It's never easy letting go. Trusting a supplier to produce quality, cost-effective components on a just-in-time basis can be a scary proposition. However, more manufacturers are reaping the benefits of strategic partnerships, which provide components faster, better and sometimes cheaper.
Savvy manufacturers are embracing outsourcing to handle extra capacity and avoid specialty equipment purchases. However, for the relationship to be beneficial, Walt Burrell, owner of California Closets, Lombard, Ill., recommends finding a supplier who has the same goals, ambition and quality control.
"I have a good working relationship with my supplier and I know once an order is placed, we'll have a high-quality product on our dock within five to seven working days."
Saving time, space
The custom closet manufacturer outsources specialty processes, such as raised panels, because it's more cost effective than investing in the technology to produce them. "Raised panels are an extremely specialized product that requires specific equipment and atmosphere to manufacture," says Burrell. "By outsourcing we can focus on design and installation. With the volume we order, (around 100 panels per week) we wouldn't be able to keep up with demand and would have to open a separate facility."
Tony Gatliff, owner of Great Lakes Woodworking, Hamtramck, Mich., has outsourced components for the past 12 years because of capacity and timing issues. The store fixture manufacturer has similar equipment as his component supplier and does many of the same processes in house.
"In Detroit when people hear the word outsourcing they instantly think the work is going to China," says Gatliff. "This isn't the case. I'm sending work down the street because he has the capacity to produce certain items faster, better and sometimes at a lower cost."
The store fixture manufacturer outsources a wall panel system and machining floor fixtures and shelves. "My supplier produces the components and assembles the wall panel system," says Gatliff. "They're big and heavy and it's not worth our time rehandling them. We order about 100 systems and 300 wall slats per week."
Gatliff has made outsourcing part of his business model and plans to do more in 2008. "My supplier is much more suited for producing components and sending them to us," he says. "By outsourcing components we can focus on other manufacturing processes."
Component industry growing
The component market is incrementally growing every year because younger generation cabinetmakers don't want to build cabinets, drawer boxes and doors, according to Debra Behring, vice president of operations at JB Cutting Inc., Mt. Clemens, Mich. "Why should they take the time to set up and make 10 drawer boxes when they can order them out?"
According to the component supplier, business owners want to design a project, assemble and install it. "Sometime they can build it cheaper in their own shop but with outsourcing you know your costs upfront," says Behring. "If they invest in equipment, they have to buy materials and figure in scrap. At that point your costs can be all over the place."
While the closet industry has embraced outsourcing components, the kitchen cabinet industry has been a hard sell. "Cabinetmakers can make their own cabinets using a table saw and hand routers," says Behring. "It's taken some time for them to trust that we aren't going to steal their work. As a result, cabinetmakers are outsourcing components if they need precise hole locations or a CNC panel part. She says,
Component manufacturers haven't felt the brunt of the housing downturn because of a rise in popularity for closet organization systems, garage organization and home offices. "About 80 percent of thermofoil goes into closets, home offices and basements," Behring says. "The kitchen industry, 10 years ago, wanted thermoformed doors but now that has shifted to wood and is a small percentage of our business," she says.
Behring believes the component market will grow in the next five years. "The younger generation is into technology, computers and building a finished product," she says. "They want to buy components and other services to get the job done."
The market will also benefit from more real-looking, richer thermofoil films. "The vinyl companies are creating products that look like real wood," says Behring. Painting an MDF kitchen door is twice as expensive as thermofoil and a glaze. A wood cherry kitchen is three to four time more expensive than thermofoil doors. In the next five years, thermofoil will be hot again in the kitchen."
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