Making profitable outsourcing decisions: a new make vs. buy study sheds light on the latest trends in domestic and global outsourcing of wood components.Because of the importance of outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. to the wood products industry, the Wood Component Manufacturers Assn. has periodically conducted "make vs. buy" studies to measure outsourcing trends. The first WCMA WCMA Williams College Museum of Art (Williamstown, MA) WCMA Western Canadian Music Awards WCMA Working Capital Management Account WCMA Wood Component Manufacturers Association WCMA Window Covering Manufacturers Association make vs. buy study was conducted in 1984 as a follow-up follow-up, n the process of monitoring the progress of a patient after a period of active treatment. follow-up subsequent. follow-up plan to the now Kitchen Cabinet Manufacturer Assn.'s benchmark research, "Assembly Versus Integrated Operation of Kitchen Cabinet Manufacturers," conducted in 1966-70. At that time, kitchen cabinet manufacturers wanted to know if it was more profitable to outsource wood components or make them in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. . The KCMA KCMA Kitchen Cabinet Manufacturers Association study showed that cabinetmakers who outsourced more than half of their components had an average 25% return on net worth compared to only 12% for those integrated factories that produced most of their components in-house. The 1984 WCMA study conducted by the accounting firm of Touche-Ross, and a 1993 study conducted by Vance Vance is the name of several places in the United States of America:
Earlier this year, the WCMA once again commissioned Vance Research Services to perform a new study. It is the first comprehensive, industry-wide study to examine outsourcing from both a domestic and global perspective. Because this study was conducted online, the survey questionnaire was sent to more companies, covering a wider variety of wood products than the previous studies. The survey was e-mailed to 3,953 companies who are subscribers to Wood & Wood Products or Custom Woodworking Business. A total of 304 companies completed the entire survey. Companies from all major wood product categories--cabinets, furniture, millwork, etc.--were represented. Like the previous studies, the 2006 outsourcing study projects that North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. wood product manufacturers will continue to outsource more of their components and products to outside suppliers. Even with downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing , woodworking companies that outsource can maintain and even increase annual sales volumes by relying on multiple suppliers. Outsourcing has stretched out the good times and minimized the bad times in the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. woodworking industry. The new study, like its predecessors, concluded that companies that outsource tend to know their costs, have tight control on production and focus their resources on what they do best, allowing them to better succeed in today's highly competitive global market. 2006 Study Highlights The following subheads and bullet points bullet point n → punto; bullet points → elenco sg puntato , plus the accompanying charts, highlight findings of the 2006 outsourcing study. Study Demographics The attributes of people in a particular geographic area. Used for marketing purposes, population, ethnic origins, religion, spoken language, income and age range are examples of demographic data. * One-quarter of respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy. primarily manufacture residential cabinets. * Nearly three-quarters Noun 1. three-quarters - three of four equal parts; "three-fourths of a pound" three-fourths common fraction, simple fraction - the quotient of two integers three-quarters npl → of respondents work in companies with less than 50 employees. * All U.S. geographic regions are represented in this study, as well as Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . * Sixty-two percent of respondents are Wood & Wood Products subscribers and 38% are CWB CWB Canadian Wheat Board CWB Central Weather Bureau CWB Canadian Welding Bureau CWB Causeway Bay (Hong Kong) CWB Corpus Workbench CWB Certified Wildlife Biologist CWB Child Welfare Board subscribers. Outsourcing Components * Sixty-two percent of North American woodworking professionals currently outsource components, primarily from the U.S. and Canada. * Woodworking professionals estimate the dollar value of wood component parts they purchased in the fast 12 months as $901,069, on average. * Half of woodworking professionals indicate the top reason preventing them from outsourcing more/any components is because they want control over production. Top 10 Reasons for Outsourcing Components * Outsourced components cost less * Do not have the manufacturing capabilities or space * Take advantage of others' expertise * Increase productivity and efficiency * Save time to focus on more important things * Reduce capital expenditures * Better quality * Reduce inventory and overhead * Concentrate on product development * Expand variety of products In-House Manufacturing * On average, North American woodworking professionals manufacture 58% of their wood component parts in-house. * Two years from now, woodworking professionals estimate 68% of their wood component parts will be manufactured in-house. * Drawer A person who orders a bank to withdraw money from an account to pay a designated person a specific sum according to the term of a bill, a check, or a draft. An individual who writes and signs a Commercial Paper, thereby becoming obligated under its terms. fronts (53%), plywood plywood, manufactured board composed of an odd number of thin sheets of wood glued together under pressure with grains of the successive layers at right angles. Laminated wood differs from plywood in that the grains of its sheets are parallel. parts (49%), cabinet doors (47%), drawer boxes (47%) and drawer sides (46%) are the top five wood components that woodworking professionals manufacture in-house. Top 10 Reasons for Producing Components In-house * Control quality of product * Produce one-of-a-kind custom products * Products too specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. to outsource * Use existing capacity * Quantities too small to outsource * Lead time required to outsource * Capability not available outside * Less expensive to make in-house * Difficult to find quality sources * Lack of reliable sources U.S. and Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. Component Suppliers * On average, North American woodworking professionals purchase 34% of their wood components from U.S. and Canadian suppliers. * Two years from now, woodworking professionals estimate 37% of their wood components will be outsourced to U.S. and Canadian suppliers. * Cabinet doors (53%), mouldings and millwork (53%), drawer boxes (42%), solid rounds and dowels (36%), and drawer fronts (33%) are the top five wood component parts outsourced from U.S. and Canadian manufacturers. * Consistent quality (49%), good relationships with suppliers (49%) and better control over costs (48%) are woodworking professionals' top reasons for buying component parts from U.S. and Canadian manufacturers. * Product quality, price and dependability dependability - software reliability of supplier are the most important factors to woodworking professionals when selecting U.S. and Canadian suppliers. * The Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the (75%), trade journals (68%), trade shows (68%) and buyer's guides (62%) are the top sources woodworking professionals are Likely to use when Locating potential U.S. and Canadian suppliers of wood. Foreign Component Suppliers * On average, North American woodworking professionals purchase 7% of their wood component parts from foreign suppliers. * Two years from now, woodworking professionals estimate 30% of their wood components will be from foreign suppliers. * Mouldings and millwork (23%), solid rounds and dowels (21%), plywood parts (19%), stair stair n. 1. A series or flight of steps; a staircase. Often used in the plural. 2. One of a flight of steps. [Middle English, from Old English spindles and newel posts (14%), and turned table and chair Legs (14%) are the top five wood component parts outsourced from foreign manufacturers. * Price (37%), better control over costs (28%) and the ability to add new products (19%) are the top reasons woodworking professionals buy component parts from foreign suppliers. * Product quality and price are most important to woodworking professionals when selecting a foreign supplier of wood components. * The Internet (42%), agents and brokers (37%), trade journals (37%), trade shows (37%) and buyer's guides (35%) are the top sources woodworking professionals are Likely to use when Locating potential foreign suppliers of wood. Rough Mill Use * Slightly Less than one-quarter (24%) of woodworking professionals' companies have their own rough mill; an additional 4% say they plan to add a rough mill within 12 months. * Among those who currently have a rough mill or plan to add one in the next 12 months, 56% would consider purchasing components from outside suppliers if their rough mill reached full capacity. * Among those who would consider purchasing components from outside suppliers if their rough mill reached full capacity, 94% would most Likely purchase from U.S. and Canadian manufacturers. * Slightly over three-quarters of woodworking professionals do not anticipate expanding their rough mill capacity within the next two years. Financials * On average, woodworking professionals indicate that their companies' gross margin is 21%. * Woodworking professionals indicate an average 12% return on equity for their company. Read the Full Report The entire report is available on the WCMA's Web site at no cost. To access it, Log onto www.woodcomponents.org See .org. (networking) org - The top-level domain for organisations or individuals that don't fit any other top-level domain (national, com, edu, or gov). Though many have .org domains, it was never intended to be limited to non-profit organisations. RFC 1591. and click the NewsFlash section. By Steve Lawser Executive Director Wood Component Manufacturers Assn. IWF IWF Interworking Function IWF Internet Watch Foundation IWF Independent Women's Forum IWF International Weightlifting Federation IWF Internationaler Währungsfond (German; IMF) IWF Independent Wrestling Federation SEMINAR EXAMINES PROFITABLE Being competitive in today's tough global marketplace requires a regular review of all manufacturing processes, including determining whether some production should be outsourced. Outsourcing can make sense for many wood products businesses. Determining which products offer the greatest opportunities for outsourcing to improve productivity and profitability is a key decision. Outsourcing used to mean buying from local or domestic suppliers. But, today, it can mean buying products from global suppliers as the term "offshoring
Offshoring describes the relocation of business processes from one country to another. " indicates. Rising material, production costs and global competition have made manufacturers in all industries work harder to keep costs down. One of the best strategies for cost control is outsourcing some part production to specialists. Due to a strong interest in outsourcing among woodworkers, the Wood Component Manufacturers Assn. cosponsored a seminar, "Profitable Decision-Making decision-making, n the process of coming to a conclusion or making a judgment. decision-making, evidence-based, n a type of informal decision-making that combines clinical expertise, patient concerns, and evidence gathered from When Outsourcing Components & Products," at the recent International Woodworking Fair in Atlanta. The seminar was attended by nearly 300 woodworkere who wanted an update on the latest trends in outsourcing components and products. A panel of experts, each with more than 20 years of experience in the wood products industry, shared their thoughts and experiences on outsourcing and offshoring. They outlined the characteristics they look for in a supplier and how they develop relationships to make their partnerships work. The panelists also discussed how outsourcing has benefited their companies, as well as some of the pitfalls to avoid. The seminar was moderated by Steve Lawser, executive director of the WCMA. Rich Christianson, associate publisher and editorial director of Wood & Wood Products, presented the results of the latest outsourcing trend study (see related story). He noted that outsourcing and off-shoring can only be expected to become more important tools for North American wood products manufacturers to use to remain globally competitive. Reed Felton, president and COO (Cell Of Origin) See mobile positioning. of TJ Hale, discussed how his company outsources various components for his store fixture units In plumbing, a Fixture Unit (FU) is equal to one cubic foot of water per minute. A Fixture Unit is not a flow rate unit but a design factor. One cubic foot of water is roughly 7.48 gallons. A Fixture Unit is used in plumbing design for both water supply and waste water. from a wide variety of suppliers, including China. Most of the components TJ Hale outsources are made of metal, glass and other non-wood materials that the company does not have the capability to make in-house or find domestically for a lower price. Walt Gahm, vice president of manufacturing of Kitchen Kompact, detailed how his company outsources 100% of its components for final assembly and finish at its Jeffersonville, IN, plant. Gahm discussed how his company relies on dependable companies that have supplied them with quality components made to their exact specifications. Kitchen Kompact has formed long-standing relationships with its key suppliers for their mutual benefit, noting that reliability and dependability are more important than just price. Gahm also explained how his company-wide employee incentive plan has motivated mo·ti·vate tr.v. mo·ti·vat·ed, mo·ti·vat·ing, mo·ti·vates To provide with an incentive; move to action; impel. mo employees to achieve very high levels of productivity. William Smith William Smith may refer to: People
Dave Groom, international manufacturing specialist for the furniture industry, has extensive woodworking experience, which has included an active role in outsourcing from both domestic and global suppliers for several leading furniture manufacturers. He provided a historical account of Universal Furniture to illustrate the evolution of the global furniture industry and outsourcing. Does your company currently outsource components? Base 304 No 62% Yes 39% Due to rounding, pie equals more than 100% Note: Table made from pie chart. Please estimate the total dollar value of wood component parts purchased by your company from outside sources in the past 12 months. Based on those who currently outsource components [187). Due to rounding, graph does not equal 100%. Mean = $901,069 Less than $500,000 73% $500,000-$1,999,999 14% $200,000-$4,999,999 8% $5,000,000-or more 4% Note: Table made from bar graph. Considering the wood component parts that your company currently uses, what percentage are: Mean Summary Manufactured in-house 58% Manufactured by U.S./Canadian suppliers 34% Manufactured by foreign suppliers 7% Based on those who currently outsource components [186]. Due to rounding, graph does not equal 100%. Note: Table made from bar graph. Does your company have its own rough mill? Base 304 No, but planning to add one in the next 12 months 4% Yes 24% No 72% Note: Table made from pie chart. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion