Carl Spencer didn’t set out to make Spencer Cabinetry an environmental award-winning business. All he wanted was to create the most efficient cabinet manufacturing facility he could. The funny thing is that he found the road to more efficiency was also the road to more sustainability.

Spencer has been an enthusiastic proponent of the Toyota Production System since the 1980s. Working at a variety of larger corporations he worked hard to institute the lean production tenants of the system wherever he worked, but he often ran up against resistance in higher management. Now that he’s in charge of his own company, he has the freedom and authority to explore the full measure of what TPS can do. And one of the first surprises was how green the system is without even trying.

It’s all about waste

“The underlying premise (of the Toyota Production System) is waste reduction. That’s a huge part of it,” says Spencer. “It’s called make more money. We never set out to be green. We just discovered we were.”

In October, Spencer Cabinetry was recognized in Seattle Business Magazine as one of the 20 Washington State “leaders in sustainability” as a business that is “changing to save the environment.” The company was runner-up in the manufacturing category of the 2009 Green Washington Awards, and was the only cabinet manufacturer so honored.

The company reduced its waste by 50 percent using 100 percent recycling of all lumber scrap, wood waste, pallets, paint waste, plastic, aluminum, steel and even office paper. They also eliminated shipping damage and related rework.

Workers start at 7:30 a.m. because Spencer discovered that was the time for lowest traffic. He also encourages car pooling and public transportation, boosting employee ridesharing by 60 percent.

Green materials

“Every company is switching to green materials, but the key elements are things people don’t talk about,” says Spencer. That includes not doing a lot of rework, which saves time and materials.

Spencer also looks at wasteful operations and looks for ways to improve. For example, in the paint room they changed how guns were cleaned, instituted recycling, all of which saves the company money as well as being environmentally sound.

While many woodworking businesses have resisted going green because they have been put off by the increased cost of environmentally certified materials, Spencer has found a way around that, too. “If all you do is buy (green) materials, it costs you money,” says Spencer. “We live in a forest of alders, which are considered a weed tree. Seventy percent of our volume in 2008 was alder (instead of less environmentally sound imported species).”

Toyota meets woodworking

Spencer’s adherence to the Toyota Production System shows up all over the shop. Materials arrive daily in a just-in-time system that allows for minimal rack storage and easy inventories. Cabinets flow through the plant one at a time on a pull system, eliminating virtually all sorting and most handling.

You won’t see big automated equipment at Spencer Cabinetry. Instead, Spencer prefers to use older equipment and invest in stepped up maintenance. A 23-year-old Holz-Her 1270 panel saw cuts panels using computer-optimized cultists. “The net result generates at least 5 percent better yield than standard booked checkerboard cuts,” says Spencer. “In addition, absolutely no extra stock parts are cut to be handled, stored, and maybe retrieved some day.” The saw may be old, but it is consistently calibrated and maintained. It has new wiring, new air cylinders and new air lines. “It runs like a new saw despite its age,” says Spencer.

The shop also uses Powermatic 66 table saws outfitted with Accurate Technology digital readouts and Steff power feeders. A Ritter framing table is used for assembling face frames with pinned mortise-and-tenon joints.

The company insists on making its own doors to be able to have faster lead times, provide maximum customer service and better design options, Spencer says. “Very quick tooling changes permit a batch size of one despite a wide range of door sizes,” he says.

Early proponent of TPS

Spencer has been involved with the Toyota Production System since the 1980s. Working in much larger factories than his current eight-man, 6,000-square-foot shop, Spencer tried to implement the principles of the system.

“I was assigned to fix a 400-cabinet-a-day plant,” he says. “We developed a full pull system and manufacturing lead time was cut dramatically.” But time and again he found that top management didn’t really understand the system, and Spencer yearned to set up his own plant. His opportunity came in 2005 when he launched Spencer Cabinetry.

Not only has the increased efficiency of the system allowed Spencer to achieve better sustainability, but also he sees it as helping to offer better customer service – his main competitive advantage.

“I’ve worked for big companies. As they grow, the system gets more complicated,” he says. “Here, the faster we go, it doesn’t change.” Lightning fast processing times give him a selling advantage, and he doesn’t have to worry about expediting a rush job and screwing things up. It also makes the shop able to handle the unexpected.

“If a builder messes up a cabinet, we can do it (replace it) the next day. If they mess up a door, we can replace it sometimes the same day,” says Spencer.

Continuous improvement

In keeping with the Toyota Production System, the company top to bottom is dedicated to continuous improvement. “If something is not right we shut the whole plant down.  But once something is repaired, it’s not much time to get back up to speed,” says Spencer. “There’s not much to fix. Out tendency to replace (something that is wrong) with something completely correct rather than just fix something.”

Employees are literally fully invested into improvements. A bonus program ties everyone’s income to the success of the business. “We pay a monthly profit-sharing bonus to all employees based on the success of the previous month,” says Spencer. “This bonus is intended to be a significant proportion of any employee's compensation, sometimes exceeding 25 percent when everything clicks.”

The overall bonus pool is determined by a fixed significant percentage of net profits. “If there are no net profits, there is no bonus,” says Spencer. But that doesn’t seem to be an issue. Spencer says employee bonuses rose from 0.3 percent in 2007 to 11 percent in 2008. And while many shops experienced serious downturns in 2008, Spencer reports his business was up 18 percent.

Workers are encouraged to contribute to that success by suggesting better ways to do things. Employee ideas, if good, become the new standard for the shop.

“We’re not the be all and end all, but we’ve got a nice start,” says Spencer.