What is your time worth?

[Ron Wenrich]

The bottleneck in a sawmill is supposed to be the headsaw.  All other operations are support.  When things stop at the headsaw, all production stops. 

Time and motion studies come up with areas that cause problems.  If the piece of equipment is productive, then that's what you want.  If it isn't producing, then you have a list of things causing it to be down.  That can be mechanical, lack of material, backup, etc.  Finding the cause downstream or upstream from equipment will yield the results.  Small operations usually know this without a full blown study, but its something that's simple to implement.

You can also take this to other production centers, like a planer, processor, etc.  Most of it is common sense.  Workers can usually tell you what the problem is.  Management is supposed to figure out how to fix it and have things run efficiently.

For a small operation, there are other things that eat up your time, since quite often management and labor are the same thing.  Taking excessive time to tend to customers or picking up logs or doing deliveries takes away from sawing time.  Hiring those things out is sometimes a good alternative.

[GeneWengert-WoodDoc]

You can saw all day, but you do not make any money until you sell the lumber.  Therefore, although I do not disagree about the bottleneck issue, I do believe we need to spend more time now than ever before on marketing.  And marketing includes developing guidelines for the mill's production system to make sure that the most valuable lumber is properly manufactured and maximized.

I wonder if Ron W would be willing to modify his statement about the bottleneck being the headsaw, to state that it is the most expensive piece of equipment...in a large sawmill, often it is the resaw that is the most expensive and is properly the bottleneck.  Obviously, this would be a large mill.

Nevertheless, close examination and improving the bottleneck, as Brucer and Ron both state is very important.

[Cedarman]

In my operation I think of it as 3 segments, log supply, processing, sales and marketing.  In contrast to most operations, sales and marketing is the easiest part.  I turn work away.  Good work.   I have chosen not to expand processing to keep up with sales.  I usually turn away low profit sales for higher profit sales. In each of the 3 segments there are bottlenecks.  I may have lots of tree length logs, but cannot buck them up fast enough or have the wrong length or wrong diameter to quickly finish the order.  Mud may be a problem moving material.
But most bottlenecks occur in processing.  I try to have buffers in different places so that if one machine stops working another  can go for a while on the buffer material.  I also have many things that employees can do if a machine goes down.  You want to do the most profitable thing or the order closest to deadline, but I do my best to have plan B, C, D, etc to use all available labor.
Efficiency is not our forte since we make so many different products.  We give up some efficiency in order to make small batches, but the margins are high enough to compensate.

My overall objective is to balance a steady log supply with consistent production to supply the most profitable markets.

You cannot remove all bottlenecks.  If you remove one, the next one comes into play and so forth.  Working to eliminate bottlenecks makes for better efficiency.  Even though we are not efficient compared to other mills doing commodity work, we do our best to be as efficient as possible.

[Brucer]

To clarify my point, the goal is not to increase production for the sake of production. The goal is to increase throughput, the difference between the money earned from the sale of the product and the cost of the purchased materials used in the product.

Inventory is not throughput -- it hasn't been sold. In manufacturing inventory is a liability. How often to we see valuable wood sitting around deteriorating? You should keep only enough inventory to act as a buffer that protects your constraint (aka, bottleneck).

We should always have our eye on throughput. Can we make more money with our existing  equipment by selling a higher end product? Can we make a minor change to the product to make it sell more easily? What happens if the market changes? What happens if the log supply changes.

So about this term "bottleneck". It's easy to relate it to production. But it can also be things like log supply or the market. I can even be a business policy. Those are things that we generally don't thing of as bottlenecks. The term "constraint" is often preferred. A constraint is whatever limits your ability to generate throughput.

Automatically assuming that the headsaw is the bottleneck, or some other piece of equipment is the bottleneck can get you into trouble. It can blind you to the real bottleneck (or constraint).

Richard, it's clear that marketing isn't a bottleneck for you, and I'm pretty sure that log supply isn't, either. You're using buffers to protecting the bottleneck. You're prioritizing the work so you maximize on-time delivery. You say that efficiency is not your strong point, but it shouldn't be anyway. The drive for "efficiency" always gets businesses into trouble.

There's just one little thing that I wonder about. You seem to suggest that there are more than one or two bottlenecks in your operation and they tend to move about. This shouldn't be the case. When bottlenecks move around, there is usually and underlying bottleneck (or perhaps constraint is the better word).

[Ianab]

There's just one little thing that I wonder about. You seem to suggest that there are more than one or two bottlenecks in your operation and they tend to move about. This shouldn't be the case. When bottlenecks move around, there is usually and underlying bottleneck (or perhaps constraint is the better word).

Producing different products from different log supplies?

One wants rough sawn green 6 x 6 posts.
Next guy wants 4 x 1 kiln dry T&G panelling.

First scenario it might be a bottleneck getting logs staged up to be sawn?
Second scenario it might be kiln space to get the wood dry?

Those are just possible examples. When you are producing the same product week after week it's easier to work out those bottlenecks. But for a smaller operation, that is using it's size and adaptability to cater for markets the big mills can't service, it gets more complex.

You chase those smaller sales because you are able too, and aren't competing with larger mills in a "commodity" market, where you will loose every time.

Ian

[Ron Wenrich]

I guess my definition of a bottleneck is that it slows down the product flow.  The inflow is sufficient to keep the production moving and the output is not impeded by other operations.  From that standpoint, a resaw or any piece of equipment or business policy can act as a bottleneck, since it slows operation.  But, it doesn't necessarily mean that its a bottleneck in the operation.  A surge deck going to resaws often take care of them being a bottleneck on the headsaw. 

The management is supposed to match the mill to the log supply, and match the sales to log supply.  There isn't any use for Cedarman to take or pursue orders for walnut when all he saws is cedar.  Most of the medium sized mills I've been associated with have standing orders for most, if not all of their lumber.  Most do not jump from marketplace to marketplace trying to squeeze out a few more cents.  It isn't cost effective, especially when there's a downturn in the market.  Most of the mills have working managers, not office jockeys.  They match lumber sales to log supply and produce a product at a profit. 

The reason I look at the headsaw as the bottleneck is because it is the main production center.  The goal is to make it run as efficiently as possible.  Cutting 1/2" pallet stock on the headsaw is not efficient, and is a bottleneck on the entire operation.  Management should either find another way to produce the stock, or reject the order. 

Also, not every log that comes into a yard should be destined for the saw.  Many mills sell off the veneer instead of sawing it.  Management is matching log supply to sales in the most efficient and profitable way.  Logs to small to put into the mill to be efficiently manufactured should also be removed from the product stream.  It creates a bottleneck at the headsaw by excessive turning for little product.  A better stream is as pulpwood, chips, mulch, firewood or other market.  Again, matching log supply to available markets.  I do know of mills that won't bring logs out of the woods that won't match their markets.

Its also important to look at those high dollar items.  Sometimes the cost of production is too high to justify the production of them with the current setup of equipment.  That's what creates those niche markets for smaller producers. 

I remember about 20 years ago when someone in the hardwood business had a bright idea of buying just dimension stock.  I believe they had a microwave kiln.  This was stuff that mills were throwing into the chipper.  There was no NHLA grade, but it was basically small pieces of wood that could be kiln dried, and easily converted over to panel stock.  The price was comparable to FAS, since it was all clear wood.  Every mill that tried it lost money.  High value, low return.  The idea died within a few years. 

[woodmills1]

$383 today

no log cost

one blade

overhead coverd I say profit

will sharpen that one blade tomorrow morning
watch out :P

[drobertson]

woodmill1, this is good news man, ;D  Days like this come around, and they are sweet to be sure,  happy for you!  I have to ask, was it a good paying job? or just allot of sawing?  not that it matters, just wondering,   david

[Schramm]

I dont want to sound stupid but how can you put a hourly figure to your time unless you are cutting for others?  To put a figure cutting wood that will then need to be kiln dried and then stored before sale is not realistic.  My guess is the guys that own the portable units are doing this for profit and the guys that own the smaller units were either doing this as a hobby or for the wood.  Maybe I am wrong but I wasnt thinking that there was a lot of profit in doing this with a small unit.  When I bought the LT10 I bought it based on the idea that I was going to do it for the wood and never thought about making money with it.  Now I am starting to realize that with a full time business I do not have time for a mill when I have to run to get logs, then cut it down, then run it to a kiln, then run back to get it and then store it.  So far it is still sitting on the pallet that it was sent to me on and I am more then likely just going to sell it.  For me my time is worth way more then the amount of money I would be saving per bf after running through all the headaches.  I can see profit in time for a guy that can cut for others while cutting for himself as well.  For the craftsman building his own furniture/cabinets I can defiantly see the use of this and if he is doing everything his self then the profit would come in time from his savings on the wood that he would have to buy.  For me I can get nice wood ready to go from a local mill (1 hour from me) for a cost of $1.25 bf for pine, $1.35 for poplar (the 2 I use the most) and for anything else it is on per need basis.  What I like about the mill is that I can give them a punch list of things I will need 2 months from now for my house (big bunch of quartersawn white oak) for my entryway from the kitchen to the living room and they have it ready when I need it.  I wish I had time for everything but I dont and I guess that is where I need to make a decision on the mill.

Rob

[drobertson]

Rob, not sure how to respond to your last post, so please take this with a grain of salt.  If you have the mill, keep it, if you can afford to do so, I'm thinking you can.  Take your time with with any projects you might have planned to use it for, and at some point find an area, with a covered shed of sorts to store it, set up ready to run.  In your travels, thinking you have a flatbed trailor, keep an eye out for short pieces of any variety that might be out for disposel.  And see about picking these up.  Try your hand at it when time permits, worst case senario, maybe not worse case, but possibly have it set up for a rental or lease option.  Just hate to see another good brain storm you might have had go for naught,  I'm just rambling, but I think you should give it a try, weather will turn better in a month or so, I think you would enjoy the break,    david

[Schramm]

David,

Your right this has nothing to do with cash flow.  I dont buy anything if it is going to hurt me financially.  I will say that I have thought about keeping it but I think that I made some miscalculations on my time.  I thought that it would be a lot easier to find the time for this but it has proven not to be.  I just bought my 2nd Woodmaster which for me is a great investment and one that I can make a lot of additional wood with but the mill just doesnt seem to me like a good fit for me.  Cost of wood is far less then the cost of milling, driving and kiln drying, driving again and then storing.  I can drive and buy 1000 bf of pine ready to go and within 2 days have a ton of trim and that is what I need to do. 
I guess to explain it better I work nearly 100 hours a week in my slower part of the year and then in my busiest time of the year you can add 20 hours onto that easily.  I know what you mean by keeping it in hopes but honestly buying and working is easier for me and the only way that I can mill wood myself is by stopping what pays the bills.  I will give it some thought though.
Rob

[Ianab]

That's fair enough...

You have done the figuring and worked out that you can make more money per hour processing pre-sawn boards into trim, than you can collecting and sawing logs with a small sawmill. Fair enough. Leave the logging, trucking and sawing to someone that's specialising in those steps.

This is a common enough problem if you are a small operation. You end up with a heap of machinery, but can only operate each one for a percentage of the time. Not very efficient. Now as a hobby thing I can do everything, starting from a standing tree, though to a piece of furniture. Not efficiently, but I can do it. But if I was doing this as a business I'd be looking to specialise. Just saw milling, or making furniture (buying wood from another sawyer) or, like in your case, processing wood into value added material.

But it's about finding the niche (or niches) that you can make money in. Markets also change, and you need to be able to adapt to them.

Ian

[drobertson]

No doubt about it, time is money, sounds like your basket is full, that is a good thing!  Wish we were closer, I would like to see your operation,  take care,  david

[Schramm]

Actually my business has nothing to do with wood at all, it is all glass and mirror all the time.  I own a very niche business which I have worked hard to build.  Basically just make antique mirror for the rich and deserving.  I love woodworking but dont always have time for it.  When I do i really like making molding for my frames and I sell quite a bit of it as well.  Most of what I sell is a replicate of something in someone elses home.  Even as a new thing added to my mirror business it has rapidly grown in the last 3 months to where I felt the need for a 2nd Woodmaster 718.  The customer sends me a piece of there molding and I remake it for them and then dye it and stain it to match the original.  Lady picked up 250 ft of base today and when she saw the replicated wood, she realized how bad hers was and said she will have me re-do it all.  It is so easy to just call the mill and say get 400' of whatever ready for me and then drive and pick it up.  My thing is I am a finisher and have been for 25+ years, dont really know anything else other then mirrors.  Below is a picture of what I mean:



  

  

  

 

[Schramm]

No doubt about it, time is money, sounds like your basket is full, that is a good thing!  Wish we were closer, I would like to see your operation,  take care,  david

David,

Where are you located?  I stay in Branson MO 2-3 times a year.  Branson is one of my favorite places and this year I am planning on buying a 30 acre lot if I can get the old timer to come off it!  Something about the Ozarks.  My wife and daughter like it as well but this year with the remodeling I dont know how I am going to break away.

[Brucer]

Rob, I know exactly where you're coming from. I was at a WM demo 2-1/2 years ago and a local tree service owner I know ordered an LT40 hydraulic while I was there. I kinda wondered how he was going to fit that in with his tree service business because it keeps him and 4 employees pretty busy.

I ran into him 4 months later and he told me he'd returned the LT40 within the 30 day warranty period. He replaced it with an LT15. He said he really wanted the hydraulics but realized he was not going to have the time to use it too its capabilities. I know he kept the LT15 because I received a credit from WM half a year later. He'd listed me as being the person who demoed a Wood-Mizer to him.

I just saw the guy last month and asked him how he liked the saw. "I sold it", was the reply. He had never unpacked it. Just never enough time to get to it.

[Brucer]

I guess my definition of a bottleneck is that it slows down the product flow.  The inflow is sufficient to keep the production moving and the output is not impeded by other operations.

I guess that's why "constraint" is a better word to use. It doesn't have a lot of preconceptions associated with it.

So ... the constraint is the one thing (maybe two) that limits the amount of money that the business can generate though the sale of the product.

In a lot of cases where a machine is slowing down the flow of product, it isn't product that is being destined for immediate sale. I have been in a few plants where products were being made and put into inventory in order to keep people working.

I was in one plant where the warehouse manager wanted to build a second warehouse because he had no space left. Instead, management sent in a supervisor with a mandate to remove anything stock item that hadn't been used in the last 10 years. And after chucking out $6,000,000 in inventory that was completely obsolete, they had 3/4 of a warehouse sitting empty .

It isn't always as extreme as that. People will be assigned to make stuff for inventory knowing that it will eventually sell. But try stopping that work for a couple of days (an yes, pay the people for standing around, or get them to clean up the yard, or something). Pretty quickly you'll find the real constraint in the plant.

Once you've found it, you can concentrate on making the products that sell and generate the maximum income.

Producing different products from different log supplies?

One wants rough sawn green 6 x 6 posts.
Next guy wants 4 x 1 kiln dry T&G panelling.

First scenario it might be a bottleneck getting logs staged up to be sawn?
Second scenario it might be kiln space to get the wood dry?

Those are just possible examples. When you are producing the same product week after week it's easier to work out those bottlenecks. But for a smaller operation, that is using it's size and adaptability to cater for markets the big mills can't service, it gets more complex.

I don't think the product mix explains it. The product mix may look complex, but looking at it from another perspective you'll probably find even a small custom business is inherently simple. Why? Because when you set yourself up to produce a variety of different products, you tend to structure your production facilities to work that way.

[Schramm]

Well another part to this, there is 1 local company that will kiln dry wood if I was to cut it and he is always a minimum of 5 weeks out.  That means that at best if I cut today it would be 10-20 weeks for me to do anything with it depending on species.  However if I shoot over the mill I can pick up 200' of this and 400' of that and come right back to the shop and after letting the wood acclimate for 4-5 days can be making molding meaning I can take it from order to finish within 2 weeks.
My mirrors will always be my priority as it is my bread and butter and I have constant work generated from it without paying advertising.  I get nearly 30 calls a day from customers all over the world and I am constantly swamped.  Fortunately I have a fabricator that does a lot of my labor for me allowing me to talk on the phone.  But then again there are jobs like the one I am doing next week which will be 4 days of sandblasting mirrors for a lighting company at $100 per hour, kinda hard to turn that down to cut wood.

Rob

[Ianab]

I don't think the product mix explains it. The product mix may look complex, but looking at it from another perspective you'll probably find even a small custom business is inherently simple. Why? Because when you set yourself up to produce a variety of different products, you tend to structure your production facilities to work that way.

A small business has more flexibility to adapt and produce different products.

This doesn't mean that "Constraints" don't exist. In my example, which product would make more money? I don't know as we don't have all the figures. Maybe you stick to producing both, but which one should you put your marketing effort into?

Unless you have a handle on the numbers, costs per hour, or per unit, you are only guessing. You might be loosing $1 on every widget sold. Making more widgets wont solve that, unless you make them more efficiently. But how do you do that?

Look for the constraints.

Doesn't matter if you are a one man band, or have 100 staff, same principle.

Ian

[Ron Wenrich]

I guess constraint is as good of term.  We had a guy who decided he was going to constrain production by slowing down.  He found out in pretty short order, he wasn't the constraint, since the amount of work didn't slowdown, it just backed up. 

Inventory is always a problem when you cut on speculation.  It will eventually sell or get thrown out.  One generates a profit, the other a loss.  The longer it sits in inventory, the lower the profit.  I've never been of the ilk to saw on speculation. 

Small orders for larger operations isn't necessarily a constraint.  It does take more time to handle them, since you have to keep the lumber separate, and you have more one on one time with the customer.  But, to cut an order of a 100 bf or less is usually not much of a problem, when we're sawing that species.  Sometimes its just a matter of putting a log or two on the deck, then take the 10 minutes it takes to saw it up.  Quite often, I can give a better product to the small orders because I have a larger log inventory to select from.  I'm not constrained by log supply nor constrained by lumber that won't fit the order, as there are other places to put that lumber.

Milling isn't for everyone.  It always sounds great.  I'll get free logs, or I'll custom saw, or I'll do it as a hobby.  There's a lot of work in it.  Some do it for enjoyment, some for extra cash, some for a living. 

[Schramm]

This is a good conversation and one that I am glad that I saw.  I guess when I was buying it, I assumed that the time wouldnt be an issue and that I could cut the wood and build a kiln and do it all right here.  While I would love to do everything myself, it is not realistic.  I have the same issues with my mirror business, yesterday I turned down a job sandblasting 1000 pieces which they wanted to pay me $100 per piece based on there time frame and how busy I already am.  To me taking on a job that I know is too big for me is not smart on my part as I pride myself on beating all deadlines and there was no way short of hiring 10 employees to get that done.  While it is easy to get caught up sometimes in the money aspect of business, time constraints or lack of space to complete jobs can also be an issue and one that you have to take a honest look at.  I know myself and I know how much I can get done and what time it will take to do it.  My shop time is $100 per hour and my design time is the same and the way I figured that job was 1 piece was going to take 1 hour of my time for cutting, setting up, sandblasting, cleaning, pulling vinyl and then re-crating so the overall job would take 1000 hours of labor time (in a perfect senerio).  That would mean that I would have to work 24 hours a day 7 days a week for 42 days with no breaks to complete that job.  Pissing off a customer cost me a lot of new business and not meeting deadlines is even worse.

[LeeB]

Could it be blasted before cutting?

[roghair]

This is a good conversation and one that I am glad that I saw.  I guess when I was buying it, I assumed that the time wouldnt be an issue and that I could cut the wood and build a kiln and do it all right here.  While I would love to do everything myself, it is not realistic. ...

Rob, don't forget you bought it for rebuilding your houses and also bought the logs, the land, the kiln, the logrite etc.

https://forestryforum.com/board/index.php/topic,64222.msg956913.html#msg956913

I dont want to sound stupid but how can you put a hourly figure to your time unless you are cutting for others?  To put a figure cutting wood that will then need to be kiln dried and then stored before sale is not realistic.  My guess is the guys that own the portable units are doing this for profit and the guys that own the smaller units were either doing this as a hobby or for the wood.  Maybe I am wrong but I wasnt thinking that there was a lot of profit in doing this with a small unit.  When I bought the LT10 I bought it based on the idea that I was going to do it for the wood and never thought about making money with it.  Now I am starting to realize that with a full time business I do not have time for a mill when I have to run to get logs, then cut it down, then run it to a kiln, then run back to get it and then store it.  So far it is still sitting on the pallet that it was sent to me on and I am more then likely just going to sell it.  For me my time is worth way more then the amount of money I would be saving per bf after running through all the headaches.  I can see profit in time for a guy that can cut for others while cutting for himself as well.  For the craftsman building his own furniture/cabinets I can defiantly see the use of this and if he is doing everything his self then the profit would come in time from his savings on the wood that he would have to buy.  For me I can get nice wood ready to go from a local mill (1 hour from me) for a cost of $1.25 bf for pine, $1.35 for poplar (the 2 I use the most) and for anything else it is on per need basis.  What I like about the mill is that I can give them a punch list of things I will need 2 months from now for my house (big bunch of quartersawn white oak) for my entryway from the kitchen to the living room and they have it ready when I need it.  I wish I had time for everything but I dont and I guess that is where I need to make a decision on the mill.

Rob

...

[Brucer]

A small business has more flexibility to adapt and produce different products.

A large business can be set up to produce a variety of custom products. Sometimes the equipment prevents it (e.g., a stud mill is designed specifically to produce studs and nothing else). More often the management mindset prevents it.

This doesn't mean that "Constraints" don't exist. In my example, which product would make more money? I don't know as we don't have all the figures. Maybe you stick to producing both, but which one should you put your marketing effort into?

It's not hard to figure out which one makes the more money. Sometimes marketing won't help you sell more of that one. That's where you have to figure out how to generate the most income with your product mix.

Unless you have a handle on the numbers, costs per hour, or per unit, you are only guessing. You might be loosing $1 on every widget sold. Making more widgets wont solve that, unless you make them more efficiently. But how do you do that?

You need to know three numbers for each product. What is the selling price per unit? How much did the business pay for the raw materials that are in the unit? How many units flow through the constraint in a periods of time (say 1 hour)? That's it.

For each product ...
Throughput ($/unit) = Selling price ($/unit) - Material expense ($/unit).
Income Rate ($/hr) = Throughput ($/unit) x Production rate (unit/hr).

So accept all the orders for the product with the highest Income Rate and figure out how much capacity you have left on your constraint. Then you accept the orders for the next product, and so on.

Of course, if you're smart you don't go canceling orders for the lower income producers in order to take on a better paying job. One of my former competitors used to do that regularly ;D. Instead, when you're expecting an order for the higher income items you quote longer delivery times on the lower paying items. That gives you room to slip in the high income items without upsetting the customers.

[bandmiller2]

A jem to remember is Rons comments on inventory and cutting on speculation,it dosen't pay.What ever you have they will want something else. Frank C.