There is nothing more frustrating than having more work than you’re able to produce. If your current throughput can no longer match your monthly sales, then you have a dilemma: Increase capacity, or ultimately lose the ground you just made by getting extra sales.
The fact that we must invest to gain capacity usually brings with it a variety of emotions: Fear that we will not keep the work to support the investment, excitement that we will be able to handle more work and grow, and deep thought about the logic of our upcoming decisions.
In this article we explore the when, why and how of adding capacity to your shop, while minimizing potential negative effects on your business.
When to increase capacity
Evidence of the "When” is pretty easy to identify. It comes when we’re maxed out with our current setup, and jobs are falling further behind because of production bottlenecks. Generally, there will also be a lack of either quality control or oversight of the finished product because we don't have the time to complete a thorough check before products leave the door.
If your quality and your customer service seem to be going downhill, your "When" may have arrived. The important step to take now is to not act in haste or make a snap business call that may put your business in jeopardy down the road. First, let’s take a deep look at the “Why” and “How” to increase capacity.
Why increase shop capacity
Identify your “Why” as soon as the “When” has become apparent. Your “Why” can be anything. You want to grow, you want to be the best in your area, you want to be the biggest, you want to have more employees, whatever the reason we all have a why.
I suggest making a list of "Why I desire to increase capacity." You may consider making this a pro/con list, so you can evaluate the positives and negatives of your actions. List an action in the center of the sheet, on the left put a proof that action and on the right of the sheet list a con of that action. This should put everything into perspective.
How to increase capacity
If you are like me, you probably just skipped down to this point of the article so you can get to the meat of the whole thing. If you did, I understand, but at least make sure you have your “Why” list that we talked about earlier.
One of the first things I learned when I was new to the cabinetmaking world was, “There's a hundred ways to skin . . . .” While that statement is surely true, let’s lay down a framework to go about your “skinning” a little smarter.
Adding labor and equipment is probably the first option we consider when we realize we need to grow. There are times when that is the answer, but we have to consider that it will generally result in added debt or lease payments that the company will now be responsible for. Is your company in a place to take that on? Will you really be able to get ahead?
Becoming more efficient in our processes is also another option. Although becoming more efficient is always a win, at some point you will likely find that capacity will still need to be expanded to truly continue growth.
Typically, the last option we consider is outsourcing our bottlenecks. There's actually lot of pride and emotion that can block us from considering it. It’s difficult to keep our pride of being cabinetmakers on the shop floor, but if we want to continually get better in business we have to keep an open mind.
Outsourcing enables growth
The idea behind outsourcing is not a new idea, but it is just recently becoming popular and viable. Opting for an outsource partner as a way to increase capacity allows you to keep your cash where it belongs – in your company. In our experience, outsourcing can allow a shop to double capacity without spending any additional capital. More cash will leave your company in a strong position to gain more sales and be able to grow within your limits.
Know to grow
As a cabinetmaker, I understand that once a craftsman, always a craftsman. The problem though, is at some point you are going to want to grow beyond just your own, personal capabilities. In fact, the value of your shop depends on it. If you have the grit to grow beyond your personal capabilities, you will soon find your when, why, and how.
If you can push through and execute these steps in detail you will be able to come up with a clear, concise plan of action that will keep your company nimble and eager for growth.
Source: Jeff Finney is the owner of Ultimate Cabinet Components in Collinsville, OK. For more shop insights from Jeff Finney, check out his articles at ultcab.com or listen to his podcast at thepushthru.com.