Make or buy is about horses for courses. The benefits of making frames yourself is that you are in control of the whole process from order to installation or delivery to your customer. You are not dependent on a third party to supply frames on time i.e. when your customer needs their product. You are also able to absorb the small changes that may be needed by your ever-demanding customers. On the other hand if your skill and interest is in either selling or installing and you struggle to get fabrication right there may be a benefit in focusing on this and buying in.
The problem you describe may not necessarily be that other fabricators, your potential suppliers, enjoy better economies of scale and so can make more cheaply than you. It may be a question of your production efficiency. Before you change your strategy consider the following:
- Efficient (Lean) production is not exclusive to large companies. Contrary to what you may have read there are lots of small manufacturers who are highly efficient and profitable. In fact some of the most efficient factories I have visited both in windows and other industries are small/medium enterprises.
- Efficiency is not about buying state of the art machinery. It is about how you use and maintain the kit you have. It's amazing, for example, how poorly machines are maintained in this industry when it is so simple to put in place Total Productive Maintenance (TPM) systems that help the smaller factory become efficient.
- Lead times are an important factor in customer service. Travelling time, the time to produce every item every day, is typically under one shift in lean small fabricators.
- Small/medium sized fabricators should be more flexible and able to react quickly as window and door sales become more complex. Bear in mind complexity gives you the opportunity to add value. As an example, I know companies who happily take on a high mix of foiled items well above 12% of their total mix, and in consequence add good value to their business.
Let's look at a few numbers you can use as benchmarks to measure your business. These can also act as a spur to your plans to increase efficiency. Go as far as you can to improve your efficiency before you look at buying in. I strongly advise you to postpone the decision to buy-in until you have demonstrated what your factory can do. It's easier to cease fabrication than to start up again.
- Small/medium sized fabricators can regularly achieve over 5 items per direct worker per day (an item or frame is a complete window or door). I am not talking about simple windows only but about an average mix.
- Absence through sickness and other reasons is a drain on productivity. Do you experience absence above 5%? If so there are some well tested methods of addressing the issue in a positive way.
- Added value is an important measure for you to look at. Added value is the difference between your average net selling prices and the cost of your raw materials. Raw materials being profile, reinforcement, hardware and packaging. I have seen small/medium trade fabricators achieving over 55% for an average mix of unglazed items.
These are just a few norms you can use to benchmark your company, measure and then put your plans in place to improve. Measuring is crucial at every stage. It is staggering how little measurement fabricators do, even very large ones. Start with simple measures like how many items are made every hour and why the targets you set are not met. Most fabricators underperform by a long way. With productivity low, profitability tends to be low. Once you know what to aim for and what to do you can transform your productivity and profits. So give your factory a fair trial before abandoning fabrication.
