Release Date: July 24, 2019
BUFFALO, N.Y. – Over the last few years, Pam Henry has eased her way into Fancher Chair Co.’s accounting practices, wedging part-time hours between preparing tax returns and managing family responsibilities.
Just before year-end 2018, an abrupt retirement at the Falconer, New York company catapulted her into the financial driver’s seat. Suddenly she needed to operate within a system she did not completely understand.
“I sat down and said, ‘How can I help?’” recalls Julie Stiles, a senior consultant/facilitator at the University at Buffalo Center for Industrial Effectiveness (TCIE).
Stiles had been visiting weekly since late August to stimulate efficiencies in other areas at Fancher, a business founded in 1807 that constructs wooden, custom-designed residential dining and office chairs for numerous big-name distributors, libraries and universities.
It was not long before Stiles focused on alleviating stresses of the transition.
“You know on the days she’s coming that we’re going to make some progress,” Pam Henry says. “We may have been spinning our wheels yesterday, but today we’re going to get out of the muck.”
Fancher’s partnership with TCIE, the business outreach arm of the UB School of Engineering and Applied Sciences, is a fluid one. From the start, company owner Gary Henry Jr. – Pam’s husband – handed the driving wheel to TCIE.
“I wanted her to come in, get a feel for the company, and she could tell us where we needed the most help,” Gary Henry says.
Heeding an outsider’s perspective contradicts his hesitancy to hire consultants. Previous engagements failed when experts tried forcing rigid models on the company.
But Gary Henry gleaned adaptability in TCIE’s philosophy that aligned with the Fancher way.
A resource for an evolving business
Before TCIE entered the picture, Fancher was dealing with effects of a business model transformation. High-production runs of the same chair were the standard 20 years ago. When offshore manufacturing took root, the company pivoted to a new niche: smaller, specialized orders.
The model is working. The pipeline of work is full. Nearly all sales derive from company reputation.
Increased customization, however, has generated delays. Gary Henry wondered how the Lean method of reducing waste could combat challenges, so enrolled himself and production supervisors in TCIE’s boot camp course.
The training was his first introduction to Stiles. She presented general principles, emphasizing the need to apply them in a way that meets their specific needs and unique culture. It inspired a staged approach to production, replacing a tactic of “send as much product to the floor as possible.”
Class interactions motivated Gary Henry to seek TCIE’s OpEx/continuous improvement consultation services – access to a general advisor who has accumulated a vast knowledge base by assisting numerous Western New York organizations.
“She’s been that resource to bounce ideas off of and give us confidence to make a change, or to stick with what we’re doing,” Pam Henry says, adding that Stiles’ positivity lends an “outside voice to keep us moving along.”
Reducing changeover time
Frank Evans prepares and programs 5-axis computer numerical control (CNC) machines to cut and shape most chair parts. The sophisticated technology combines processes otherwise handled by multiple machines, and is adept at complicated designs.
Between feeding raw wood pieces into the machine, Evans explains the changes over the last half year. A complete set of dedicated, regularly used tools diminishes hunting trips around the factory. The formerly jam-packed shelves of unidentified model parts – used to measure whether dimensions of a freshly produced part are correct – is orderly and ridden of those that haven’t been made in years. Drill bits are fashioned with their own collets and set to the proper length for speedier tooling changes.
None of the Lean-driven changes is earth-shattering. Many appear gradually, since shutting down production is not feasible. Little by little, they all save time.
“We’re knocking off a minute here, a minute there, five minutes here, five minutes there,” Evans says. “Over time, it all will make a huge difference.”
That matters greatly to Gary Henry. The 5-axis machines are more often idle than operating. They account for only 5% of the equipment on site, but are the bottleneck of the plant.
“A lot of the machines have a long setup time. Some of that is unavoidable. But other times, it seems like it shouldn’t have taken as long as it did,” Gary Henry explains. “The machines are really quick when they’re running. That was the frustration. Why are we down so much?”
Setup starts with swapping out tools, loading the program and producing the first part. The lengthy delays often accompany the second stage of ensuring the manufactured part is precise before proceeding with the full job.
Evans records the amount of time taken for each setup step of every job. He also notes any outlying issues, like why the setup for one job elapsed nearly 2 ¾ hours, when the typical duration is closer to one hour.
Stiles collects the data and reviews it from the perspective of a Lean mentality, returning with suggestions to streamline the process and quicken changeovers.
“It’s a second set of eyes. Julie will see some things that I or my co-workers haven’t seen,” Evan says. “She’ll bring up points and we’ll all say, ‘Wow, why didn’t we think of that?’”
Gary Henry estimates that the company has already realized a 20% improvement in efficiency. He points to the decision to accept additional business – a move he previously would not have made because “I knew I wouldn’t be able to get the parts done. We don’t need more people or more hours. We just needed more machine time.”
A precise costing method
Gary Henry admits that he is not good at saying “no” to customer requests. That might never change, but he now has a tool for determining whether a prospect is worthwhile that also aids with production planning.
Requests for new jobs often lack details. A magazine photo or sketch of a chair might be the sole guide. That leaves Gary Henry’s father and the company treasurer – also named Gary Henry — to speculate dimensions of the front and back legs, rails, seat and other adjoining pieces. He combines that information with the chosen wood variety, upholstery, labor and overhead to devise a quote.
Upon inspecting this process, Stiles noticed one component in particular that was skewing the equation. The company was treating all labor hours equally. The estimate of labor did not factor in variables or distinguish work of greater value, such as that performed on the 5-axis machines.
The new dynamic cost model that she developed accounts for every phase of the production process, assigning rates to the distinct processes involved in each chair piece.
“We’re putting the actual labor into the piece and allocating appropriate overhead per piece,” says the elder Gary Henry, who has handled costing since he joined the company in 1975, originally as its plant manager. “Some pieces will have more overhead than others. Rather than a lump sum of overhead, we’re actually putting it into the pieces that deserve it.”
Greater accuracy enables heightened insight into what is profitable and what is not. A clearer picture of the plant’s overall output emerges when analyzing the time and machines to create each part of a chair.
For example, a product may appear very profitable on paper, but dissecting its movement through the plant tells a different story. Its slow flow has a stifling effect, decreasing capacity and therefore lowering profits over the long term.
The elder Gary Henry says he will reserve the new tool for larger orders. For the everyday, he uses a simpler, formula-driven spreadsheet in substitution of a manual version. The quoting process now takes 15 minutes instead of two hours and significantly decreases the potential for error.
Leveraging software to the fullest
Fancher has utilized the same accounting software since 1992. One of the first actions Stiles took when coming to Pam Henry’s aid was requesting an upgrade to tap further capabilities.
The two have worked since then to explore the options – Fancher had implemented only the basics – and streamline processes. It was the prompt to “think outside of ourselves and think bigger,” as Pam Henry says.
Stiles influenced Gary Henry to invest in a cradle-to-grave system that manages accounting, procurement, project management and other business activities. An enterprise resource planning (ERP) system will support growth of the company, which has doubled in sales since he acquired it 10 years ago.
They are also eyeing a new shop floor management system to integrate with the office software, which will produce up-to-date information accessible across departments.
The Henrys say the ERP will replace an antiquated approach to profit and loss statements with real-time reporting accuracy. The elder Gary Henry anticipates most monthly verification tasks he performs – which typically expend three or four days – will vanish.
“That will help us in decision making, as far as how to grow the business, or seeing different areas where we have weakness and don’t know it,” Pam Henry says.
She concedes conducting ERP research on her own would have been difficult and, because of the company’s complexity, guesses it would have taken double the time. She also appreciates Stiles’ forward-thinking mindset.
“She’s always encouraging us to not plan for today,” she says, “but to plan for tomorrow.”