When the economic downturn hit the office furniture industry in 2000, Jofco realized it had to change to survive. As a result, the Jasper, Ind., manufacturer initiated the most far-reaching improvements in its 83-year history.
Jofco produces mid- to high-end office furniture, including casegoods and seating for private offices, conference room furniture, lounge seating and occasional tables. Known as a wood furniture producer, its newer products combine wood, metal and glass.
Before 2000, strong sales and growing business allowed Jofco to tolerate production inefficiencies. "We were just throwing people and footage at the problems," says Lee Kraft, vice president of manufacturing. "When the downturn hit, we knew we had to have a new plan."
1. Fix the flow
First, Jofco decided to reorganize and consolidate its 600,000 square feet of manufacturing space spread over a downtown facility, built in 1922, and a plant outside town, built in 1978. Building additions had created a haphazard manufacturing sequence, which brought problems such as the need for a plant-long conveyor system to move finished product to the warehouse.
To help with the transition, Jofco increased its engineering resources. "We've added a lot of horsepower in the areas of engineering and production analysis," Kraft says. "We realized that we had to not just straighten out the flow, but straighten out the processes."
Jofco gradually relocated and realigned the departments until they flowed sequentially through the C-shaped, 325,000-square-foot newer plant, from rough milling, laminating and machining to assembly, finishing and shipping. By the end of 2002, the downtown facility had been converted exclusively to warehouse and office space.
Second, Jofco started reducing its raw material and component inventory. "When we had both facilities going, we had a dedicated warehouse that was full of chip core and veneer," Kraft says. "We had lumber sitting in the yard and in the cooling sheds. Throughout the process we had work-in-process, buffer stock and raw material stock."
Because it sold standard product through a catalog and used batch-and-queue production, Jofco inventoried its finished product. "We ran in large quantities, stocked it, then built to replenish that," Kraft says. When customers wanted custom product, they had to wait until the production cycle could accommodate them.
Made-to-order production was the solution. Jofco started buying dried lumber and limiting buffer stock to best-selling and quick-ship products. It also expanded its product selection. "We've offered a lot more new product that was outside the traditional casegoods lines that we had offered before," Kraft says. Jofco now sells primarily through dealers, architects and designers.
Specials now account for more than half the orders. Jofco's best asset is its ability to react to and build what the customer requests, Kraft says. "Whether it's a variation of our standard product or a complete special, our success in recent years has been our willingness to find a way, through our experience and flexibility, to solve the clients' challenges."
3.Work with competitors
Third, the company developed cooperative relationships with other office furniture manufacturers. For example, Jofco produces an upscale wood product for a competitor that prefers to focus on its core competencies. Sourcing the product from Jofco enabled that company to consolidate operations and close a plant. "It's good for them," Kraft says. "It's good for us."
Jofco also knows when to outsource. "We're not going to succeed if tomorrow we want to make aluminum extrusions and open a glass-cutting operation," Kraft says. "Other people who have dealt with those for the bulk of their existence can provide better solutions than we can."
Many office manufacturers embrace this cooperation, which was unheard of before the downturn, Kraft says. "People smartened up and said there really aren't many secrets in this business. There are things that people can do better than other people, and there's been a willingness to let people do them."
More than ever, customers want product faster and cheaper. "At the end of the day, there are two salesmen out there haggling over a sale," Kraft says. "The person who can get it to them faster and cheaper is going to be the winner."
Fourth, Jofco added machinery that fits its new manufacturing requirements. Key equipment includes two Biesse Rover 30 and one Rover 35 point-to-point machining centers, Biesse Stream single-sided edgebander, Biesse Omnia double-sided edgebander, Burkle and Italpresse feed-through press lines, Torwegge CNC tenoner, Schelling panel saw, Shoda NC516-P and NCW516-2134 CNC routers, and Heesemann LSM4 sander.
The value of the CNCs is that they consolidate machining functions. "When we got the point-to-points, we changed a lot of product," Kraft says. Panels used to move among tenoners, pin routers and manual boring machines. "They're now slapped up on the point-to-points, done one side, done the other side," he says. "Then they go through the edgebander, are sanded and stocked."
Kraft says Jofco was the first U.S. manufacturer to buy the Rover 35 machining center and the Omnia edgebander. The Rover 35 features an EPS system where individual servo motors automatically position the rails and pods. "The cost that it added to the machine was really minimal," Kraft says, "but the capability it added was really substantial."
Jofco switched from solid wood edges to veneer edgebanding. "We glue all our edges internally," Kraft says. "We endeavored to reduce cost in that area and the inventory we carry." He had visited Italian manufacturers that use Biesse edgebanders, and he liked what he saw. "We decided internally to go with Biesse banding equipment," he says. "I don't think we dreamed that it would work out as well as it did."
The Omnia is a very precise, well-equipped machine, he says. "It's literally improved quality 100 percent."
5.Refine the work force
Fifth, the company dropped its incentive-pay structure. "That went hand-in-hand with the way we had manufactured things run a lot of them and run them quick and you'll make a lot more money," Kraft says. With a new flat-pay structure, everyone is paid the wage they're assigned, with raises based on merit.
Jofco instituted a gain-sharing program last October. "We set specific goals for labor and materials to be measured against a sale," Kraft says. "When that goal is met or exceeded, there's a 50/50 payout the company keeps 50 percent of the gain, the employees keep 50 percent of the gain." Muller Group Inc. manages the program and provides updates at monthly meetings that all employees attend. In January, employees received their first payout 2.7 percent well ahead of expectations.
Ready for the future
With these comprehensive, inter-related changes, Jofco has positioned itself for increased profitability as the office furniture industry recovers.
"Our internal sales are trending up and the people we do business with report that they're trending up, too," Kraft says.s
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