment," Schlegel explained. "If we have Busellato point-to-point boring machines in California, we want them here (in Ohio). We want to be able to run the same jobs out of both plants."
Inside the New Plant
The facility -- known within the company as the Symmes plant (the road on which it is located) -- is where the majority of fixtures are assembled; components are produced at its manufacturing facility and trucked to the plant. Prototypes are developed in a mini-mill that features Altendorf sliding table saws, Delta saws and a number of smaller machines. Administrative and sales staffs are also housed in the plant.
While little machining is done in the Symmes plant, the infrastructure was built with future expansion in mind. A dust silo and wood dust vents, pneumatic lines and power sources, were all put in place prior to move-in.
Currently, this assembly plant and the manufacturing plant are linked by a truck that shuttles the seven miles between the two facilities six to eight times a day delivering components for assembly.
At the manufacturing facility, all of the high-production equipment that Hamilton had in its eastern-division arsenal were merged to create a "Supermill." The 140,000-square-foot plant features two rear-loading Giben panel saws which cut the bulk of its wood and panels. A Holzma front-loading panel saw is used primarily to cut acrylic sheets in books three to six panels deep. Two Busellato point-to-point boring machines, from Delmac Machinery Group, handle vertical boring while a third, the Busellato Junior, also bores horizontal holes. Routing is accomplished on a Shoda six-head, dual-table router, from Computer Router Services, or on a Heian four-head, dual-table router, from Stiles Machinery.
Other equipment at the plant includes a second Shoda router for cutting Plexiglas and a Stiles' Homag Optimat double-end tenoner. Two Homag SE9400 edgebanders, apply PVC and wood edgebanding. In general, carbide tooling is the norm, "but we will use diamond occasionally if tolerances demand it or if the job is large enough," said vice president of operations, Terry Schultz.
The various machines work together using bar codes. Almost everything is bar coded at Hamilton; the company has 20,000 SKUs, Schlegel said. In addition to helping with production, bar coding also allows the company to accurately track inventory. Inventory control has improved to the point where auditors have told Hamilton that it doesn't have to take a physical inventory once a year as it used to, a process that would take three days to accomplish, Schlegel said. "We are working with our vendors to get them to all use bar codes so we can scan materials as they come in," he added.
All Together Now
Some customers may even have Hamilton Fixture personnel placed at their company. For example, one particularly large client had three Hamilton employees working in its office including a draftsman/designer manning a CAD station. Another example of VAVE involved a fixture designed for a customer that included substituting a snap-on extruded plastic molding in place of T-molding. Also, snap-on aluminum extruded uprights were substituted in place of a one-piece, welded assembly and the metal caps on these uprights were replaced with injection molded plastic caps. These VAVE changes saved the customers about 20 percent from a previous design.
"The idea is to get the cost out of the product and still get what the customer wants," Schlegel said.
The second bonus plan is a "Pay for Performance." Under this plan each employee's job category involves four to nine skills and each skill has a development test. Bonuses are based on passing the test. "We show them the tests and they work toward passing it," Schultz explained.
"To be successful everybody has to be involved. We want our people to take an overall look at things and ask how what they do affects the overall operation," Schlegel said. "You could keep increasing base wages, but ultimately we would become less competitive, or you can give them an opportunity to make more money by helping us improve customer service and efficiency."
The ideas generated by employees are not necessarily earthshaking or difficult to implement. Often, however, they are effective.
Walter Miller, who has been with the company since 1993, and prior to that owned his own workshop for 30 years, was able to save the company $1,600 in direct costs, not including labor. "We were using a sign holder insert that had square edges going to a curved cut-out and we would have to round them off," Miller said. "When we looked into it, we found that inserts with round edges cost 85 cents a piece. We had been spending $3 for ones with square edges that we would have to work on."
Another example led to a worker being able to do his job more effectively and without risk of injury. While assembling fixtures for a large department store, James Coleman did a lot of bending. At the end of the day his back ached. He mentioned this to his supervisor Bob Riddell. The next day, "We asked him how high it needed to be for him to work comfortably and we built up his work area until he was comfortable," Schultz said. A small idea implemented quickly saved some wear and tear on Coleman's back and improved efficiency as he and the rest of the assembly team built an order of 215 of these fixtures. "Ideas like this have helped us with our safety record," Schultz added. "We haven't had a lost workday because of an accident in almost two years."
Another back saver and production enhancer is known as "The Wheel." The Wheel is used in a workcell area to assemble fixtures for a leading "off-price" clothing retailer. The fixtures have casters on the bottom of them and after attaching them, assemblers would have to flip the case good over to attach the bumpers and other components. Then an employee hit upon the idea of The Wheel. The Wheel rests on a conveyor and as a fixture is rolled into it, a second employee turns The Wheel, flipping the fixture right side up. "What once took four people to assemble 112 fixtures in an 8-hour shift," Schultz said, "now takes two people to do 256 fixtures."
These are just a few of the employee ideas implemented in the last couple years. "So far, we have had 286 employee ideas that were implemented," Schultz added. "The ideas either saved us money, improved safety or helped us use our resources better. Rather than just have five of us making decisions, we now have 350 decision makers. Five of us are not that smart, that is why we need to get everybody involved."
Controlling Costs Through Value Engineering
Getting in tune with its customers needs is one of the primary ways Hamilton Fixture meets the "price points" required by certain national retailers. This is why it is constantly looking to develop long-term relationships with its customers.
"A customer may say, 'We are paying $800 for a fixture and we want to get this down to $600.' We will start working on ways to get the price down, but unless we know what it is used for we can't do a good job," said Hamilton Fixtures' CEO John Schlegel. "If we use a wire grid for something that weighs 20 pounds, it might not be strong enough. The welds might break and so on. So we need to look at another solution."
Hamilton looks for a solutions using a concept called VAVE or Value Analysis, Value Engineering. VAVE is meant to create a products at a lower cost through substitution of materials, a change in processes or other cost-cutting measure. For instance, a major greeting card manufacturer, a 25-year customer, was looking to reduce its fixture costs by 20 percent. "In that case we formed a multi-disciplined team and our client formed a team and we worked together," Schlegel said. A number of ideas were implemented including changing part of the fixture from fabricated steel to injection molded plastic; costs were cut by 30 percent.
Another example of value engineering involved a customers that ordered 1,000 fixtures at a time. When Hamilton found out that the company was ultimately going to need 10,000 fixtures, it determined that it could buy the necessary raw materials in bulk and invest in tools to roll form sheet metal, to reduce costs.
"That is part of having an ongoing relationship," Schlegel said. "If you are quoting on a job-by-job basis, then you don't have the knowledge to achieve a cost breakthrough."
An ongoing relationship can also help meet delivery times, Schlegel said. "We can work with our customers to forecast their future needs," he said. "We can bring in materials to anticipate their store openings. Even before we have the detailed plans, we can use a template of the store and start building products that are typical for that type of store."
An example of this is a national chain of video stores that is in the midst of a national expansion program. "The client may know they want to build a store in a particular area three months out, but may not know the layout until 30 days before the opening. By knowing the clients needs we can build the fixtures, keep them in inventory and deliver them on-time," Schlegel said.
Hamilton Fixture mixes and matches an assortment of materials including wood, metal, plastic and laminates in its products. "Using a variety of materials allows us to serve a broad spectrum of our client's needs. Our ability to use the correct material and use it properly is a major strength for us. We design and engineer in all materials. If we can do it ourselves we will, or if there is someone with better processes that can do it, we will buy it," Schlegel added.
-- Larry Adams
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