W&WP February 2000


Quality, On Time, or Cost -- Is There A Choice?





Our goal as wood products manufacturers is to ship quality products, on time and at a cost that will net a profit for our companies. In fact, these three tenets could form the foundation of a mission statement for any manufacturer striving for success.

However, every manager and supervisor knows that consistently hitting this trifecta is easier said than done. That's because we are constantly being called upon to balance these three basic elements, an exercise that often requires compromising one goal to achieve the other two.

How do we determine which of the three elements is most important? How do we decide which tradeoff is the right one to make?

To answer these questions we must first acknowledge that the underlying goal of every company is to make a profit. Therefore, every decision must be considered with this in mind as we examine the relationships of Quality, On-Time Schedule and Cost.

Maintaining Quality

If we produce a quality product we have laid one of the three essential cornerstones of a profitable company. As we stated in "Management Matters" last month, quality is defined as conformance to customer requirements. It is a prerequisite for developing a base of satisfied customers who will come back for more and spread good words about us.

On the other hand, if we do not manufacture a quality product, we have shipped a product destined to create an unhappy customer. Our company cannot remain profitable by building a reputation of providing inferior products, no matter how cheap the price! Cutting corners may lower the initial cost of a product but will lead to higher costs as problems mount.

For example, skipping a sanding operation will lower the initial manufacturing cost of a product. But if this is done on a regular basis to meet a schedule or to improve the "production count" in a department, a day of reckoning will come and costs will soar as the company attempts to make repairs to and replace products returned by unhappy customers.

Staying on Schedule

Every product has a required delivery date -- the date the customer wants it by. That customer may be the next operator in your department or it may be the end user. Each has an expectation as to the scheduled delivery date of the product. In order to be successful, everything we do must be geared to fulfilling our delivery promises.

To this end, a master schedule should be maintained to keep products flowing through the plant on a time-line designed to satisfy all of the varied customer demands for delivery. If we do not produce the product in our departments according to the schedule, we will cause problems throughout the plant -- disrupting the schedule of every subsequent manufacturing station. The end result will be the creation of a back order unless extra cost is incurred to 'catch up.'

Cost Considerations

Before marketing a product, we should have already given careful consideration to our cost to manufacture and/or distribute it. Our asking price should include an acceptable margin of profit. If no consideration is given to cost during the manufacturing process, a negative bottom line is almost certain to result. This is contrary to our underlying goal of making a profit and it is therefore unacceptable.

There are many variables which must be managed in order to control our costs, including the cost of materials, labor and machinery necessary to produce the products. If we manage costs in these areas well, we will produce a profit. If we do not, we not only erode our profit margins, but risk making inferior products in our mad dash to get back on schedule or create scheduling delays, which can also translate into unhappy customers.

So where does this leave us in answering the three questions posed earlier? Why do we have to make choices and how do we make the right ones at the right time?

At times we are forced to choose between Quality, On-Time Schedule and Cost because we have not been able to fully harness control of all of our manufacturing variables. For example, if one member of the packing team notices lacquer runs in the finish of the products when the loader is crating them up, the delivery will be delayed to make the necessary costly repairs.

In some cases, the unexpected sets us back. For example, if the profile shaper suddenly breaks down, we must find an alternative method to machine the parts or wait for maintenance to fix the problem. These are just two of thousands of possible miscues that force us to make on-the-spot decisions.

How to Avoid Choosing

If we have ongoing conflicts that prohibit us from producing quality products, meeting schedules or controlling costs, we must find a way to remove the causes of these conflicts to minimize the number of times we need to choose between them. The following are a few ways to avoid constraints that inhibit us in meeting all three.

* Use the correct methods. Every product has specifications that determine the quality and the cost of each item. They are there to be followed to assure an acceptable product is manufactured at a profit to the company. To ignore the specifications or procedures is to invite disaster. If it is specified to use a moulder to machine a part and we opt to use two shaper operations instead, we may well cause unnecessary tear outs that require extra sanding to repair. We may also create additional costs through increased labor and a longer process time.

If your company has not created specifications adequate to control Quality, On-Time Schedule and Cost you should begin a serious discussion of how to do that.

* Use the correct materials. If the correct materials are not specified and used for a particular application, quality will be compromised. In addition, the cost may go up due to the materials costs themselves or due to difficulty in machining, etc. Improper materials can cause delays in the flow of the product through the plant as well. Specifying and using correct materials can have a positive effect on all three of our criteria for maintaining a profitable company.

A simple example might be deciding to use pine scrap to make screw cleats instead of the specified oak or other hardwood scrap available. Maybe we just want to use up the pine. Unfortunately, the pine is so soft that the screws crush the wood below the countersink and make the screw go too deep causing damage to the face of the cabinet top.

This simple compromise will raise the cost of the item due to unnecessary repairs required and will almost certainly result in delays in the schedule. In addition, the product quality will be compromised during the process.

* Use quality materials. We have all heard the saying, "You can't make a silk purse out of a sow's ear." It's as true in woodworking as it is anywhere else. If you begin with veneer that is checked, you are destined to increase costs and create delays. Likewise, using lumber that was removed from the kiln at 12% EMC will surely cause costly problems and delays later.

* Do the job right the first time. Last month I spent a lot of time on DIRTFT (Doing It Right The First Time). If we allow the job to be done incorrectly, the quality will suffer, the costs will soar and we will disrupt the flow of materials through the plant. As in the examples above, all of this will negatively impact the bottom line.

If you are constantly having to make difficult choices between Quality, On-Time Schedule and Cost, get some help in identifying ways to eliminate problems in your operation. Set up a Continuous Improvement program and follow the tips above. Your job will become much easier with a lot less hassle and your company will see its profits grow!


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