Undergoing a "Culture" Change
Gienow Building Products enjoys a reputation for manufacturing innovation. Just-in-time or JIT manufacturing is a goal at window and door industry companies across North America, but few are probably at the stage reached by the Canadian manufacturer, where most products literally come off the line and are loaded onto a truck.
Window & Door recently traveled to Calgary, AB, to visit the company, and gather some insight into how it has achieved its enviable reputation, and learn about where it is going now. We sat down with David Munro, Gienow's president, to learn about the challenges the company faced to become "fully-integrated" and its next phase of development, bringing its integrated system to the Internet for customers to access.
Dave Munro, president, stands by windows ready to be
loaded onto trucks at the Gienow plant in Calgary, AB.
A little bit of history first. Gienow was started in 1947 by Bernard Gienow, a Calgary homebuilder. The wood window manufacturing company grew and was purchased by Redpath Industries in 1972. A group of Calgary businessmen, including Munro, then acquired the company in 1983. Under its new ownership, Gienow adopted the Japanese philosophy of JIT manufacturing. Another major change came in 1993, when it worked with Veka, Inc., the Fombell, PA, based extruder, to add vinyl window products to its line. In 1999, the company moved into its current 360,000-square-foot facility. Today, it sells products throughout Western Canada, as well as the Western U.S. and overseas.
Window & Door: You have a reputation as a leader in our industry in window and door manufacturing innovation. How did you get started?
Dave Munro: We've always been a technologically driven company, from the day we first bought it. And our goal then was to have a fully-integrated manufacturing system from front to back. We described it in '85. We bought the company in 1983 and came up with the manufacturing philosophy in '85. And that's when PCs were just starting and network PCs weren't available. We've been working on it since that time-to have a fully-integrated manufacturing system.
WD: Why did you see fully-integrated manufacturing as such an important goal?
DM: Because we felt that long-term, down the road, you'll have to be able to produce a customized product at the price of a standard product. And you have to be able to make a product consistently without a high skill level and that's what we tried to achieve from day one. Fully-integrated, in our theory, means the order-from the customer all the way through the system-never gets touched and we've worked real hard to develop that.
In about 1992, we came up with a configurator that we thought was quite unique. The customer puts the order in, and the configurator knows whether you can make it or not. In 1992, we didn't know how the Internet would work, or how it would all work, but the Internet is the answer now. We said we could get a configurator that could have all the engineering knowledge built into it, be mathematically scalable, and it would be able to be used for any window. And basically, we have just put that up in our system in the last six months, and it does work.
It went up last September along with our ERP system and it's fully integrated. The next phase is to take it out to all our customers. We have some customers already on the Internet putting in orders, and all our salesmen are on the Internet putting in orders. But now we have to build the firewall and the security systems. Then just about all our customers will be able to put their orders in. The configurator knows if we can build it. It knows all the engineering constraints of every component we use. Down the road, and I'm not sure we'll go this far, we'll have the ability to have a virtual window. A customer can literally draw his own window on the Internet and be able to know if we can build it, and he can price it.
Building an Infrastructure
WD: What were some of the important steps you had to take to get where you are today?
DM: We were growing. We had four buildings, and we said we have to come up with a master plan, because we're not going to be able to go to the next step without a master plan. And we said we can't go there with the buildings we're in, so that's when we decided to go buy a 40-acre site. Subsequently, after we bought that land, we found this site. This was much better for us, because we had much smaller buildings that were not electronically capable of being upgraded to a Level Five, high-tech building. We needed a facility where we could get all our people back under one roof. We needed the ability to implement all the software we were working on.
WD: What do you mean by a Level Five building?
DM: It's very, very high speed. Throughout the building, we have something like 10 miles of fiberoptic cables in here and 165 miles of Ethernet cable. So we have very high speed. I think our slowest connection here is about 200 times faster than our fastest connection in our previous buildings. And everyone's on that level. So it delivers very high speeds and it really makes a difference. There are some really big wins there, but it's a very expensive thing to do-make your building a Level Five building. But you have so much data in the manufacturing business. You have to be able to handle it.
Gienow manufactures vinyl windows using extrusions from Veka.
WD: Where are you now as far as just-in-time?
DM: The theory is no inventory. We have a shipping dock that says you bar code it off the line, you put it on the truck. We have a small staging area in the middle to get enough product to make it worth loading. There should be very few windows sitting on our docks at any given time. The moment I go out there and see carts full everywhere, I know we have a problem. It's a JIT system. The products are made in exactly the order they're going on the truck. If we're going to make a house package and it's got 27 windows in all different sizes, they're made exactly in order down the line, put on the truck, biggest to smallest. They come out in the order they're going on the truck. I don't think anyone else can do that kind of stuff. We've been working on it about 15 years.
WD: What are some of the benefits to being fully integrated?
DM: As a manager, when I complete a window, I want to know what my efficiency on the floor is, and I want to know what my quality is. If I'm doing quality inspections or if I'm doing audits under an ISO-type configuration, we want that all to be live through the system we're putting in. And that was our vision, and we've now evolved, and, in all cases, we know it works. We don't have it all rolled out, but we know all the risk is out. Or at least we're 90 percent sure all the risk is out. We can actually go out on the floor...we can talk to one of my guys. He can dial up, he can tell you what his production is today, how many windows he has to do, how many he's done, how many he's doing per minute, what his efficiency is. Every time it updates a window, it updates his efficiency and throughput; you know how many hours you have on the line, fully integrated. Our guys can dial up from home if we're running a second shift. If a foreman has a second shift running and wants to check and see how they're doing, if there's a mechanical problem or whatever, he can check the status. The JIT we do is key. We make that window in the order it's going on the truck. I don't think there's many guys doing that out there. Basically, the only time we ever batch is to get optimization efficiencies.
WD: In moving to JIT, has it been difficult to coordinate all different production lines?
DM: Platform scheduling becomes a bigger and bigger issue. It really is. To make sure every line's got the product out at the same time. We've been pretty successful at that. And that's where you have to get fairly sophisticated with your platform. And, very sophisticated in terms of how you apply standards to that platform. The biggest win for all of us when you go to these ERP systems is going to be your data. Your database is going to be one of your biggest assets. It might be your biggest asset.
If a customer phones and tells us, "I bought my house in 1992. I can give you my address or a phone number." We can bring up his order. We can even tell the size of the sealed unit in his master bedroom, and the grille that's in there. By having that ability, we don't have go out to the site to measure anything. We capture all that data and keep it. We can tell you every house since 1990 that we put a product in. That database is very important to you down the road, and tie that in with the Internet and your web page for service, and I think you really get something. What you'll be able to do with that data. You'll determine where your efficiencies and your inefficiencies are and how you load your plant. How can you do certain things to meet certain rules to better refine schedules. Even create opportunities for efficiencies by running models. A good example would be our sealed units. We can optimize our butterfly table. You can put two units on if they are less than half (the length of the table), less an inch. By optimizing the units going through there, we can minimize the number of butterfly actions we have and we can increase our capacity. That's the kind of stuff we can improve on. And down the road, we think that will be very effective.
We're just starting to see some of the benefits now out of our data. A lot of the data is phenomenal. I don't think the industry realizes this yet. We haven't seen the real benefits yet. We're now just going to go forward with the benefits. We've always worked in a JIT system since 1985, but it was always constrained by the computer technologies. It was constrained by the networks. It was constrained by the PCs. It was constrained by the processing power. Every time we wrote a new program, we needed more processing power and more RAM and more storage. And we needed a method to communicate. High-speed Internet is the answer. We spent a lot of money. But I think what we have now is a stable platform for the next 10 or 15 years.
Culture. Pure Culture
WD: What's been the biggest challenge so far to getting where you are now?
DM: Culture. Pure culture. It's a change of the old manufacturing culture. I think the biggest challenge is still ahead of us and that's the transfer to an electronic culture. How do your people deal with it? How do your salesmen deal with it? How do your customers deal with it? You know you'll have salesmen who will never deal with it. You know you'll have customers who will never deal with it. We even have people in-house who won't deal with it. Change is great as long it affects you and you, but it doesn't affect me. And it's continual change. That's one of the biggest challenges to it. Just as soon as you get stabilized, you want to make another change to it. I think we're through. We've been through this for the last three years big time. We're now in a stable format and now we just take sort of a Kaisan approach to it-continuous improvement. The biggest hurdle is to go from a paper society to an electronic society. I feel real comfortable, at my age, reading pieces of paper. Teaching your people to access databases. How to work in an Oracle database. That's a major change. How do you do all that? How is the Internet going to affect how we do business? It's going to affect us dramatically. I really believe that.
Gienow's complete line is on display in its factory showroom.
WD: Have suppliers been able to support your efforts to be JIT?
DM: We run JIT with our suppliers too. And our inventory turns are great. You go down here and you won't see any inventory. We can double our volume and increase our inventory only by a very small amount. You just don't have to have more inventory to do more volume. We have suppliers that ship product every day. They ship in every morning at 7:00 and we ship those products out on the truck in the afternoon. We have suppliers that do that and we have suppliers of special products. It might be a special grille, or something like that; it will arrive here the day of production. It's a culture change. The first six months, my guys were ready to fly the coop. But today, you can talk to them about it. The culture change is there. And maybe that will change the way you do business in some cases to make it worth it. But it's so logical. It really is. I think trucking, tied to master plan scheduling, is where it's going to go. I really do. You'll have quantum bottom line improvements, because you'll cut all that overhead.
WD: With the JIT approach, do you get in situations where you deliver a product and the customer's not ready or they didn't tell you they wanted to reschedule?
DM: Yes. And that's a culture change. That's a big one. But there are ways you can make them want to go JIT. They know they want to schedule. They want to know it's going to arrive Thursday morning between 8:00 and 12:00, and the framer's going to be there at that time and they can put them in the holes. I think all those things are culture changes that you'll have to sell. But I think there are big wins.
WD: Can you describe the changes Gienow's bringing in now?
DM: I want to upgrade the system so I can tell the customer over the Internet where his window is. I want to be able to tell them it's on the truck. I want to be able to tell them it's been delivered at the site...And we're really getting close to all that. Down the road, your customer's going to be totally live. He's going to be able to schedule his own delivery date. If a customer has an order, we ask him to put it in 10 days before he needs it. If he wants to re-schedule...we'll let him re-schedule that order to any delivery date he wants within four days of the original delivery date. If he gets a rain storm or a snow storm or the roads get closed, we just re-schedule that order to the next available truck going to that particular market. If you're in Calgary, and you're a close customer doing new construction, for example, you have the ability to re-schedule to the next day if you want, the next morning, or the next afternoon. Two days out, three days out, depending on whether your framers didn't show up or someone got sick, we have the ability to re-schedule all those orders. And there's no inventory.
WD: How are you bringing the system to the Internet?
DM: We started out with our salesmen taking the role (of the customer)...and that was a big challenge. First we said, "now you're all going to use a computer, guys. The first step is you are going to input your orders just like you hand write them now....No one's going to check those orders for you and the system has to do all the checking." We've set up the system, Internet-compatible, so the salesman will take exactly the same position as the customer. So when a customer has a question, he's got to know how to handle it. When a customer has to return product, how's he going to handle it. When he orders a house package, how's he going to handle it. We deal with a lot of tract builders. For example, if a builder orders a house package with the garage on one side and the windows on the other and then he wants to reverse it, how do you deal with that. All that stuff is in the system now. We're going to the salesman as the customer now and we'll move to the real customer live in the fall.
WD: What do your customers think of this concept?
DM: The progressive ones are all over it. My phone rings every day. We're giving demos on it and my phone rings every day, with guys saying, "When can we go live? How are we going to do it?" It's just unbelievable with the progressive types. You have some guys, who are old-time builders, that have always been the craftsman type, they're going to struggle. But in theory, if you take a builder that's building a house-and a lot of our builders, and you see it all the time-they're building just a modification of something. If I take that guy, I go pick the young guy in his company that I'm going to deal with. And I go put a template in his machine, in our order entry system, and I say to him, "Every time you want to order, you know, a reasonable modification of this template, you can just bring it up and make the changes and send it to us. It's in our system immediately." We're at 10-day lead time now, with a four-day change. We'll be eight and three. That's where it will go, and maybe shorter. Your customer's live. For example, he has the ability to go into the Internet and check his production if he wants. He has the ability to know what the status of his order is. He has the ability to put those service calls in. He'll have the ability to change his delivery. So he'll go on the Internet at night, after he's been on the job site all day. In the old days, first, he'd have to find time to get the phone. Then he'd have to find a salesman or a sales desk guy. In most cases, our superintendents are busy in the field all day. They get home at night, that's when they do that kind of stuff. They'll just get on the Internet and do the changes. And then there will be an automatic confirmation sent to them. That's where it's going. We have customers up live now. We're selective where we go, because we don't have the firewalls up yet. We have one renovation customer that goes out now, he takes our order entry system in and a printer, and he closes 80 percent of his orders in the house with the printer there. He says it's the best tool he's ever had. He walks in there. Quotes a renovation. All non-standard size windows. All the special installations. He can do it right there on site. He can quote it right there. It used to take three or four days before a salesman could get back.
Adapting to Change
WD: Do you expect to lose customers? Will there be customers that won't adapt to the online approach?
DM: Yes, you don't want to lose them, but you'll redefine your cost of dealing with them. That's what you're going to do. I don't think we all realize what our true profit margins are on certain customers. Let's say you take 20 of your biggest builders or 50 of your biggest customers and put them on the Internet. You'll have no trouble picking 50 to do it. Then you'll have another 300 or 600 or 1,000 customers you only deal with once in awhile. They're going to start and you'll have to migrate them through it. Then you'll have to have training seminars. We have a training group now. We'll teach them how to do it. Look at what happened when they put notebooks out. Nobody had a notebook. If you had one you were a rebel. Now you've got to have one. You have to work on a computer. It's going to be a migration. There's no doubt about it. You're not going to go into a company, a big builder, and say give me that 50-year-old guy I've been dealing with for 25 years. I don't want to deal with him anymore. I want to deal with the young guy with the computer knowledge, who understands where it's going. I don't know how you're going to say that to someone. And then you're going to have your group of sales guys. They're going to go out, take a plan, do the take-off, and basically put the order in just like we do it today. You can't walk away from that market, you just have to handle it differently. We'll find true costs that way. This is the culture change we're talking about. And I don't know how it will all work. But it's going to change big time.
WD: What are some of the opportunities you see in moving your customers onto the Internet?
DM: There are a lot of profit opportunities in the electronic interface. I think a lot of stuff you give away. You don't realize you're giving it away. In the future, I think that will be one of the biggest opportunities and we're just starting on that one too; using the electronic price book and the pricing capabilities has all kinds of margin opportunities. For example, if you want a three-day lead time, that's obviously worth a lot more money than an eight-day lead time. You're going to pay for that. Maybe you don't want that capability. Maybe you're so organized you can order in every time with an eight-day lead time. There's a profit opportunity. So that's a culture change, and I don't know what it's going to look like. We're brainstorming that. The ability to use the Internet to price your customers properly. And the controls you're going to be able to put on. And that's your database again. Your database is going to give you the control. Down the road, I see our customer's customer ordering product. For example, if I'm out selling a tract home, and I'm the builder, I don't want to confuse the customer with all the options he can buy. I think down the road, and I'm not talking long-term here, I'm talking 12 months, we'll have the ability for the customer's customer to access our site and actually be able to order all his options. His low-E glasses. His doorlites. All the specialty stuff he's not getting today. And it will be subject to builder by project as to what constraints will be there. That's where it's going to go and that will be a high margin add-on for us.
WD: Do you see the customer's customer using the system on the replacement and remodeling side?
DM: I don't know how that will all work yet, but the dealer is going to be better equipped. Once you go wireless, you'll be able to go on the Internet eventually and you'll be able access a renovation program to do renderings online. I looked at a rendering program the other day...unbelievable. You can go and take a picture of your house digitally, and actually bring it up and do a rendering in 10 minutes with all the changes. You can have vinyl windows. You can have wood windows and all that. And we'll tie into that. It's not difficult, and down the road it's going to get simpler and simpler and simpler.
WD: Gienow has been working to expand its business beyond Calgary and Western Canada. How is JIT and online ordering going to help you in serving those markets further away?
DM: JIT's not as big a factor going to markets where you're shipping truckloads, but I think down the road, the Internet is going to be key to that builder in Minnesota. They're going to be on the Internet ordering their products, scheduling their products. They're going to reduce their own inventory. They're going to be able get the product they want on a regular cycle.
With all the things we've talked about here, the next step is to expand our markets and double our size in the next three years. And I think we can do it easily. The customers are just so receptive to it; if you can make it easy to deal with you. It's real easy and it makes their life easy and they take the accountability and now the role of your salesman changes. He becomes a service type guy.
It's not like it's high risk to go there. The high risk is putting the infrastructure in. And that's where we will go forward now. We know our customers like it and the version we have today is the worse it's ever going to be.
The Internet opens the world up to you. It really does, if you do it right. How it'll all look, I don't know, but that's where it's going.