Making Money with LEAN Systems
What are the pros and cons of building inexpensive stock cabinets vs. building custom cabinets? Unless I'm wrong, it seems that a really good custom maker can make a good living, while a really good stock cabinet builder can make a killing, economy willing of course.
I just quoted a builder a small house, $6900 excluding counters. He told me the other quote he got was for $5900 including counters. My material estimate was $2700 on the above. Tack on another $800 for laminate counters and you are about $3500 in materials. That would leave the other company $2400 to build, deliver, and install. Doesn't sound like good money to me, unless you are doing an absolute ton of them so you can get the material costs down and pump out 8 or 9 different cabinets all day every day.
From contributor R:
My opinion is that you should give the customer what they want. Many times we make what we want and then try to find a market. If the area you are in wants stock cabinets, give them good design with stock cabinets. Take IKEA as an example. The furniture is functional, cheap and designed well. Because of this, the stores are packed on the weekends. They give the public what they want. There is also a market for well made, custom built, well designed cabinets. The key is to find what your customers want and provide that.
From contributor M:
Well said, contributor R. The biggest misconception I see here is that "custom" and "pre-engineered" or "standardized" are treated as opposites. That just isn't true. I build true custom cabinets. The widths are available in 1mm increments and the heights are offered in 32mm increments. If a client insists on a height outside of the 32mm height schedule, I do it with no additional charge, but that has only happened on a couple commercial jobs.
Once you develop a standardized system, you will be able to build and assemble much faster. You will also eliminate much of the head scratching that slows everything down.
From contributor C:
I am trying to find that balance with my product. Yes, provide the customer what they want. Question becomes, just what do they want?
Until late 2009 I closed most deals, and for a new small shop, stayed very busy, sometimes too busy, doing mostly remodel type kitchens. Then all of a sudden I hit the wall, getting to bid but not getting the job.
My thoughts have been that with word of mouth only, when you get a call, the job is yours to lose. So in order to keep busy, eat, pay the bills, and keep the integrity of prices, I will be trying to find that sweet spot. Just what does the customer want? Try a bit harder to educate them.
I am also getting some calls for very unrealistic requests. I understand when they have a budget, but I wish it was based on having saved for what they want, and not just trying to get something for half the price.
We have another local shop, larger operation. The wife of a mutual friend who uses them calls me and wants me to price a unit. Frankly, if I did all of their work, I would have built the unit for free just as a good gesture, but I do not plan on working for free. If I starve I donít want to be exhausted as well.
Another builder friend, also building for a mutual friend, would not even allow me to put a bid in, - told me I needed to start selling prefab cabinets. I donít want the headaches that come with the volume, and I have invested my life in providing a good product at fair price. I was very insulted by his statement. I may build prefab myself, but have no desire to simply sell and install. I build what I consider true custom, in respect to wood, color, size and fit, door style - all to suit their needs.
I am reminded of the tortoise and the hare - slow and steady wins the race, but maybe not the sprint.
From contributor E:
Question is, what do you want to be, a cabinetmaker or a salesman? A cabinetmaker is building stuff. Stock means someone else already built it, therefore you're now a salesman. Nothing wrong with that, but you're not a cabinetmaker. I mean if it's only about money, go to law school and forget about cabinets altogether.
I started my business because this is what I enjoy doing and I'm not too bad at it. There are a lot of advantages to being your own boss, as well as a lot of stress and headaches. Sell someone else's stock cabinets? No thanks, not for me. Could I make more money? Maybe, but there are a whole lot of things in life that could have made me more money.
From contributor S:
Custom cabinets are made to order, regardless of whether or not the widths and heights are standard. Stock cabinets are just that - they're made before they're sold.
From contributor N:
I agree with all the comments that have been made. I would add, do you have the sales ability to sell pre-made cabinets? Are you willing to put out the money and sit on the inventory, which may or may not sell? It is hard to imagine what a client would want in the way of color, crown, hardware, etc.
I build to suit the client's needs, offering more than just a box. As was said, educating your client to the differences in your product versus bulk store cabinets is a good thing.
How long does it really take to cut, edge, bore, assemble 15 boxes? For me it is about a day. The only time constraint is doors, panels, crowns, and then the finishing. I outsource my doors and finishing and if need be can turn over a kitchen in 3 weeks, then install.
An educated client will see the value in your product, not the cheapest price. I had a client come into my shop after I did a drive by to size up the job. Worked out the price, allowing negotiation, gave him a price of 13k. He said he could get it for 7k at a DIY box store. I told him to get up out of the chair, go to the box store and get them. I reminded him about assembling and installing them himself, warranty, etc. to make my point. He didn't get up, and we negotiated to my price that I wanted in the first place.
From contributor M:
With the incredible technologies and production solutions available to us today, there is no reason to carry inventory. It has been a while since I have spouted my Lean, cell based enthusiasm here, so here I go again.
You guys are worried about the right thing, but thinking in the wrong direction. It is more than possible for a small shop with low overhead to compete with the industry giants. Companies like Craftmaid and the other huge custom lines have massive overheads and long supply chains. We can buy the materials at nearly the same price as them (they probably only get panels and hardware at 20% less than us). And our overhead is a lot less, even when figured as a percentage of the gross income. They only survive due to the volume; they are the ones at a disadvantage.
Because I have fully integrated my CAD/design software into my production, bidding and accounting systems, I can go from meeting a client to installation in 48 hours (only 8 to 12 hours shop time) for a 20K job.
Go to Atlanta and sign up for every course they offer. Look for seminars on Lean manufacturing, production cells, and scaleable production lines. Read the top three books on Lean and the Toyota Production System. You will come up with many ideas on how to increase your profits. Many will not involve new machines, just a new way to look at your business.
Do not try to compete with marketing or pricing. Start with what we do the best, making cabinets, and do that better.
From contributor S:
Contributor M, what size is your shop?
From contributor E:
Contributor M, could you expand on this please? I have to assume you don't mean this literally. I can't get my head around how you could turn a decent sized project around in 48 hours? Even assuming you stock an enormous quantity of materials and hardware to eliminate having to order anything (which you say you don't), that's a heck of a turnaround time. I mean with materials on hand and the right equipment, boxes go quickly. How do you profile, glue up, sand, stain, and finish a door within that time span?
You must have a decent sized and well equipped shop to be doing this. And you must be carrying inventory, because there's no way you're going to have just-in-time delivery several hours after you call. If I'm in a rush I can usually get a plywood order delivered within 48 hours.
From contributor J:
Contributor M, you can't just throw out some numbers like those $20k worth of cabinets in 12 hours shop time and leave us hanging.
1) Approx how many cabinets is $20k?
From contributor O:
I've said the same thing here many times, and have been slammed for it. I find I make much better money making mid-level or lower cabinetry. That said, as a one man shop, a 20k job consists of approximately 50 boxes and takes me 4-5 weeks to turn around. If you can do it in 48 hours, more power to you, but I couldn't sleep at night with your overhead. To each his own.
From contributor H:
What are the top three books on Lean and the Toyota Production System?
From contributor D:
The basic point of Lean manufacturing is material handling. Every time you touch something, it costs money. Buying material and putting it on the shelf only to take it off again costs money. Cutting parts on the panel saw and putting them on a cart to move across the shop to the router costs money. Having your clamps stored more than an arm's reach away from your assembly table costs money.
With the nature of the small cabinet shop, some of these are unavoidable, but there is lots of room for improvement in most shops. Just make sure that every time you touch wood, you add value.
From contributor M:
I am about to give you lots of reasons to claim my shop is an exception and cannot compare to your shop... But that is not the case. Even with US labor rates, you could duplicate my success. Plus in the US, CNC makes a lot more sense for most shops as a labor reducer. But even a two man shop can do very well without a CNC. So please read with an open mind.
The basic idea of production is we build one cabinet at a time, very fast. With everyone naming the case work cell (one man on the saw, one on the bander, one on the boring machines, and one on assembly), we cut out the cabinets more or less in order (Cabinet Vision allows you to arrange the optimized patterns by the cabinet with a fudge factor of 1, 2, 3 or 4 cabinets overlapping per sheet). So by the time the third sheet is cut out, there are one or two complete cabinets worth of parts to be assembled. No parts are stacked, no batching, no bottlenecks allowed. The parts are labeled and go straight to the bander and then to boring. The 21 spindle is set up for construction and the pattern never changes, no matter what kind of cabinet. Upper, base, oven, closet, vanities can all be dowel bored with no change to the machine. It literally takes 10 seconds. Only stretchers and dividers require using a different stop, but the stops are permanently set there so all the operator does is choose the correct stop (they are color coded). The 23 spindle is used for the hardware boring. This is the most complex part and deserves its own paragraph.
I have developed a standardized boring pattern and nomenclature system that makes it very easy for the operator to set up the machines. Some of you may remember me asking for help using these machines about a year ago. I never found anyone who knows anything about using these machines, so I came up with my own system. I am sure that this is the same type of system used in Europe; I do not think I am the only one to figure it out.
I basically follow the True 32 or KISS system. But I drill only the holes needed, and my panels are not balanced, but the doors are. All reveals fall on the 32 mm grid, cabinet heights are in 32 mm increments. I reference the bottom/front of the panels, which allows me to change to top reveal with no change to the boring machine. If the panel is cut 1.5 mm longer, the reveal is 1.5 mm more.
I am still experimenting with the nomenclature system. But here is the current system. It uses both Tagalog and English, to avoid duplicating letters (D for door and drawer, or desk).
First letter describes the type (Base, Wall, Tall, Desk, Vanity), next is a number indicating which spindle to use (or how many 32mm increments to skip), and another letter to describe if it is a door, drawer or space. It looks like this: B19P5C
The operator knows this cabinet is a base (sets the reveals), there is a door that is 19 32mm increments high, and a drawer that is 5 increments high. Now they have all the info they need to set the machine correctly. Just in case, there is a set of cheat sheets that have all the boring patterns and a graphic showing the machine setup mounted to the machine. We usually bore three lines; first line has 37mm setback for the hinge plates and first hole of slide, second line for the 2nd hole of the slides and adjustable shelves, third line for the last hole on the slide and adjustable shelves. The 2nd and 3rd line bores use the same setup, but a different stop (the stops are color coded).
A complicated panel (pantry cabinet with two sets of doors, lots of pull outs and adjustable shelves) takes about 10 minutes to bore (it takes two setups because the machine only has 23 spindles). But most kitchens only have one or two of these. An upper cabinet takes one minute.
Then the panels go to assembly. Dowels are manually set, all hardware is installed using 5mm Euro screws. The notches for uppers are done on a shop made jig. Then the box is assembled and clamped in our shop-made case clamp. Drawers are Metabox so there is only a bottom and back to screw into the slide unit. Doors are mounted, adjusted. Plastic and cardboard is taped to the corners and doors. Cabinet is pulled out of the case (actually flipped onto its back and the feet plugs are installed on the bottoms for base cabs). The cabinets get wrapped for shipment and the cabinet build sheet gets wrapped onto the face. My assemblers are women who used to work at a printing business as QC monitors. They have an eye for detail and look over the cabinet build sheet to make sure it is all correct. These girls are the most important part of the system.
The panel processing cell is a true Lean cell. It is scaleable and workers can easily move up or downstream to alleviate slowdowns. If the boring operator has a complete cabinet in his outbox, it sends him a Kanban to go help the assemblers. Then the edgeband guy sees there are panels to be bored in his outbox, so there is another Kanban for him to operate the boring machines. If the panel saw operator finishes a sheet and there is more than a half sheet worth of parts waiting at the edgebander, he does that. This is how a real production cell operates. We can use between 4 and 12 workers, and there is no change in layout or process! If there are 12 in the cell, the cabinets come out so fast that it does not make sense. This is what Lean is about.
Doors are processed separately, and finished first. Most of our doors are either high end melamine (yes, there is such a thing) or HPL. Solid wood doors account for about 30% of our door/end panel production. HPL is laid up on the whole panel by hand and rolled out by hand, then treated the same as a melamine panel.
Solid wood doors are processed on a different cell (using the same panel saw and boring machines). (It is possible that separate production cells can use the same machines, sometimes simultaneously. For example, CNC machines do this in a lot of Lean shops, but it takes a lot of planning. In my shop we either make doors or we make cases, because there is only one saw. If I add another saw and a dedicated hinge boring machine, I could operate simultaneously). The solid doors are made with the same ideas as the case work. One door at a time, really fast. Stock is milled beforehand, usually while something else is being done. If we are in a hurry we can S4S the lumber on demand (all lumber is bought rough), but it causes the cell to slow down too much because the saw has to switch between ripping stock and crosscutting parts (we usually switch blades for these operations, but that cannot be done in a mill-on-demand basis, so we use the ripping blade and scoring blade for crosscutting.) So it is not efficient, therefore we pre-mill the stock. But that only takes about 2 hours for a larger job, if we put everyone on the S4S cell. Actually, our problem is that we go so fast our dust collectors can not keep up (2 3hp double baggers). We also do a lot of mitered doors.
Panels are glued up first (usually while the S4S cell is operating) and allowed to set. Once ready to mill, all panels are sized and milled in batch method. Door frame parts are not optimized. We cut all the parts for a door, one door at a time. They are then milled one at a time on the shaper (shaper has all the cope and stick cutters on one MK5 shaft). As the completed rail and stiles come off the shaper, assemblers select the panel (all parts are labeled) and assemble. Often the doors use plywood panels, so the panel glue up is eliminated. In this case the panels are cut out at the same time as the rails are sized, one cabinet at a time. It slows down the saw operator a lot to do this, but it does not matter because he is not the bottleneck. Usually it is the assemblers that can not keep up.
This is a key concept in Lean that most cabinetmakers have a hard time accepting. It makes no sense at all to cut out your panels, stiles and rails one door at a time. As an experienced shop owner, I am sure you guys have all run a saw. You would think your boss is nuts for asking you to waste so much time jacking with the plywood and the lumber at the same time. Usually you would batch everything. Cut all your stiles first (there are usually a lot of the same size - all the uppers, all the base cabs, etc.). Cut out the panel stock when you are cutting the rest of the sheet goods. This is the way we always did it. And yes, it is a faster way to cut parts out. But it is a slower way to make doors. Because in the end you waste more time sorting parts than it took to do it the Lean way. You also tend to make more mistakes, and it is a lot harder to fix the mistake because you are done sawing, or shaping the parts. In a flow type production cell, a bad part can instantly be replaced. All the operators are in talking (or shouting) range of each other. If an assembler needs a part, she tells the saw operator to cut another one, and one minute later the part is coped and sticked, and she has her replacement part. Elapsed time 5 minutes, at the most! The traditional method is to set the bad door aside to deal with later. That is a big time waster.
Finishing is done batch style. We only finish doors and millwork. They are relatively small batches. We stain with alcohol based dyes, shoot vinyl sealer, and 2 coats conversion varnish. The dry times for all of these are less than the time to change the gun over and de-nib the finish. It is all done in one batch except for the biggest jobs. But really big jobs are broken into install phases.
As for what a 20k job looks like... This job had 54 sheets of material (total). The doors were a high end textured melamine. Carcasses are melamine, we used drawer systems, we made the aluminum doors (had the glass cut outside). It took us 2 long (10 hour) days to finish it and we hired an extra 3 assemblers so my main crew was dedicated to the machine operations. We batched uppers and lowers separately. Day one lowers, day two uppers and tall cabs. If we had done this in solid wood, it would have added 1.5 days, maybe only one.
After the architect and client signed off on the contract, we could have started production in 5 minutes. All I would have to do is call or text message the shop to print the standard reports group and run the standard optimizer. We had the melamine for the cases in the shop and the door stock and edgeband could have been delivered in a few hours. In reality, that is never necessary. The builder is never ready and we usually have a 3 month to 1 year scheduled install. Some of the general contractors here are amazingly slow. So we schedule the production so that it will be done when they really need it. (Not an easy task in this country, where everything is always late.)
The main reasons we can get away with this level of productivity are the standardized cabinet layouts and complete software integration. I rely on the CV bid center 100%. It has taken a lot of work, but I think it is pretty much perfect now. I have a complete catalog in several formats (CV, 20/20, and PDF) for my dealers to use. I operate as a wholesale supplier except for large, multi-unit or commercial jobs. And I have adopted Lean, Flow and TPS as my religion in the shop. We do not stop improving. Our competitors will never catch up, even though they are using top-of-the-line CNC routers, CNC beam saws and CNC edgebanders! (Granted the shop owners here have no idea how to use those machines efficiently, so that is not fair.)
There are many details I am leaving out. I could write a book on the subject, and I might someday. But I owe all this to Cabinet Maker magazine. I started subscribing about 4 or 5 years ago. I was the typical redneck Texas cabinet shop. I made great cabinets, as good as anyone. But I did not make money, and I did not manage my business. I kept reading about how the 2 and 3 man shops were making a fortune with a CNC and edgebander. There was a story about a couple guys in California that had no carpentry experience and they bought a CNC and edgebander and grossed 1,000,000 their first year. These were college geeks, not carpenters. If they could do it, I knew I was doing something wrong.
At the same time I read about giant shops with all the machines losing money and small one man shops struggling as well. I began to suspect the problem was deeper than it looks at first sight. I got a copy of Ecabinets and started production sharing with a couple guys that had Thermwood routers. Their machining rates were fair and I never saw a reason to buy a CNC myself. I started making money! I could finish a huge job with one helper in 4 days!
Then I started going to Atlanta and Vegas. The first show was Atlanta, 4 years ago I think. When my wife and I got there, I saw the signup board for all the seminars. I had heard about Lean in Cabinet Maker magazine, but never read a good description. In these classes I learned what Lean was all about. Next year at Vegas I signed up for every class. I hardly had time to see the show, even though we were there 4 days. Since then I have read lots of books and attended every class I could find. I have visited other productions facilities that use Lean ideas, not cabinet shops, because there are very few out there. I went to a CCTV factory and a sheet metal shop.
I no longer look at machines the same way. I used to look at the feet per minute, HP, capacity, weight, etc. Now I look at a machine as a part of my production cell. Sometimes it is obvious, like a feed through CNC boring machine (next major purchase) or a case clamp. Other times it is less obvious, like a different panel optimizer and barcode labeling system, or a different glue. Mostly I do not look at machines as my solution. I look at the product flow on the shop floor. Are the parts moving? What is my TAKT time? Why are the doors always the problem with assembly?
Hope you can understand what my shop does and how it works. I could have made this kitchen with one helper in 5 or 6 days, and made a lot of money in the US or here.
Click here for higher quality, full size image
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From contributor M:
I forgot to address the number one reason custom shops think they can not do what I have done. Because they are so custom that they could never standardize even the most basic details of their line, much less the entire line. I say BS.
I offer my cabinets in 1mm width increments, and 32mm heights. If the client needs an odd height for some reason, I can usually cheat by fudging the toekick or other detail. If this is not acceptable, I will break the 32mm height increment standard. It is not a big deal. The result is usually that the doors are not balanced, or the drawer front has a larger overhang on the top side of the box. In production all it means is the guys have to move the fence on the boring machine from its usual position. The fence is micro-metric adjustable, so this is no big deal and accuracy is not compromised. If the doors are not balanced, it just means the operator has to take extra care to not bore the door upside down. For the drawer box fronts, we reference the bottom of the drawer front so it usually makes no difference at all. Because panels are referenced from the bottom, changing the height has no effect on the line boring.
Custom sized openings for ovens and other built-ins are done using the same reveals-on-the-32mm-grid. We use the next larger 32mm increment and either make a false front the correct size or have the door/drawer front above extended to meet the off grid divider or whatever. This means that there will either be an unbalanced door, or off system drawer front. No big deal, just a fence adjustment.
So basically I will make anything in any size in 1mm increments. 1mm is less than 1/32". I will make doors/drawers in any size also. I do not offer this upfront - naturally 90% of designers/architects assume the heights will be the standard. If they specify the drawer fronts in the drawings, I submit my design with the sizes rounded to my 32mm standards. I tell them I did it and they never care. If they are insistent, I explain there is usually an extra charge for ordering off the catalog program, but "because you are such a good customer, I will do it for no charge." In the end it doesn't really effect my production that much. If my calendar is full and I need all the time I can get, I would charge, but it is minimal.
The point here is not that my standards cover, or don't cover, 100% of the cabinets I make. But it does cover 90% of them. And when it doesn't cover truly off-the-wall stuff, there is a basis for modification.
For example, we did a huge job for a golf course - all the dressing room lockers. These include the ones the members of the club use all the time. There are several sizes and the architect told us it had to be the way he drew it because the members are paying for the space and it has to be maximized. When I looked at the drawings, I basically looked at the reveals and calculated the offset from our usual pattern for tall cabinets. In the end the operators see an ordinary tall cabinet with the normal fixed shelf divisions, but they are drilled off the 32 mm program. No big deal. They just moved the fence stop. Because there is a predictability in the format and a standardization of the layout, the operator immediately understands how to adapt the tools to this task. The thinking is, "this reveal is 7mm above the usual one, so I move the stop 7mm from the normal position."
I build cabinets for banks, condos, hotels, homes, restaurants, anything. It all looks the same to me.
I do keep inventory for the panel stock. I do not like to, but I have no choice. We import HPL from Europe and Canada, and panels from Canada and Malaysia. I was exaggerating about the time from contract signing to production - the reality is no one has ever asked me to deliver a job in such a short time. Usually there are a few weeks or months. My point is my system does allow me to go to production with the click of the mouse. Theoretically, I can do what I said I can. There has just never been a reason. What this means is I can wait to manufacture the cabinets until a few days before delivery. I send my lead guy (me) out to double check the measurements before we start and I confirm with the architect that there are no changes. This way, there is almost no possibility that the site will have changed and the cabinets will not fit. And with no CNC. If you have a CNC, it is way easier.
I only outsource installation. I wish I could outsource more, but business owners here are weird about that. They do not like to offer their services to competitors. I am the one offering outsourcing to them. But they are afraid I will take their clients, so they don't.
I'll say it again - go to Atlanta, sign up for every course. Do not listen for reasons why you can't do what they are talking about. Listen for how you can. Some of these guys are absolute geniuses with this stuff. Some of them are just talking heads. The most impressive speakers I have heard are the guy that did the Hands on Lean Class at AWFS last year, Brian Swanson, and Donald O'Hora. I have been in some lame classes as well, where they throw out the Lean terms (Kaizen, Kanban, TAKT, 4S) but do not follow through with real world examples.
From contributor M:
Here are the books. Not in order of importance, but in order of best read.
Lean Thinking: Banish Waste and Create Wealth in Your Corporation, Revised and Updated
Toyota Production System: Beyond Large-Scale Production
The Toyota Way
A Study of the Toyota Production System: From an Industrial Engineering Viewpoint
There are several good Lean podcasts on Itunes. There are several good Lean web blogs and newsletters. Some colleges offer great courses on Lean. Check on various Lean sites for recommendations on good speakers.
Lean is not everything. But it is very applicable to the cabinet industry where we have a diverse product range to produce on a single production line. I think that the big thing is to quit thinking about processing times and look at the whole picture. For example, the way we use our boring machines is not process efficient. The machines are reset for almost every operation! Traditionally we would batch together the like parts and bore all those together. That would reduce the process time for that operation to seconds instead of minutes. But the batching, sorting, looking for and losing parts slows the overall process down to a crawl and makes it hard to improve the overall production flow.
For a one man shop it is hard to avoid batching. A two man shop can avoid some of it. A three or four man shop can eliminate most batching. If you have more than five employees you should really have a flow based production system. The book "True 32" is a bit out of date, and takes the standardizing a bit further than most shops are willing to go, but it gives a pretty detailed rundown of how the whole shop is managed and how he can maintain very high production levels using a simple shop and few employees.
Nested based is a whole different chapter on this subject. For small shops it is generally the best way to go. It is almost never Lean in the technical sense, but it is faster overall even though the batching gets pretty extreme in many shops. If your software allows you to optimize the nest while keeping cabinets more or less together in the pattern, you can still assemble pretty fast. Adding a CNC dowel boring/inserting machine will really speed things up. But the 200K investment is not realistic for most shops. Even a 20K ShopBot costs a lot more than my shop at the end of the day. But that is just the way it goes.
For CNC nested based, I really believe in Ken Susnjara's ideas. He is a visionary and some of his ideas are out there, but he is absolutely right. Fully custom furniture can be made on demand by small shops, very fast and with huge profits. The big furniture companies cannot compete with us in that game. The problem is marketing and sales. I have not seen anyone who is really embracing the concept. But it would make millions easily. A couple routers, a good finisher and the right kind of sales floor (think of Rob and Stuckies or Broyhill) could clean up. But you are dealing with a very different group of customers. The same client that buys cabinets from us for their new home would not buy furniture from us the same way. They expect a different approach.
From the original questioner:
I've heard a few things about the Toyota batch production method, how it isolates defects and allows corrections to be made without slowing production. The system that you have adopted sounds realistic and doable.
I'm just thinking that cranking out, say, one particular model of cabinet (for example, 10 12" drawer bank cabs with 3 drawers), and then cranking out another 10 36" sink base cabs, and then... You get the picture - this method would take advantage of the traditional stacking and carting around that you rightfully say results in wasteful sorting and more frequent mistakes. But it seems appropriate for the setup I just mentioned.
Your method sounds great for custom work, but I would at least like to try some stock production work, just to see if I can fair better at selling to the guys at some local lower end warehouses, than dealing with an endless parade of spoiled pampered princesses who want you to make perfection, at a big box price.
I've learned the hard way that any given stain possesses not only color, but shade, hue, tint, depth, etc, and that... "Well that's not the color I wanted." Yes ma'm, it is, you saw it, and pointed it out. "Well, it must have been in a different light when you showed me the samples." No m'am, I showed you the samples in your kitchen, so you could see how the stain would look. "Well, it must not have been on the birch that I wanted." Yes m'am, it was on birch, natural birch, that's what you checked off on the questionnaire. "Well, I've changed my mind. And by the way, $7300 for a 10x20 kitchen is really high, I mean, I'll have to think about it, while I'm tooling around in my Mercedes SUV, chipmunk chattering on my cellphone, drinking Starbucks lattes, and shopping at the local Macy's." Sound familiar?
And like the other craftsmen here, I build really fine cabinets. Customers are impressed with the quality of materials, construction and fit and finish. It's just that (maybe it's my area, New Orleans), few want to pay for nice work. Hence the advice that an elderly Jewish businessman gave to my late dad when he was a young man, "Son, just remember, this is a nickel and dime town, with nickel and dime people looking for nickel and dime prices. If you can remember that, you'll make lots of money."
And he did just that. Once someone bought one of his starter tract homes, they were stuck with the color scheme. Some tried to get him to change the floor tiles, wallpaper etc., but always, he'd tell them, look, you bought the house as is, you make the changes.
I just want to know if anyone out there builds economy stock cabinets, and what their experiences are. I really love this craft/business, but in my market, it's hard for me to find people who will pay for nice custom cabinets. Thanks for everybody's advice.
From contributor M:
I have spent a lot of time looking at operations big and small. None of them carried inventory of built cabinetry. It is just a bad deal. Cabinets take up a lot of space and are very easy to damage. The only companies that do are the monsters of the industry like Ikea. Even Craftmaid does not keep inventory like you are talking about. I know the New Orleans market pretty well. I did a lot of post Katrina work there. I found the clients to be a joy to work for. They knew the difference between good and perfect. I think you need to look at how you are getting your jobs. Are you known for offering discounts? Do you offer commissions to architects and designers? Often these practices will bite us in the butt.
I have known a lot of truly excellent cabinetmakers, but I can't think of any that were good at sales. I am okay at sales - I sold diamonds and expensive bicycles before cabinets. But I am too invested in my product to sell it correctly. As the craftsmen making the product, we have a hard time separating our idea of value and the customer's idea of value. Customers just do not perceive value the way we do. There is a lot discussed about this in the good value added production and management seminars. Clients just don't really care about plywood vs. particleboard or dados vs. dowels, dovetails vs. drawer systems, etc. Of course when we ask them a loaded question like, "I build with hardwood plywood, that is why my cabinets are more expensive. You don't want that particleboard stuff, do you Mrs. Smith?" they will answer no, but they really don't care. And there is no real truth to those statements from the perspective of the customer.
One of the best things the average medium sized shop can do is get a salesman. I generally do not sell to the clients. I set my prices not based on the market rate, but on my financials. I have a goal for a certain volume of work and I estimate what prices will give me the net that I want. I then offer those prices to my dealers and the rest is up to them. I have seen jobs where the sales guy made little on my cabinets but a fortune on the counters or appliances. But usually they make around 5% or 10%. For us 5% sucks, because we are not sales people. But for him it is easy money. The larger dealers are getting like 20% to 30% over my price to them!
If these numbers seem crazy, look up the annual pricing survey published by Cabinet Maker. You can see it there. Shops are bidding between 30K and 100K on the same job. And there is no rhyme or reason to it. Big shops, small shops, city shops, country shops, new shops, old shops, CNC shops, cabinet saw shops. It is pure insanity. There is no other industry like ours. The annual pricing survey was another big eye-opener for me.
My guess is the more successful shops are selling value to the clients, not joinery and tradition. Value has very little to do with material and construction. Most of my work in the states was remodeling. I have uninstalled a boatload of cabinets. I have uninstalled cabinets that were made with 5/8 PB with wall papered interiors that were nailed together using butt joints and little or no glue. I uninstalled a lot of cabinets that were held together with stapled plastic braces. Most of them were so out of square that they had to be twisted and shimmed in place so the face frames would meet. Most of them had water damage. Yet even after 10 or 20 or 30 years they were still there and I still need a crowbar and sledge hammer to break them apart.
And the customer did not care about any of that. All the customer wants is that the door hinges stay on the cabinet, and the drawer slides don't collapse. Instead of selling them plywood, dados, CNC, accuracy to the .001" and all the stuff we care about, just offer them a 10 year warranty in writing covering the casework for failure, offer 5 years on doors and 5 years on drawers. I use moisture resistant melamine that will survive a flood. (This was recently put to the test where I live!) Our cabinets survived 3-6 hours of being submerged. No failures. There was a little swelling and I suspect the edgeband will start falling off next rainy season, but they are still functional. One of my competitors' big selling points is that they use marine grade plywood (using plywood to make cabinets is unusual here, and in most of the world. Only in the US is plywood widely used). But their cabinets look just like mine. The client doesn't care.
So what is the value to the client? Is it the accuracy of your joinery? Or is it just that the cabinets will last 10 or 20 years? I use all 5mm Euroscrews, not the pan and bugle screws used in the US by most shops. Those skinny screws fail too easily. But I don't really push this detail onto the customer. I point it out, and explain why I use them in one simple sentence. Then I let them look and touch the cabinet. They see value with their fingers more than anything else. They love pretty finishes and cool hardware. They don't care that I import my dowels from Europe. They usually do not even know what dowel is. It was the same in the US. After I explained what a rabbit/dado joint is for the 50th time (using cute samples demonstrating the tightness of the joinery), I realized I was wasting the client's time.
We really only have about one hour to sell the job. If you spend more than an hour, you are wasting your time and theirs. The client is usually too polite to say it, but they do not want to talk about the virtues of your product for 3 hours. If you have not moved on to the design and layout and generated real pricing numbers at the end of one hour, you are missing a sale. If you leave the meeting and all you gave them was technical BS, promises, and a ballpark number, you wasted time. You might still get the sale. But if you can leave them after one hour and 30 minutes with a complete layout (3D only, no measurements) and an honest to God bid, you will have a huge advantage over the others. If they find lower prices, they will likely call you back and want to meet again. Give them options to lower the cost (not discounts). Ask them if the other company was offering the same services and if they were able to provide samples to see yet. Help them compare the value that they think is important. Don't push superior construction and traditional good ol' boy crap. Find out what they want, what they think is important. You really have to listen, keep them talking. They will tell you exactly what is important to them. You can beat the competition without lowering the price.
Whoever commented on the Mercedes driving, latte drinking, Iphone talking people who are suddenly being cheap on their cabinets makes the best point. Why are they being cheap with their cabinets? How in the world was the Mercedes sales guy able to sell that overpriced hunk o junk over the Toyota guy? They certainly weren't cheap there. Or the 5,000 dollar watch, the 1,000 dollar purse? But they are suddenly getting wrapped up in 2 or 3 grand on a 10 grand purchase? Why? Do they not value the cabinets? Let's look at this... Do they entertain? Does the appearance of their home seem important? Expensive curtains, high end doorknobs, solid brass toilet paper holder? Do they have a fancy espresso machine and a convection oven? Are they installing cheap tile? No, no, no. These are not cheap people. They value their kitchen more than any other room in the house (surveys show this to be true). They want their friends and family to be impressed when they see the cabinets. They aren't stupid, they know that cabinetry makes the kitchen. They want the best they can get.
The only real difference between all those other examples and us is how we sell. They see us as different because we present ourselves differently. The shop that built the kitchen in that pricing survey did it for 120,000! I think it was the 2007 or 8 survey. He sold the job for more than any of the submitted bids. Why? I bet there are other shops claiming they lost that job because "the cheap homeowner..." I bet many of the jobs we lose are not to a lower bidder, but to a higher bidder. It is a fact that most clients do not pick the low bidder. (I read it in some survey done by JLC or Remodeler). That means that most likely every one of us has lost a job to a higher bidder.
Yes, sometimes people get wrapped up in the excitement and start shopping the high end shops, then realize it is out of their budget and go to the low end suppliers. That happens. And during the discovery phase, if the client seems most interested in the lowest price, you know where you stand.
Very rarely does the client bring up price in the first 30 minutes. When price does come up, I show them 3 kitchens ($5,000, $10,000 and $30,000). There are two or three pictures of each and a basic description of the finish materials and hardware. They instantly have an idea where they stand with you. The 5K and 10K kitchens are based on the 10x5 L kitchen the big box stores and large production shops use as their standard display.
From the original questioner:
Thanks for your insight. You've given me a lot to think about. I've been in woodworking as a hobby for 13 years, and only went pro last April.
From contributor M:
I just thought of another job that is even more unbelievable than my previous claims. In Texas I finished a $30,000 kitchen in 4 days all alone. My shop was 1,200 sq ft, my nicest equipment was a Delta Unisaw and a 1940's Dewalt radial arm saw. Aside from that I had a lot of clamps and the usual collection of small semi-portable machines (6" jointer, 12" planer, router table, etc.).
The kitchen had dovetailed drawers (more than 25), dado/rabbit carcasses, face frames, 4 radiused cabinets, special custom, cantilevered, radiused shelves and conversion varnish finish on the boxes inside and out. The doors were real wood veneer HPL from Treefrog. I had the doors laid up, cut and banded by another shop because I did not have an edgebander and did not want to hand glue 50+ doors worth of banding.
Based on the market rates I way undercharged. None of my competitors (this is Dallas/Fort Worth where there are more cabinetmakers the Starbucks) could have beat my price and none of them could have done it as fast. Even the shops that have CNC machines and 10 employees would have a real hard time doing what I did. The most important thing... I made a ton of money on that job. I could have done it for 5,000 less and still been happy. If I did it for 20K, I still would have probably had a better net than any shop that would have accepted the job.
How did I do it? Ecabinets, production sharing, outsourcing the doors and having a very low overhead.
Installation took me a while because there was extensive remodeling and we cast Terrazzo countertops on site before mounting the doors. I think I could have installed all the cabinets (assuming all the old stuff was gone and the plumbing and electrical were complete) in 2 or 3 days by myself. The last day would have been spent cleaning, polishing and taking pictures.
I rarely give credit for my work to other people (except my Dad maybe). But I owe this job and the others I did like it to Ken Susnjara and the Thermwood/Ecabinets team. Granted I put a lot of time and effort into learning the program and making all the tools work for me. But they made the tools available to me... and everyone else too.
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