The new production processes put into place by Euro-Rite Cabinets, located in Port Coquitlam, British Columbia, Canada, made a dramatic difference that was vividly illustrated when the company recently reached $2 million in sales in a single month. After the changes were implemented into the plant, the company hit this sales landmark with no ill effects, no overtime, and its inventory also dropped.
"A year earlier we had done $1.6 to $1.7 million in sales (for a month) and there was overtime, Saturday work and stress," says president Bill Longman. This time when the company reached the $2 million in sales most of the employees in the plant didn't even realize that the company was having that busy of a month, says Longman, until the results were announced and a celebration party occurred.
Taking advantage of a strong economy with an aggressive sales push will only work if the resources on hand can handle it, says Longman. That's why Euro-Rite focused on analyzing and reorganizing the plant's processes, with the help of consultants, to get maximum efficiencies out of the equipment and space the company already had.
The result is that the company saw growth in sales from 2004 to 2005 of 22 percent and is seeing similar growth for 2006. With the restructuring of processes, sales not only grew, but became more profitable, says Longman. And the company is anticipating another robust sales push.
Euro-Rite sells frameless Euro-style cabinets in a ready-to-assemble line to wholesalers and retail out of its showroom, as well as an assembled line to dealers. All the category sales went up.
A different way
The changes took from 10 to 12 months to put in place. "It was just a different way of looking at things," says Longman. "We concentrated more on throughput and less on standing product." The system Euro-Rite Cabinets and its consultants put in place is based on the theory of constraints as presented in "The Goal" by Eliyahu M. Goldratt.
One of the changes implemented in the plant was smaller runs. "We made smaller runs and made them much more frequently. We built very, very few parts for inventory. We built what we needed," says Longman. "Most of the things we cut as we needed them."
One of the results of these changes was less inventory on hand, which increased the space available in the plant for new equipment and for processing. "It reduced our inventory by 20 percent."
Focusing resources makes it possible for even more growth. "We just finished spending $1 million for new equipment," says Longman. "For where we're at, we didn't need it, but for where we're going, we're going to need some new equipment. We bought a third panel saw, a fourth edgebander and our third CNC drill."
The difference between the new equipment and the old is that the new pieces employ the latest technology. The panel saw is a rear load Giben with moving grippers. The IMA edgebander holds 24 tapes with an automatic changer. Finally, the Biesse Skipper CNC drill drills from the top and bottom simultaneously.
"We want to push more sales growth," says Longman. "We're going to go after more new accounts." The company is looking forward to expanding in other directions. Euro-Rite is selling container loads of its RTA product to Shanghai, China, with the first load ready to go.
The company has only a skeleton crew in a second shift and can add capacity by adding to this shift and without expanding the company's physical space. With the new equipment and this additional capacity, the company is poised for more growth.
"I think we're lucky because we're small and we've been able to ride through every recession," says Longman. His concerns are freight costs, inflation and gas prices. s
Have something to say? Share your thoughts with us in the comments below.