Latest / The Manufacturing Blueprint / 12. From Chaos to Control: Building the Capacity, People, and Systems to Scale Your Shop

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12. From Chaos to Control: Building the Capacity, People, and Systems to Scale Your Shop · The Manufacturing Blueprint

• speaker-0: Yeah. If everything depends on you to run the business, then you're not really ready to scale your business, right? Your business can't scale if everything goes from you. If you can't step out of your business for a week and the business go on, that's a very dangerous place. Jason, it's about empowering your team, right? How do you trust your team to make decisions in the business? I say to my team sometimes, I can forgive a mistake, right? If someone makes a decision and it's a bad decision, well, we can learn from a bad decision. ⁓ yeah. But if a team just fails to make a decision, the cost of that is worse, right? The cost of indecision into the business, not making a decision can hurt me far more. We're not learning, but we're just losing time and productivity as a business. speaker-1: Mm-hmm. Welcome to the Manufacturing Blueprint. This is the show where manufacturing leaders, shop owners, and operators come to sharpen their thinking, strengthen their teams, and improve the way work gets done. From leadership and culture to system, strategy, and execution, we break down the blueprint used to build high performing manufacturing organizations. No fluff, just straight talk and real conversations, real lessons and real results. Here's your host, Jason. Hello again, everyone. Welcome back to the Manufacturing Blueprint Podcast. Today is part two of our two-part series on scaling a manufacturing business. In part one, we covered how growth creates chaos and we gave some tips on combating that chaos. And in part two, we're going to be talking about how to grow without losing control. Scaling a manufacturing business, it isn't just about adding machines or adding people. It's about building a system and a team that can handle growth. before it shows up. So we think about growth, that growth oftentimes will expose weaknesses, weaknesses in our foundation, weaknesses in our processes, weaknesses in our system. And it's really important for us to to start to combat that early on. So oftentimes when that happens, the result is people not knowing what they should be doing. There's maybe a lack of standard work. And then that leads to, like we talked about earlier, the chaos, not having visibility. That's leading us to reactive decisions. Overall, today we just want to talk about the idea of building a platform before the growth starts to expose those gaps. speaker-0: Right. Growth is the ultimate stress test for your business. It increases revenue, but it also is going to multiply the complexity, the volume of tasks, and forces every part of your organization to handle more weight than it was originally designed for. The underlying foundations of your systems, your leadership and the culture and the fragility of it will be tested as you continue to grow and expand as a business. speaker-1: You know, it's funny, like I think so often as leaders, we think about, you know, we're trying to plan out the next job, we're trying to to plan out the future as best we can. But there's a lot of things really behind the scenes that needs to happen that doesn't get the attention. And that's really what causes a lot of that chaos, a lot of those issues when you do start to grow. I would say ninety-nine percent of the businesses out there, they want to grow. That's one of their goals. But doing these things really behind the curtain is what's going to help them actually not only achieve that growth, but sustain that growth. And in many cases, there's there's not this blueprint. You know, it's not a situation where you can just like, ⁓ okay, well, I have to do XYZ. And if I do those things, then we're perfect. Like there's a lot of things that you just gotta figure out what works best for your company. So there's gonna be some guidelines that we may talk through, but ultimately there's gonna have to be decisions that have to be made for you as an individual company to make those things be successful as you go into that growth period. speaker-0: Yeah. So in the last show, Jason, we talked a a lot about like reactive stuff, right? When you find yourself in the chaos of growth. In this show, I guess we're hoping to talk about how we can be more front footed, right? And prepare for that. To get less caught out and and to avoid falling into some of those traps earlier. So I guess we're starting with how do we prepare for that, right? speaker-1: Yeah, that's it. That's it. So one of the large things that we really need to talk about in being prepared for that growth is capacity planning. Capacity planning is something that I think we're gonna spend a bit of time on because we're g really need to look at three different things here. We need to look at the machines, the people, and the processes. I know when it comes to the equipment, what we're calling that machines, but that could not only be machines, that can also be your back end software, that can be machine monitoring software. I think we we really want to take a look at all of those things because ultimately we need to work to figure out what our utilization is versus our bottlenecks, really be able to take a take a minute and and stop and and look at our process. Paul, I know in your in your world the identifying those bottlenecks becomes a really critical part. So is if we're looking to be able to grow our business, how are you finding where those bottlenecks are? speaker-0: Yeah, I guess it's it's important to know in each area of your business, whether that's in a production line or in any particular cell, you need to know what that maximum capacity is. There's only so often or so many people that you can add to it or so hard you can push it or so fast it can go until you reach your limit. And you need to understand those as a business and then what you do. For us, even our manual assembly lines, we just treat them like a large machine as you would do a CNC, right? You can still only run it at a certain rate, it's still only as fast as it can go until you need a second machine. And it's about understanding the capacity that you can get out of each one of those machines and then how and when to multiply them. And you don't wait until you're maxed out, right? Because there's leak time and setting up and there's all that cost. So I guess here as we're talking about growing your business and how that business expands. It's about being able to do that at a certain point, knowing that in the next number of months that you're going to need that extra capacity and knowing when to switch that on and be prepared for it. speaker-1: Yeah, and you've really got, I guess one thing you have to identify is your true capacity versus a theoretical capacity. I mean, if you have a piece of equipment sitting there, theoretically you have twenty four hours of capacity available on that machine every day. But true capacity is not going to be twenty four hours, whether you've got you know, you've got off shift time, you've got maintenance time, you've got setup time. I mean, there's all these factors that come into it. So You know, I think one of the things we have to be aware of as as shop owners or leaders or somebody on a manufacturing floor, oftentimes, you know, we we kinda get caught up into we're we're doing the math and we say, Okay, well, you know, if it takes us, you know, three minutes to run apart, then we can run X many in a day and that's great, but we have to make sure that we're building in enough excess capacity that we're not gonna get overburdened and gonna get behind because If if you're miscalculating that on the front side then and you get behind and it's almost you know, getting caught up is gonna be nearly impossible. So you gotta be be prepared. And I I would say, I mean, if you're leaving yourselves twenty percent capacity, I mean, I think that's a fair number to be able to reach your goal. And I think for my shop, one of the things I like is if I've got a little ⁓ a twenty percent buffer and it could be a little tighter if it needs to be, but I would prefer it not to be longer term because that twenty percent allows us to to handle any hiccups. any issues that we have without impacting our customer. And it also allows us to take on a little extra work. If I get a request from a customer where they need something quickly, we need to drop a part in because something needs to shift forward in our schedule, then we've got the the little bit of extra capacity there that we can we can open up, drop in what we need to drop in, and then come back. And we we didn't just put ourselves behind, because if we're running that hundred percent, ninety eight percent capacity and we need to do one of those things well, that normal job that needs to run and you just you've lost it. I mean you're never gonna get caught up. Making sure that we're really understanding what that true capacity is versus theoretical capacity is critical. So speaker-0: That's really, really critical as sure people that maybe listen to this podcast and maybe other podcasts. We talk about efficiency and we want the business to be run ⁓ optimally, right? How to lean your manufacturing processes. And people will say, Well, why do you not want to push it higher? Why do you not want to get to one hundred percent utilization a and take every penny that you can out of your business? But the bottom line and what you're just saying there is it's it's not sustainable, neither is it sensible for your business to do so. Right. Right. And and we're we're the same. We run at about maybe eighty five percent utilization. I mean it'll depend on the different aspects of the business, but why is that eighty, eighty five percent the sweet spot and and what's the risks if you're going over over that? Sometimes I guess for you guys in those machines you have to have preventative maintenance, right? So the machines can't run around the clock. And it's just that eighty five percent, it's not even just on your machines. If you apply the same to your people, your whole business as a process should also not run at a hundred percent capacity all the time. Why? Because you've got absentee rates, you've got vacation leave, you have all those things that you just can't plan that everybody's going to be running at one hundred percent all the time. And overloading that actually will increase your cost long term, whether that's burnout of your employees, whether it's increased defect rates or or higher maintenance. And as you said, the important one there is recovery of arrears because there'll always be unforeseen downtime or issues, right? And how do you recover that? And that'll be the biggest reputational damage if you get behind and you can't deliver your product on time. Yeah. Yeah. Yeah. And then also whenever we factor in that eighty five percent, we try to allocate time for business improvement projects. Mm-hmm. If you're just busy running your day to day and everyone's a hundred percent just getting things out the door. You restrict your team from trying to run improvements. And we've talked about that in some of our previous podcasts about how do you enable your team, right, continuous improvement on that lean manufacturing journey, even for training others and developing projects and transformation. How do you do that if your people and your business is 100% utilized? You can't afford any downtime. And that's a very dangerous place to be, especially if you're planning for growth, because your team already hasn't got capacity. speaker-1: This is a tough topic, I think, f especially for let's say you're a smaller business, you know, that you've got five employees, in that situation, you're probably up and down a little bit in your sales, right? You're in that cycle. Like you'll you'll get really busy and then you'll be you'll be really soft, you'll you'll be busy and then you'll be down. And so trying to, you know, kind of flatline, I mean, ultimately not not not flatline in a bad way, but we wanna kinda make that journey a little more flat. maybe with a an incline going to it. But, you know, we want to be able to to shave off those peaks and valleys a little bit so things are a little more moderated. We can handle that slight bit of increase. We can handle a little bit of a decrease and kind of meet somewhere in the middle. But, you know, I think when you get into those down times, it's really important that in those moments that that's when you're really spending the time to work on the business, put some of these things in place. So that way when you ramp back up, you've got those things in in place, you've got your machine maintenance taken care of, you've got your processes ready to go and you can handle that spike. speaker-0: And that that level loading is really, really critical as well because you're already running ninety five percent capacity and then urgent orders come in, you have to pull jobs in. You don't wanna then just have to be struggling and go to hire additional staff. But if you have that a little extra capacity there, or maybe you can create the extra capacity with overtime or weekend work as exceptions, then it allows you to react to that. speaker-1: You can't spell high-end without DN. If you're serious about taking your shop to the next level, it might be time to stop thinking in terms of good enough and start thinking in terms of capability, flexibility, and my favorite, automation. DN Solutions is helping manufacturers move into true high-end machining with their SMX multitasking series, the DVF five access machines, and advanced automation solutions designed for shops that want to run smarter. Faster and more competitively. The SMX platform gives you the ability to combine multiple operations into one setup, reducing handling, improving accuracy, and helping you get complex parts out the door faster. Their DVF five-axis lineup delivers the precision, rigidity, and confidence manufacturers need for today's demanding aerospace, medical, and high performance applications. And when you pair those machines with automation, you're not just buying equipment, you're building a more scalable business. High end parts, high-end capability, high-end thinking. Because you can't spell high end without DN. Learn more at dnsolutions.com. Yeah, you mentioned staff there. So let's talk a minute about the the people. So that's the second part. We we said it was machines, people, processes. So let's let's talk about people. That's what is your skill level, what is your head count, how are we handling cross training, coverage gaps? I mean, we we kind of touched on these a little bit, but you know, I think you really you've got a couple things that we have to deal with, even thinking about our leadership and how we've got to to develop our leadership, right? That's not these are not just things That just happened. And I think that's the most important things that we miss often time. Adding a piece of equipment is a quick fix, if you will, to some degree, right? As in when it comes onto your floor, let's say you already have some equipment, you decide, okay, I'm gonna buy another piece of equipment. It's got the same controller, it's got the same setup. We can you can basically plug and play, right? You set it on your floor and it's ready to go. But just because you do that. While theoretically that will add extra capacity, do you have the skilled labor or the skilled individuals to be able to go run that? And that's always, you know, for many shops, that's one of the biggest question marks is being able to get get the skilled individuals in to be able to work and getting that head count right, right? Because, you know, there's there's no magic number There's no magic chart that says, Okay, well if you're doing a million dollars worth of business, you need ten employees, right? Now, obviously there's some philosophies on how much revenue you should have for each employee and those vary widely amongst people's thoughts. Yeah, I think maybe talk a minute about like cross training, how you guys cross train amongst your team or even working on how we bring people in and get them up to speed. speaker-0: Yeah. Well, whenever you're adding machines, yes, and I'm sure a lot of your machines are well, I wouldn't even guess the cost of some of your your equipment, right? And it might be more expensive than some of the our assembly lines and so on. But either way, whenever you work out that capital, you need to make sure you're getting your return on investment. But if you don't have the right skill people there to use it and you're not utilizing it enough, then you're leaving that money on the table. So Mm-hmm. If we're looking forward about how we're going to grow our business, how we're going to expand over the coming months, you have to look at your skills and be prepared for that early as you come into rapid growth and as you hire new staff, your experienced staff, then get thinned out across the business. So the more versatility and training you you have in place in advance of that, the better. Right. So if there's a person that goes out on vacation leave, for example. You need to make sure that you have another person who knows how to step into that process, right? Maybe that machine, that process that doesn't happen so often. And maybe there's this experienced guy that we rely on to do it because he's the best guy at it. And he's becomes comfortable at it. He's always on that machine every day. And then he goes out and leave because he's got an appointment. And what we say is, ⁓ we'll just we'll just let that sit. He can pick that up tomorrow whenever he comes back in, right? We've all been there, but as a business, if you're going to keep growing, you get to the point where you can't afford to do that, right? And you shouldn't be doing that, knowing that that machine is your asset, the the value that it's worth to your business, it has to run. So it's about cross-training, right? Having a a diverse staff force there that can and can go on multiple processes. Mm-hmm. In our assembly lines and our processes, we would train what we call one up and one down. So if I'm on a sh a machine or in a process in the middle, can I also do the process to my left or the process to my right? And if everybody has that, you kinda then have a three for one, right? I've got three employees who can work in any one process across the floor. Because it's always easy to train someone in a simple job and those easy jobs maybe we've got ten people trained for, but it's the complex ones that nobody wants to train, or maybe it's the ones that take longer to train. we don't have the skills built up for. But at the same time, they're the important ones, right, that we can't afford to fail in our business. So that gap coverage, that cross training is really, really essential. And then I think we talked about it on on the previous show was that you can't just train the experience, right? We talked about what does it take to run those machines? Can they hear the machine? Can they feel it? Do they know how it's running? Can they spot problems early? And sometimes it takes a period of time with maybe with the experienced employee and that kind of buddy system rather than just reading an SOP, but actually learning the trade and the craft. And that's something that we can't neglect. And whenever that takes time, we have to be willing to put in that and make that investment before we grow. There's no point adding machines and then thinking let's do the training afterwards, right? We're better doing it up front to better utilize that machine whenever it comes online. speaker-1: Yeah, I think the work gap that you mentioned is a really important part, especially for our business having equipment, you know, very expensive equipment, very technical equipment. We can't just bring somebody in off the street and teach them in a week how to do a setup on on this complicated five axis mill. It's just not gonna happen. Now, we can bring them in and start them out on a on a path where they can get to that point, but we're talking weeks, months, years before they become that very experienced set up personnel where they've got the ability, like you mentioned, to hear the machine, feel the machine, and really ⁓ know what that cutter's doing. Okay, I know this cutter's gonna break. I need to go ahead and make this tool change now before we start tearing things up. So that is something that as a machine shop, you're really gonna struggle doing that in a last second situation unless you're going to be bringing people in from the outside. Now, There is a market for that, obviously. I mean, bringing talent in from the outside is is one thing and sometimes we have to do that. But I do think there is something culturally that's a benefit of growing people from the inside that long term, that's gonna help, you know, build your business and build your culture and build your team to where they're gonna have a little more take a little more ownership and and working for that team that they that they've really helped to build and develop themselves. speaker-0: Yeah, and if if you hire staff and you're if you educate them, if you're sowing and investing your time into them, sometimes you end up with a far more what should I say, a loyal workforce, right? Where the people have a feel appreciation to the business for helping to teach them and to in increase their skill levels. Yeah. That's really important. Hey folks, listen up. You know that manufacturing buyers don't ask simple questions. They're asking about product compatibility, materials, specs, lead times, application fit, and they want answers before they even talk to sales. That's where Navu comes in. Navu adds AI chat to your website trained on your own content so visitors can get reliable. Accurate answers in real time. It helps buyers find the right product, understand the right application, and take the next step without forcing your team to answer the same questions over and over. And setup is simple. NAVU works with your existing website. It connects with tools like HubSpot, Salesforce, and Slack, and gives you visibility into what visitors are actually asking. See what your website has to say at Navu.co slash making chips. That's Navu dot C O slash making chips. speaker-1: you know, we've talked about training as far as your f floor personnel is concerned, whether that's on an assembly line, whether that's as a setup personnel. What about leadership, right? One of the things that I think is really key, especially as you grow, you as a leader, you've got to be able to delegate some of those roles and you want to to really work to develop internally some of those leaders to come up through your system, to come up through your organization and to take those responsibilities. So what do you guys do? What do you think about How you develop those leaders and making sure that you you've you're putting the right people in the right places. speaker-0: Yeah. Whenever you're looking forward to business growth and you know you're gonna expand and you know you need to hire people to those management positions, I would say my advice is don't wait until it's too late. If you're gonna bring in new people to your business who maybe don't know your business or whether you're gonna promote people from within and expect them to be able to take a step up, don't recognize the need for those people when it's too late, right? Because to be fair to them, you need to give them time to learn. To get to know your business, to be able to adapt and to mature, to build relationships with your other employees, to allow them to do their job effectively. Quite often what I see is our business grows or or we promote someone or hire someone to fill a gap because we already have a struggle. And but whenever we have a struggle already and you put someone in, it's very hard to expect that person to be able to swim, right? Mm-hmm. What they just do is is trying to find their feet while they're trying to firefight. And that's not fair to the employees and it's not easy to do. Also, if you're gonna grow, and again, before you grow, how do you scale up your businesses and scale up your management team? If if you have a team, maybe three or four people, whether they're quality managers, sales guys, finance people, whoever, HR, you might have daily meetings with them, understanding what's going on in the business, but You need to understand that if you're going to grow, if your business is going to double in size over the next couple of years, is the way you run and manage your business, is it is that scalable? Can you keep doing that same level of work at that the same way over the next couple of years or how do you plan to adapt? For us, rather than having so many one-to-ones, you might have maybe a weekly calibration meeting, right? Where everyone comes together for one meeting to discuss everything rather than discussing it in its silos. And that even opens up then the communication, right? Does away with those communication silos. Everyone knows what's going on in the business. And you need to think at that management level, how do you scale that up so that as your business grows, not everything is having to go through you all the time and you're able to delegate and trust some of your management with those decision makers so that you're not the only one that every decision has to go through. That'll also help you prevent your burnout, right? Burnout of yourself. And your management team. speaker-1: Yeah, you're right there. You mentioned, you know, putting a leader into a tough situation, it really puts them under pressure. That's gotta be a tough situation for many businesses because there's a reason that you hired someone or that you're promoting someone is because most of the time it's because there's a need, there's a problem. You're wanting somebody to step in and to suffer that need or to solve that problem. So, you know, it's a real challenge. And I've experienced this before where You know, we've got something that needs to be accomplished. And I I mean, I know as a as a leader in our organization, sometimes you just got to kind of bury your head a little bit and you go fix the problem, get things organized, and then you can bring somebody in and to to help lead that once you've established or maybe once you've reset it. Because, you know, like you said, dumping somebody into a bad situation is really setting them up for failure. For they're gonna be frustrated, they're gonna be burnt out, they're gonna probably get to a point where They don't understand your business most likely yet. They don't know your people yet. And so when you're putting them into a bad situation, it's very easy for them to to step back and be like, Okay, I don't I don't know what I signed up for. Maybe maybe this is not the right fit for me. So really make sure that you're focused on giving somebody that's coming in or somebody you're promoting, give them the best opportunities to succeed. Set them up for success and And I know as a leader, sometimes that's gonna be a little more difficult on you, but that is gonna be your responsibility to make sure that they're prepared and make sure that they're set for success moving forward. All right. So we kind of talked about I like, you know, where you were going there. We we talked about ⁓ the machines, we talked about the people. The one thing that's left there is is our systems or our processes. And I don't wanna forget and kind of how these tie together though, is those systems also require trained people to execute. So, you know, that's that's really how everything all ties together. You've got to have people, you've got to have machines, you've got to have processes, and you've got to be trained in all of these things. And it's really all three of those areas working together as one. So speaker-0: Critical one, Jason, maybe to start with, there's your E ERP system or lack of. And I know that there's still a lot of companies out there who maybe don't have a robust ERP system if they're coming from smaller shops, maybe they're still running from Excel with paper printouts of orders and so on. And if they're still growing as a business, it's about how do you know Jason when you're when's the time right to actually invest in an ERP system? And How do you do that and implement that without losing control? Right. Because as your business grows, they'll reach a a point where that, should I say, that older style ERP system that we that we would work, that manual paper trail, right, that becomes a tipping point where where that will fall over as your business continues to grow. speaker-1: Well, I think nowadays things are a lot different than they used to be in my mind because the classic ERP system was based on a really large financial investment and you had like this one time this huge one time fee that you had to pay and that was actually in my mind prohibitive to smaller organizations being able to step into that next level that, you know, okay, so maybe it was gonna cost you twenty, thirty, forty thousand dollars and obviously ⁓ some of the large scale businesses, they're spending millions of dollars a year on an ERP system. But that was one thing that really was difficult to to kind of take that next step. But now, you know, as we've seen softwares change over the last few years, how many things have in your life have you seen go to a subscription based model, right? That's the way everything is. And so now a lot of the ERP systems are the same way. And not only that, they're they're not only a monthly subscription type model, But they're also individual user-based models. So that gives a three, four, five, ten person shop the ability to step into one of these ERP systems and then scale it as you grow. So you're not really ⁓ having to look at that cost analysis on a huge tens of thousands of dollars expenditure where, okay, I really want to do that, but I just can't financially afford it yet because I'm too small. Now you've got the ability to To start to step into those things on a smaller level. So that is w gonna be one of my biggest suggestions is make sure you do that as early as possible. Do you have to get off the ground with ⁓ Excel spreadsheets and some Word documents and chat GPT? Well, maybe so, but at the end of the day, the the one of the most important things that you can do once you're operational is get shifted over to ⁓ an ERP system. ⁓ full disclosure, we're using Pro Shop and our shop. We made that transition last year and that's been a a really big improvement. Being able to to see your schedule, being able to see your training metrics. Basically a lot of these ERP systems, what you're gonna find inside of that is you've got the ability to control your quality aspect. So if you're if you're looking to become an AS ninety one hundred certified shop or you're looking for ISO or you're looking for some of the other certifications that are out there, you know, having these systems, it's going to make that process so much easier because They're building in now those parameters. They're building in all the things that you need to to house and to keep your your processes in order, to keep all your records straight, to keep your inspection data. It's all built inside of the ERP system. So that's a really critical piece as far as as I'm concerned. And alm almost like one of like non-negotiables, right? It's like y you really need that to grow to be able to again have your schedule taken care of. You can ⁓ look at your costing, your job costing. You know, you've got the ability to print reports and see where's your money going, what are your employees doing, what does each job look like? Are we spending more time than we anticipated? Are we spending less time? These are the types of jobs that are we're doing well with, these are the types of jobs we're not doing well with. And so then then that gives you the opportunity to say, okay, well, you know, in my mind I thought this type of job was doing well for us, but when I look on paper, it's not. So we can start to maybe shift away from doing those types of jobs and start pushing ourselves more toward the ones that we're being more profitable on. So that's a that's another benefit of having that data. Data is key there. speaker-0: So that data will even help you, right? If we're talking about how to grow successfully and how to deal with that growth, a good ERP system there will actually tell you what sort of growth you want, what sort of work to be looking for and what gaps you need. I guess a good ERP system should also pay for itself, right? That should drive a lot of efficiency improvements and a lot of control that should actually Yeah key in and make you money. I guess if you're working from the old school, if you don't have an ERP system, there's gonna become a tipping point, a breaking point where not having it hurts your business and will definitely limit your growth. speaker-1: Yeah, it does. I have already seen like think thinking about Pro Shop specifically. I had a customer come in a couple of weeks ago. ⁓ it was a brand new customer. When they they told me they were gonna swing by, they had a little louding thing going on and I thought it was gonna be two or three people. And the next thing I know there were eleven people that showed up. Eleven people in the lobby. And they were just like, Hey, you know, sorry there's so many of us 'cause I was like, Mm, come on in, you know. But what was great was we were able to sit them down in our conference room. Although we did have to find a few extra chairs, ⁓ but we were able to sit them down in the conference room. We've got a nice large television that's touch screen, and we were able to put our ERP system, put ProShop right up on the board, walk them through exactly what the process is, how we handle it when the purchase order comes in, what that work order looks like, how our records are maintained, how our traceability is maintained, how our inspection data is recorded and maintained gauge calibration. all of all all of your quality metrics, any of your nonconformances or ⁓ corrective actions, it's all housed there. And I I got a note later on, an email later on, and they were very, very thankful of, you know, the hospitality, which that's what we do, right? We're s the Southern hospitality, but they really made a mention about how important and how thankful they were to see Pro Shop and how that really ties in for them. They're an aerospace customer. They're a group that relies on that type of processing. that type of traceability. So that was just kind of a really, really great sales point for us. So it's not just helping our business to operate, it's also functioning as a sales tool. So when we do have the ability to get a new customer or a potential customer in front of it, we can show that to them. We can use that to help sell and gain more business. speaker-0: Really, really good. You mentioned there about metrics, right? And as our as we're preparing for growth and significant growth in our businesses, how important are metrics within the business right now? As you're growing, as your work's gonna double, maybe we don't have good performance indicators where we need them, but the likes of quality, efficiency, utilization, downtime. Is there any specific metrics, Jason, within your own business that have been critical to you as you've continued to grow through your business? that might be worthwhile for other businesses if they haven't done so yet. Putting in place in the early in the early days and then that as the business continues to grow, those key performance indicators are already established and in place and allows you to manage at a higher level quickly, knowing the health of your business and being able to react quickly. So as your business grows, you're able to keep up with that. speaker-1: I would suggest a couple of really simple things just to start. You know, if we're talking about somebody that's that's not got any of the metrics involved at this point, I think tracking your your quality metrics is really critical, right? And and getting that out so that you way you know what your defect rate is, what your what your scrap rate is. But kind of look at that in two ways. A, what is it on the floor? So what is it that you're seeing is good and then maybe in your final inspection you're finding is bad, right? 'Cause that's a that's a really To me, that's a really big step because ⁓ my operators are running product and if they're doing their in process checks and then now they're saying, okay, well, I've got a hundred good parts, but when we get to quality, we do our in our final inspection and they find, okay, well, twelve of these were not good, right? I need that number because I need to be able to track that back to the team so we can have that conversation. And then we also want to know what the quality metrics looks like as far as to our customer. Now, of course, we're like all of great businesses. There are no Quality defects to get to our customers. It's always, it's always zero. But on the odd chance that our customer disagrees with us, well, we want to know what that looks like as far as any rejections from our customers. And then on time delivery, right? The on time delivery is another part that should be very simple for you to track. And that's kind of what I'm looking at right here. Something that's going to be easy for you to track. So your quality rejections and your on-time delivery because That's gonna be a very simple way of looking at what your capacity looks like. If you're always at fifty percent on your OTD, well then it maybe you don't have a capacity problem. There could be process problems, there could be other problems, but you know that you're not ready for that growth, right? 'Cause if you're already not making hitting your mark and you know, how in the world are you gonna have the possibility to grow and grow successfully if you can't make your current delivery? So Getting those up into over ninety five percent as far as your OTD is concerned, getting that scrap race pushed down as low as you possibly can, that's gonna be setting you up for that next step. But I think that can also take us maybe into the next thing we wanted to talk about was how do we know when to add machines versus adding the shifts, right? Because if your OTD is not where it needs to be, you've really got to step in and decide, okay, what do I need to do in my business? to make this improvement. How can I prove my on time delivery? Do I need to add more equipment or do I need to add more people? Do I need to add more shifts? And really take a look at that. And so there's there is some evaluation because adding machines, you know, that's ⁓ takes a lot of capital. That's something that takes a long time to get in place. And you really want to make sure that you've got stable demand in order to be able to put that on the floor. Especially if you're financing ⁓ equipment, you're going to be paying for that for, you know five or six years. So you don't want to do that for just a job. You know, you want to make sure that you've got that steady growth already starting to ramp up. You know, adding shifts or adding people, that's going to be a little more flexible, a little lower cost. But again, that kind of comes back to the situation where you gotta have, you know, you gotta make sure you've got your training in place. You gotta make sure you have your leadership in place. So those are going to be some requirements for that. speaker-0: Yeah. I guess the temptation when you're coming into growth and you know that there's big growth coming. The temptation is another machine, right? Everyone loves a shiny new toy. speaker-1: Yeah, we do. speaker-0: We do, right? We do. Like we Yeah, yeah, absolutely. It's l it's like Christmas morning, the excitement. Mm-hmm. But yeah, it's a big financial investment. And I guess w as we're going through growth, we just need to be careful that we make the right business decision because of the cash and the capital that it it'll tie up from your business. Mm-hmm. Just before you make those decisions, just I would encourage anyone just to look at your business afresh and say, Are we lean enough as we go into this growth journey, right? We said on the last show that growth will multiply your issues, growth will multiply your inefficiencies, growth will exponentially exploit and just your bottlenecks, right, will become even more of a constraint. Before you make those big investments and before you write the big checkout for new machines, just consider are we lean? Is our five S good enough? Do we need to run Kaizen activities to try and increase our efficiency? How do we remove the bottlenecks from the existing machines that we have? How do we optimize our workflow so that we can reduce the downtimes of our machines? Just to make sure that whenever we do have to add a machine, yeah, that you're as efficient and you're as a cost effective as you can as a business. And that's really critical for smaller businesses because of the overheads involved. speaker-1: Yeah, and I I think you you really touched on a point there that ⁓ I think is is really critical. We often get in a situation where, like you said, we do want a new machine and you know, we get we get we get emails that says, Hey, you gotta take advantage of this tax benefit, right? And there's there's some truth to that, but but I would say, you know, you don't wanna go you don't wanna go jumping into it without just because there's a tax break, right, that's not that's not a reason to buy a new piece of equipment. But I think that I would I would challenge you as leaders in your organization, I would challenge you to spend some time on the floor and make sure that you really do need this piece of equipment. Now, there may be situations where you want to add a piece of equipment because it brings a technology that you don't have. That's a different scenario or it brings in a process that you don't currently have and that's a different direction. So those are business decisions. That's not what I'm talking about. But to touch on what Paul said is make sure that you've spent time developing your internal processes, developing your lean systems, developing, you know, doing some kaizen and time savings. I would I would challenge you to go to the floor, spend some time on the floor and just making sure that you're watching what's going on, you're seeing how your processes work, you're seeing how your products move, you're seeing where all of these different things kind of come together. Do you have Multiple people running multiple machines. And as you as you grow, that's gonna be really critical too. Oftentimes we chase cycle times in our industry, thinking about the machine shop. We're chasing cycle times and it's all about driving down that cycle time and getting that cycle as low as possible. But as we've talked about in some of our other episodes, that's not the only thing that a machine shop is. Like we're also a logistics company. in some degree because we've got products moving around all over the floor. We've got it going to different departments. So if we get so focused on only driving down that cycle time and we reduce it by, you know, forty five seconds, but we end up having other areas of our business that product is just sitting and waiting, you know, because we didn't properly plan to have the right parts on this machine. We didn't have the right operators running this equipment. We didn't have our operator spread out properly. Like you mentioned earlier, somebody was out today, so that machine just set. Well, that 30 seconds that you saved in your cycle time, now you've got somebody that's gone for two days or they're sick for two days and the equipment just sits. What did that save you? Right. So there's a lot, a lot, a lot of savings that we can get by being more efficient in our process of moving parts, our process of scheduling product, our process of managing our people. not just the cycle time of how long it takes to physically machine something, put something together, or move it to the next operation. speaker-0: In the day and age we're living in, Jason, there's there's so much that automation can do, robotics can do. We have to look out just outside the direct machines, but how do we utilize robotics and automation in the rest of our business, whether it's to move material to streamline our processes and become more efficient in that, to maximize the machine runtime. speaker-1: Yeah, yeah. Manufacturing isn't always polished, and neither is raw material. Jamie Marzilli gets into the real, raw side of manufacturing, leadership, pressure, mistakes, technology, growth, and building a manufacturing business from the ground up. No buzzwords, no sugar coating, just raw conversations from the shop floor. Check out the Raw Material Podcast, part of the Making Chips Podcast Network. We're talking about building a platform for growth and I I I said we were gonna spend a bit of time on that capacity planning, which we did. That's, you know, your machines, your people, your processes. We talked about when we want to look to add machines when we're maybe adding a shift. We've got a couple of other we I guess we've really got like three more things that we wanna kinda touch on and these will be a little quicker as we go through them, but you got your supply chain, right? Especially as things as you want to get into more difficult products, I think. And when you get into medical or you're trying to do aerospace. You're gonna have to deal with a supply chain. Now, in your business, supply chain is probably more critical than it is for us, because I'm probably dealing supply chain. I'm dealing with raw materials, I'm dealing with outside processes, heat treating, plating, anodizing, those things. You are relying on your supply chain for all of your products. I'll probably defer to you a little bit on this because you're gonna be the expert as far as supply chain, but but knowing that that supplier that can really limit your growth potential if you don't have the the correct suppliers in place. speaker-0: Absolutely. And we have lots and lots of suppliers right the way around the world. ⁓ in most recent years there's been el electronic chip shortages, right? Which has left us short on a lot of electronic components that go into our products. But no matter who your supplier is, if you're going through rapid growth, the chances are that your supplier is also growing with you. And it's important that yeah as we prepare our own businesses for growth. We also have to support our suppliers because if we grow and our and our suppliers aren't aware that we're growing and all of a sudden they get caught out with increases demand, then we can't grow anyway. And all the good upfront work that we have already done in preparing our own shop is then wasted because everybody's standing still waiting for materials. So never ever neglect your supply chain, right? I'm sure that a lot of smaller shops has a good relationship with their suppliers. And it's just about being in constant communication with them, letting them see the growth that's coming. If you've got any forecasting that you can share with them, do that regularly to make sure that they know if you can look out three months, six months. I'm not sure how far you would look out in your demand for raw materials, but just making sure that they can see that. And then collaborative planning with them. And if you're working with them and they can see the growth coming, well, financially perhaps you can negotiate maybe better rates for your material because you're you're buying more volume and so on. But be prepared for that. Help help your supplier help you by making sure that they're well informed. I know that there's some businesses allow their suppliers to see their stock and their inventory levels, right? As you're growing your business, you might say, well, because I'm growing I want to hold slightly more safety stock in-house, right? And maybe what you can do is allow your supplier to view your inventory Either online through your ERP system or another method, and ensure that your supplier is working with you to keep those stock levels where you want them. That'll allow you to outsource some of that work. And then it also allows your supplier to monitor your usage and ensure that they've got enough material to keep you in supply. So as you're planning for growth, don't neglect your supply chain. Looking at single source as well, Jason, we would we have had to onboard multiple suppliers even just sometimes to just to keep up with our growth. So Maybe also don't put all your eggs in the one basket. If the suppliers let you down, have you got a plan B? ⁓ because you don't want to be standing there with a shop full of people and machines and no material to run. speaker-1: Yeah, that's it, that's critical too. And I I see manufacturing as a whole is continuing to grow, but I don't really see the outside service vendors really growing at the same rate. It is a little bit different situation, I think. ⁓ you know, it's not as easy to start up a new metals company or even start up a new plating line or heat treat line. I mean, those things just aren't as easy to start up as, you know, a machine shop or a small manufacturing facility because you just you could your scale is just completely different. So I think that's probably gonna be hurting us in the long run as as a country is that we're not growing our service vendors as fast as we are growing our manufacturing needs. And I think the other thing that I really thought about there, you were talking about, you know, having the discussions with your vendors about your forecast and those things. As a smaller manufacturing organization, I think it's easy for us to fall into, you know, we have limited resources. Right. We have certain amount of time and we're gonna focus on servicing our customers. We're doing all these things on the shop floor. When we have the opportunity to communicate with our customers, we're doing that. And we probably neglect having those conversations with the suppliers and having that communication with them because we're just busy doing the other things. So where it's the suppliers aren't as big a portion of our business as it is for you, that's an easy one for us just to overlook and really not communicate with them as we should. So I think that is a really key point and we need to do a better job even in our shop of communicating with those suppliers and having, you know, maybe quarterly talks with them at a minimum, sit down with them and talk about, hey, where we're at, where we've been. We do supply them with some metrics. We give them on time delivery and a quality metrics monthly, but we need to we need to do a better job of matching up with them from a business standpoint and looking at it from the bigger picture. So we've taken our platform for growth We've looked at our internal things, machines, our people and our processes. We've looked at when we're gonna add machines or equipment and or a shift. We've looked at our outside processes. You kind of touched there just a second ago about your forecasting. And I think that's a a little a point that we need to touch on is your forecasting. And maybe we'll also kind of tie this in with our cash flow. I'm not gonna get too deep into this. The cash flow aspect, I will say this, that's something that Mike Payne is always pounding the drum on. So Make sure you go listen to by the numbers because he's always talking about cash flow and rightfully so it's a really, really critical part of the organization or of your business. How do you guys using forecast to help level out your production lines or do you do that? Do you look at your forecast to to determine your workforce? How does that work for you guys? speaker-0: Yeah, well generally our our outlook will maybe be six months or so and some business units, depending on the product type, could be more or less. And and then we're just to try and balance that, right? To take the peaks out of the market. You don't want to be letting go of personnel and then having to rehire them a month or two later. That's an expensive way to to run your business and and not nice for people as well. So it's about just being able to level load that and make your business more repeatable and consistent and and level loaded. And then you mentioned about cash flow as well, right? I'm not the finance guy, but again, when you're supplying to large organizations like us, we might not pay you for ninety days of right. And again, if you're you you know too well, maybe longer. And yeah, if if you're a small business, I know that that's puts companies under pressure as well. So it's just something to be aware of. Yeah, if you're ramping up and you're increasing, you could be doubling your volume and so you're buying twice the amount of material. Mm but if you're not getting that cash back in, that can put you under serious pressure. So it is worth considering. And then the stock value as well, right? Your inventory, your whip, all your values going through the roof. And if you're not making money in it can put you under short or medium term financial stress. speaker-1: Yeah, you're right with that. The the cash flow aspect is so critical because if you're experiencing growth, you're not only spending money on on more personnel, potentially more equipment, more material, more of your outside processes. You know, all those items that really have to be paid up front for for a group like ourselves. Just being totally transparent. I feel like a lot of times we're we're a bank. You know, we're just the small company, but we kind of get utilized like a bank because we've got to pay for all these things up front. send in a product and then wait thirty, forty five, sixty, ninety days to get paid. And so our money is just always sitting outside somewhere else. And so that's a that is definitely a challenging part. So speaker-0: As a business you maybe get used to that over time, right? But if you go through a period of steep growth, I think that can put the added strain on it. speaker-1: Yeah, it certainly can. And I mean and you can do some things to help mitigate that as but especially like like you said, I mean, once you're in that cycle, it's better. It's still challenging because, you know, like if we receive a purchase order and the product's not due for, you know, a couple of months, well, I've got to now be strategic. And this kind of goes back to that ERP system. I really want to bring that material in to us as late as I possibly can. I don't want it sitting on my floor any longer than I have to. Because once it hits my floor, I got thirty days to pay for it, right? So where it really hurts us, I would say, is when I have products that have a lot of outside services. There are some of our specialty products that I may need twelve weeks to do multiple outside processes. So if you think about those numbers, if I've got to have it machined, let's say, if I've got to have the product out at my outside processing twelve weeks before it's due to my customer, and then that's another 90 days after that. So what is that, six months? So we're looking at that's six months before I'm gonna get paid. That's just from the date I sent it to outside processing. I needed the material another four weeks ahead of that. So we're looking at what I'm bringing into my shop is gonna be seven months before I'm gonna get paid. And guess what? Insurance has to be paid, any rents, employees, benefits, taxes, all of those things. I mean, we're having to to do that. So Yes, getting in that cycle helps. But like you said, anytime you're looking and dealing with growth, I mean, you've got to be able to finance that. And that is a very, very difficult point. So be just be aware of that. And again, like I said, go check out Mike Payne and by the numbers. He definitely drives that home all the time. But I think ⁓ just to kind of touch one more time on the forecasting, you know, that is important if you have customers that will Work with you on the forecasting, that's great. Or if nothing else, make sure that you're looking at your current orders and you can forecast those out a little bit. So that way you can help prevent yourself from having to make reactive decisions. You can be more strategic in your decisions and not have to react so much. So I think that kinda is gonna take us into the last point that we wanted to touch on, and that's gonna be your leadership and your ownership, really making sure that we are defining those roles. We're assigning ownership and accountability. We touched on this a little bit earlier. Making sure that you've got things in place so that people know what their responsibilities are, people know what they are accountable for, and making sure that you as the leader of the shop is not the only one that's accountable for things and making sure that you're not that bottleneck that everything is having to come through and removing that decision bottleneck of you, making sure that you empower other people to make decisions and that you equip them with the ability to make decisions and that they're not relying upon you to to run that whole business or else. You know, it's it's not only gonna exhaust you, but it's also gonna slow your business down and and really stop that growth before you you're even able to to get started. speaker-0: Yeah. If everything depends on you to run the business, then you're not really ready to scale your business, right? Your business can't scale if everything goes from you. If you can't step out of your business for a week and the business go on, that's a very dangerous place. Jason, it's about empowering your team, right? How do you trust your team to make decisions in the business? I say to my team sometimes, I can forgive a mistake, right? If someone makes a decision and it's a bad decision, well, we can learn from a bad decision. speaker-1: ⁓ yeah. speaker-0: But if a team just fails to make a decision, the cost of that is worse. Right. The cost of indecision into the business. Not making a decision can hurt me far more. We're not learning, but we're just losing time and productivity as a business. speaker-1: Yeah, and I think that's an important part for you as a leader is to make sure that you're you're working with your team for them to make decisions as you go. You know, I get the question all the time, well, what do you want to do? And my response a lot of the time or most of the time is, well, what do you think? Right? Because especially if we if we go into meetings or we go into projects, I probably have a really good idea of what I want to do. In fact, we were working on a project this past week on the floor. I'm out there with the guys. And I know exactly what I would choose to do, but what I want to do as a facilitator, as a leader, I want to ask questions, I want to get them thinking and I want them to make the decisions. Now, I probably want them to make the decisions that I want them to make, but at the end, I don't want to tell them what I want and I want them to figure it out on their own. Right. I mean, I don't know if if if that's coming through like I want it to like speaker-0: Coach it out of them. Coach your answer from them without telling them, right? speaker-1: Yes, I'd like to definitely like speaker-0: You're specializing in mind control, right? speaker-1: Yes. It is so important. Because I think the the other aspect of that though is it really gets a buy in from them. I mean, I'm not trying to be manipulative at all, but I really want to keep my ideas and my thoughts to myself until they've had the chance to give their ideas and their thoughts. You know, I'm going to also share what I've come up with, but my goal is if I've got six things that I've that I've think that we need to do, my goal is for them to recommend all six of those things. But if they get it four of those things, then great, I can maybe add in the other two things. But that gives them really a sense of ownership and a sense of pride that they can take, you know, because it was their idea, it was their thoughts. And so I mean, that's again, I think that's how you start to develop thinkers inside of your organization. And you you empower them to come up with ideas and come up with thoughts and make it a point that you don't make every decision. Ask your team like what do you want to do and empower them to You know, start making decisions without you. speaker-0: Shows the maturity of your management team. And as your business is hoping to grow, you need that maturity there. If you have to go and hold your production manager's hand through every decision and make sure that it's done, it's going to be very, very hard to grow and scale that business. Now, maybe that will come with time, but that trust and that person's confidence will only come with time if you allow it and you promote it and you encourage it. speaker-1: Mm-hmm. Yeah. Yep. You're right. So as we wrap this up here, you know, we we covered our capacity planning. So that's our machines, people, processes. We looked at when you need to add machines versus adding personnel or a shift. Making sure you focus on your supply chain. Don't leave that out. That's a critical part as far as growth is concerned. Being aware of your forecasting and managing your cash flow. Again, those those spikes and growth can really eat into that cash flow. And as leaders, you know, taking that ownership role and then making sure you're giving that ownership role. That's gonna be a really critical part. So scaling that manufacturing business, it's it's not just about getting bigger. It's about getting stronger. It's about getting more robust. It's about having a system and having the people in place as a foundational part that you're building on that you can grow, right? You're not gonna go put up a skyscraper just by pouring a pad of concrete that's six inches in the ground, right? You're gonna put those beams down into the ground. We're gonna root ourselves. So that way as we grow, we've got the strong roots, those strong beams in the ground, and we're gonna able to hold and we're gonna be able to weather the storms. When those things align, that growth becomes controlled instead of chaos. So that's it for this shift on the manufacturing blueprint. I want to say thank you for joining us today. If you've got value from this episode, make sure that you follow us or you subscribe on Apple Podcasts or Spotify or wherever you listen. And if you could leave a quick rating review, it really helps us out and helps us to grow the show. So if you know another manufacturing leader who's dealing with this, share this with them. And ⁓ remember, we're not just talking shop, we are giving you the blueprint to build it. So go build it. We'll see you next episode.