Current Slump Shows It Pays to Be Proactive
The decline in new home construction, combined with an anemic remodeling market, has created serious setbacks for many companies and the people who work-or worked-for them. Yet some window and door makers not only made money in 2007, they grew. Some expect no worse than flat sales for 2008.
What separates these companies from those that are struggling, or already out of business? To get some answers, we talked to some of our manufacturer customers we felt were doing well. We learned circumstances help. Companies in the Midwest, for example, have had a steadier path, particularly if their focus is the replacement market. But this is not enough. We know other companies in similar markets are facing real challenges.
So what else matters? As customers, the six companies we spoke with obviously all have integrated manufacturing ERP systems. What is unique is the fact that they all constantly work with their systems and procedures to wring out all the benefits. They aggressively seek improvements at all times.
They also are looking beyond the plant floor for efficiencies and ways to improve customer service. This is primarily done through tools that enable their customers or their own sales locations to estimate, place and track orders through Web access. The benefits are customers have more information control, errors are reduced and sales staff can focus on more than taking orders or tracking down a truck.
You don't have to tell people in Southwest Pennsylvania about economic pain. Vandergrift, 40 miles northeast of Pittsburgh and home to Kensington Windows, once boasted the largest steel mill in the world. Today, the town's population of fewer than 6,000 people is less than half of what it was in 1940.
Chuck Wetmore, Kensington vice president of operations, sounds anything but glum. Last year was a growth year, he says, and, at worse, the company expects sales to be flat in 2008. Wetmore will be particularly busy. He is the driving force and implementation leader for the vinyl window manufacturer's investment in a new FeneVision manufacturing ERP system. It will be done during the busiest months of the year, with completion scheduled for August.
The decision was made in December. "Ultimately, we had to do it," Wetmore explains. "The cost to maintain our old cobal-based system was going up while the resources to support it were becoming less and less available. Creating new reports or changes required custom programming." Wetmore's list of new capabilities is long. Kensington will now integrate all the equipment on the floor, not just the saws. Production barcoding will be implemented, including automatically printing NFRC and Energy Star labels when the unit barcode is scanned. Any remaining paperwork on the floor will be replaced with displays at each cell that show the color and all options for the unit being made. "The efficiency and capabilities we expect to gain are the big attractions. We are looking forward to these."
There will be more built-in reports and custom reports will be easier to create. "The new system is a tool for improvement," Wetmore says. "You have to be able to get information to work the system."
"One of main reasons we go with automation is to take human nature out of the process. We'd rather have the system do the calculations," Wetmore said. Finding workers in the region is actually a challenge. "Unemployment is only 5 percent. That's basically normalized."
While the company's main goals are quality and scrap reduction, he expects the new system to reduce errors and improve customer service levels at the same time. Kensington's implementation includes a module that enables its customers-and even their customers' customers-to create estimates and place orders through secure login in a Web browser any time day or night.
"We sell mostly through a dealer that sells in the home, but we also do some two step distribution. Distribution wants Web-based order entry. They want to push it out to their customers. Think about it: the person at the counter would rather enter an order and be done with it, especially if it can tie into their system, which this can. They can run a quote quickly and change multiplier and discount levels."
The error reduction? Once captured in a quote, data does not need to be reentered anywhere. And with minimum and maximums set in the product configurator, it is impossible to quote a unit Kensington cannot build.
Wetmore says the "slump was not a factor. We do all remodeling. We still need to go forward as a company."
VINYL WINDOWS TECHNOLOGY
Paducah, Kentucky, is a short drive from Illinois, Missouri, Arkansas and Tennessee. From its 160,000-square foot factory in the historic town, Vinyl Window Technologies sells throughout the Midwest in every channel in the window and door market.
While the company has seen new construction sales fall, Fred DiPrete, senior IT manager, says the management team expects overall sales to increase in 2008. "We're not discouraged. Right now things are a little slower. But we are taking advantage of this time to tweak our systems and to make improvements."
A big reason for the optimism is that ViWinTech, as the company is usually called, implemented its manufacturing ERP system six years ago. Ever since, they've been using it to drive improvements in efficiency, quality, service and more, DiPrete says.
The company is also using the system to drive growth. In six years, the company has increased its run rate from 250 to 750 windows per day. Still, the focus for 2008, with one exception, is getting more from what the company already has.
"The slump has motivated us to find even more ways to be more efficient, to get more windows out with fewer people," DiPrete explains. "We want higher quality and fewer defects while getting orders out faster. We're not necessarily trying to improve lead-time as much as to reduce backlog. We've always been good at orders complete on truck, but we want to get better."
A project for 2008 is an upgrade to Web-browser accessible sales tools. These will help the company extend online estimation and ordering capability to nearly 300 customers, up from 125 currently.
"We've actually downsized our customer service department, but service levels are up," DiPrete says. "About 60 percent of all quotes placed in Web Center are converted to orders. Our sales partner can promote to their customers better and quicker, and we can do more sales building rather than order taking."
Most people know Youngstown, Ohio, as the poster child for the decline of the steel industry. But managers at Polaris Technologies, founded in Youngstown in 1944 and now based in the suburb of Austintown, are optimistic. "As far as we are concerned, there's not really a slump," says Dave Cicozi, systems manager for Polaris. "We had a good first two months of 2008 for new orders. We've been out of new construction for years. Our markets are mostly in the Midwest."
Polaris helped develop the first version of our company's manufacturing ERP software nearly a decade ago. The company has also been an important voice in improvements over the years.
"We were always working toward efficiency," Cicozi says. "Our priorities haven't changed because of the slump. Right now our focus is primarily improving customer service and efficiency in serving our customers."
The company is implementing new order entry and trucking management modules.
"The trucking module will give us more accurate information on loading of items and truck routing. It will be more efficient. We plan to enable online tracking for some customers. This will help cut down on calls to customer service for routine information."
Web-based order entry also will empower customers and improve sales efficiencies for Polaris, which sells through a company building supply chain as well as outside distributors.
"The housing climate hasn't changed our focus," says Cliff Langdon, vice president of operations for Sunrise Windows in Temperance, Mich. "We grew last year. We expect to grow more this year. We have a tiny piece of a big market. There's plenty of room to grow."
The replacement window manufacturer implemented its ERP system five years ago and practices lean manufacturing. Langdon said one focus for 2008 is using information from the system to build flow lines throughout their facility.
The company is also working on production scheduling and truck routing this year. They've asked to modify the schedule module in their ERP system to accommodate how Sunrise wants to sort production in the future. They are evaluating whether a new trucking module will provide the functionality Langdon wants.
"We're always looking for ways to improve. Efficiency is driven by making a continuing series of small adjustments. Still, the performance of our windows, the options that we add and the quality that we build in, are the foundation of our ability to grow. We are never going to choose to save a penny if it affects those critical values."
The key for any manufacturer, Langdon says, is to focus on what is key for your business without neglecting other areas. "There's a balance you must strive to maintain."
He sees a "vicious circle" in 2008 for companies yet to embrace automation. "To be more efficient, you probably have to invest. When the market is soft, this can be very difficult. But just adding more manual processes keeps costs above the competition and postpones the benefits."
Automation is not optional for Intigral. The Ohio company delivers tens of thousands of units of insulating glass from four fabrication facilities each day to customers in a number of Midwest states. Delivery is within 36 hours of order with at least one remake cycle per customer per day. Each unit is bar coded and sequenced for customer production.
While orders from customers in the remodeling segment remain steady, Intigral, which changed its name from Edge Seal Technologies last year, has seen slower orders from those in new construction, says DeAnna Negron, vice president of customer service and systems. The company has reason for optimism, however.
"Window and door makers are showing heightened interest in how they can configure insulated glass to help them create an edge in their markets. With us, they get almost immediate access to more than 100 million unique IG combinations without having to invest and install any new equipment."
Customers are also looking for ways their IG supply can help them be more efficient in other areas, Negron says. Intigral has always delivered glass in glazing sequence. Today, they see customers doing more with batch sizes to further optimize lineal yields.
To keep pace with the complexity of providing variety and speed, the supplier continues to invest in new capabilities. Intigral is making a six-figure investment in IG order tracking over six spacer lines for 2008, while running its ERP system with several custom modules specifically developed for its use. "We're going for one-piece lean flow," Negron says. "We are also implementing additional capabilities to see where production is bottlenecking."
While the other five manufacturers all enjoyed the good times, Wincore Windows was just getting started as the market began its decline. Twelve industry veterans built a new plant in Parkersburg, W.Va., and made their first window last July. Bad timing?
Cindy Dotson, vice president of administration, says everything is more than fine. In fact, late last year, the company increased its plant size by 60 percent, from 50,000 to 80,000 square feet. It added two new construction product lines at the request of customers. The vinyl window maker is also hiring more employees. And it's already adding new capabilities to its computer system, which employees began to learn only in January 2007.
"Today in the window and door business you have to have good systems to compete," Dotson says. "Without a good manufacturing ERP system, I don't think we would have started this company. We would not be distributing as far as we are. We probably would not be experiencing such growth." No one within the company is taking anything for granted, she adds.
"Our public commitment is delivery of all orders within seven days. Often we are faster. Every day we measure order completeness, cost per unit and other factors. Every week we learn that there are new opportunities for us to improve."
Wincore is now rolling out its Web-based quoting and ordering tools to its distributor customers. The system will also enable customers to see the status of any order, including whether a specific unit is on the truck bringing the next delivery.
Wincore sees these as a win for everyone, Dotson says. Distributors will be able to estimate, order units and check on orders at any time. This will reduce errors and improve efficiency. It will also enable inside sales representatives to focus on creating long-term customer relationships.
"Our customers know us for producing a quality product and standing behind it. It is the foundation of our growth. They know they are going to get quality product the first time," Dotson says. "With our systems, we can be operationally excellent. If we are, our customers and employees will benefit. 2008 is going to be great."
The one thing I see in common with fabricators that continue to grow or do well during uncertain economic times is a proactive nature; not just in their approach to gaining market share, but also in implementing new technology and new concepts in their operations.
Some said the current state of the housing market made little or no difference in their current focus. When times were good, they invested to get even better. All said improvement is an everyday objective, not something you do when things begin to look bleak.
These companies are led and staffed by people who want to do better. They investigate what is possible. If computers did not exist, they would still be looking for tools to improve quality, deliver faster, reduce errors, offer more options, increase productivity and earn more profits.
Many are in parts of the Midwest devastated from declines in the steel and auto industries. They know suffering. They know that if you let yourself fall behind, you might not ever recover. They embrace excellence. They see better times ahead. Even with all the pain in the industry right now, it is difficult to feel anything but good for them.