We have spent a great deal of time talking to business owners, operators, and experts in the fenestration industry. We compiled our notes into a straightforward guide with 10 tips to help you eliminate the non-value-added activities in your fenestration business. Many of these are simple processes that you can implement today to realize immediate savings. If you want to put dollars back on your bottom line and stay up-to-date on the best fenestration manufacturing equipment and processes, keep reading.
1. Get the Price Per Pound of Raw Materials in Your BOMs
If you sell your scrap aluminum by the pound but are pricing your extrusions in your purchase orders and BOMs (i.e., bill of materials) by the foot, how do you determine your yield? Say you have 1,000 linear feet of extrusions at $ 2.50 a foot. After you cut all of this material, you’re left with 500 pounds of scrap. What is the yield? Who knows?
The only way to really determine what you’re throwing away as scrap is to know how much per pound you’re paying for your extrusions and then calculate how many pounds go out to the recyclers. Make sure you price your BOMs and purchase orders by both the pound (or kilo) and linear foot (or meter). Then, when you sell your scrap each month, you can easily deduct its weight from the total weight of material you used in the same period. This will give you an accurate picture of your yield.
For example, if you used 50,000 pounds of aluminum in a given month and 10,000 pounds ends up as scrap, you know you’re getting an 80% yield. Once you know your yield, you can work toward reducing scrap to improve your bottom line. Your scrap bins are bins of lost profits.
2. Stop Looking at Scrap as a Source of Revenue
Most operators see the scrap number at the end of the month on their profit and loss statements as a revenue number. Well—it’s not. We cannot stress this more. Now that you’re purchasing and accounting for material by the pound, you can see your scrap number as a measure of inefficiency.
A typical shop uses 40,000 pounds of aluminum per month. Reducing the scrap rate from 18% to 12% puts $4,800 per month onto your bottom line. That’s $57,000 per year! When you purchase by the pound, your aluminum costs are most likely in the range of $2.50 per pound. Typically, scrap brings in about $0.50 per pound. Therefore, the real cost of scrap is $2.00 per pound. So that 10,000 pounds of scrap you received $5,000 for is really $40,000 of lost profits. Not such a fun number now.
Let’s assume a scrap rate of 18%. For every 10,000 pounds of material, you’re losing 1,800 pounds, or $3,600. If you reduced your scrap rate from 18% to 12% for a net savings of 600 pounds, or $1,200 (keep reading to find out how!), you could put a net of $1,200 per 10,000 pounds directly on your bottom line. That’s a discount of close to 5% on your material costs. How much do you spend in a year on aluminum? Would a 5% rebate be a pleasant surprise?
To help get these savings, you should view your scrap rate as a trackable metric. Your monthly scrap percentage should be posted where every member of your organization can see it. Your percentage of scrap is a measure of overall organizational efficiency, from the sales team all the way to the guy installing the job. Everyone needs to own and understand this number.
3. Stop Using a Tape Measure
Measuring and setting manual stops takes time, requires a great deal of skill, and even with the best operator, you will still get miscut parts requiring costly rework.
- Productivity: Reducing non-value-added activities, like wasting time pulling out a tape measure and setting a manual stop, for example, is one of the easiest ways for a fenestration business to save money. Any operation that you need a tape measure for can be automated. Simply attach a CNC fence or pusher, such as the TigerStop or SawGear by TigerStop, to your compound miter saw, double miter saw, drill, or punch. Whether your operation is cutting aluminum extrusions or vinyl, you could be saving a ton of operator time by installing an automated fence or material pusher and simply typing in the measurement you want to process and hitting start.
- Skilled labor: Finding operators who can accurately read a tape measure is becoming more and more difficult. The skilled labor shortage is real—but it’s easier than ever to combat. Simply put down your tape measure! Any operator can be trained within minutes to type in a desired measurement on an automated stop and press start.
- Accuracy: Adding an automated stop or positioning system will also combat accuracy issues. Your newest operator can be cutting like a pro in no time. An automated stop means perfect parts every time, saving you on expensive rework down the line.
4. Set Up the Right Material Handling Processes
Do you have high breakage rates? Do you have a warehouse full of pieces and parts that clutter the shop floor? Both of these problems ultimately lead to increased costs. Review your production line. Is it designed to be the most efficient in terms of how materials are moved through the shop? A waste of motion is a waste of time and money. Proper space planning can save operators huge amounts of time by streamlining the distance particular pieces must travel between each step in the manufacturing process.
Purchasing right-sized material-handling equipment, such as racks, dollies, carts, tables, conveyors, and storage systems, is a perfect way to combat the associated costs of material-handling issues. Free up your shop floor, decrease bottlenecks, and reduce breakage all in one. Purchase custom material-handling solutions for your shop’s unique space constraints, budgets, and needs. You can also fit your material-handling needs to the exact specifications of your products.
Material-handling and right-sized storage solutions may also help your business save money on leasing or purchasing additional factory space and storage space. Correct material handling is not only cost-effective—it’s safe. Quickly and safely move aluminum and glass products throughout your shop. Reduce the physical toll that comes from highly repetitive tasks like lifting, carrying, or bending, which can cause stress injuries. Products like tilt tables, glass manipulators, and assembly racks are all effective solutions.
Additionally, an often overlooked part of material handling is the final protective wrapping that’s applied. Stretch wrapping machines automate the process and can reduce costs over hand wrapping significantly. Wrapping machines create a tighter wrap, therefore better protecting windows and reducing breaks. They can also reduce the amount of film actually used, reducing costs.
5. Restore Trust in Your Fenestration Business
The quality control department is vital to any fenestration organization. Adopting proper quality control tools is important to passing federally regulated certifications and maintaining consumer trust in your products. If you aren’t happy with your current way of verifying parts, easy-to-use Statistical Process Control calipers, such as the TigerSPC, can make critical quality control measurements on the fly.
For the remaining 5 tips, download the FREE guide below:
10 Ways Fenestration Download
10 Ways Fenestration Download