Kent Moore Cabinets

Production Application

This article was originally published in the September 1998 issue of Midrange ERP magazine. It appears on the AGI Website with the permission of Midrange ERP.

TOC Case Study: Kent Moore Cabinets

If you call the Kent Moore Cabinets plant in Bryan, Texas, don't count on finding Mr. Kent Moore in the office. He's more likely to be at the ranch or on the golf course. And both Mr. Moore and his employees like it that way.

It's all about quality of life. And that quality has improved significantly for all concerned since KMC adopted the Theory of Constraints (TOC) principles espoused in the book The Goal and through the Avraham Y. Goldratt Institute. The basic transition took place nearly ten years ago and KMC has continued to improve operations and results since that time by applying TOC in all aspects of business.

Moore first became aware of TOC and synchronized production through a course he attended at Baylor University's Center for Manufacturing Excellence. After reading The Goal and realizing how closely the book mirrored his own challenges, he attended a two-week course at the Goldratt Institute. He had 40 people in the company read The Goal and immediately started training his managers in TOC concepts.

First: production
KMS had implemented just-in-time techniques prior to TOC and managed to get production lead-time down to an admirable 40 hours. But with a company goal of ten days from receipt of customer order to shipment of product, and five days required for design and paperwork, this wasn't good enough. After TOC, production lead-time averages 8 hours; ranging from four hours for the easiest doors to 12 hours for the hardest.

The biggest challenge is that TOC goes against the grain of traditional cost accounting practices. "It's very compelling for a manufacturer to think that running 100 parts across a machine in an hour costs half as much per part as running 50 parts an hour," Moore says. "But if you don't immediately need those 100 parts, you haven't done any good. You've just created a pile of parts."

Each of the company's five departments previously had a full day's work queued up in front of it. Consequently, a problem in one department could be resolved before it had any impact on the next. Now, parts move directly from one department to the next. "We had lots of work-in-process, now we have very little work-in-process," according to Moore. They have, however, left a one-day buffer before shipment to correct any problems.

Customers are given a ten-day lead-time (promise date) when the order is taken. After the five days allocated for design and paperwork, the salesman is called to reconfirm the delivery date. If everything is still on schedule, the order is released to the plant. Once a job is in the shop, there's no stopping it until it's packaged and ready for shipment.

Sales up, costs down
When KMC started implementing TOC, there were 155 employees. A year later, that number was down to 120 at the same time sales had increased by 15%. As the company has grown, the increase in costs has lagged behind the growth in sales volume. Moore casually mentioned that company profitability is now about four times the industry average.

But making more money is not the only goal. There's also that "quality of life" thing. Moore used to track "a lot of things," he says, "I had a bunch of spreadsheets I followed and a lot of tasks I didn't feel we could afford for someone else to do. When I came back from class, I was convinced there were more important things for me to do. By focusing on the most important things, I now have plenty of time." Rather than putting out fires, he is now focused on looking for the causes of fires.

More than just production
Since the initial implementation of TOC in the plant, the target has moved outward to encompass other aspects of the business. Because TOC is a different approach, changes in policies and in compensation plans are required to get everyone on board. Says Moore, paraphrasing Eli Goldratt, "Show me how you measure someone and I'll show you how he behaves." KMS used to pay sales commissions as a percentage of volume only. Now the plan pays on gross profit. Instead of looking for (any) business, the sales people are now looking for profitable business. It makes a difference.

This same philosophy has been brought into the plant as well. Team leaders (foremen) and lead men (the next level down) are on a similar system, with incentives to work on the jobs that are best for KMC's overall performance. "Commissions based on volume assume unlimited capacity," says Moore, "we don't have unlimited capacity." He adds: "We learned that our compensation system constrained performance. It was a constraint. So we addressed it like any other constraint.

The drafting department provides an example of how appropriate incentives create a more productive atmosphere. Before, there were seven draftsmen whose goal was to finish work at five o'clock and go home. Now, being paid on percentage of profit with a factor to cover completed bids, there are four draftsmen doing the work of seven or eight. And "they each make about three times what we used to pay draftsmen." Moore says he used to think that his objective was to create jobs. Now he realizes that he really would rather create GOOD jobs. Including his own.

© 1998 Midrange ERP