The document discusses how Comer's Cabinet Works is struggling with late orders, poor quality, and declining profits. It analyzes the production process and identifies constraints like the laminating department. The proposed solutions are to add an edge banding department before laminating, set up two laminating lines, and move sheet stock closer to saws. Charts show the expected results are completing 30% more orders while decreasing costs and increasing net profit from 9% to 24% of sales. The changes aim to improve throughput and help Comer's Cabinet Works achieve their goal of making more money.

1. Comer’s Cabinet Works, Inc
Need to Increase Net Profit?
We Must First Understand
The Process
A Robert Comer Production ©

2. • I hope everyone has read their copy of The
Goal that was passed out last week.
• Our company is struggling right now with less
than 50% of our orders finished on time.
• The quality of our products isn’t what it used to
be in the hurry to finish orders and customers
are complaining.
• Our bottom line, or net profit, keeps declining
which makes it impossible to give raises or
buy new and updated equipment.
What Hasn’t
Worked• Overtime
• Giving raises
• Firing people – creates bad
will
• Adding QC and expediter
• Every job is a rush order

3. • The slowest part of the process sets the rate of
throughput. Throughput is getting product out the
door
• Slow parts of the process are called constraints
• We must identify constraints on a daily basis
• Follow the 5 Focusing Steps for Constraints

4. We take raw materials:
• Sheet Stock
• Plastic Laminate
• Hardware
Convert the raw
materials:
• Cut out
• Laminating
• Drilling holes
• Applying Hardware
• Assembly
• Shipping
Finished Goods:
• Counter-tops
• Cabinets
• Furniture
Input
Conversio
n
Output
Problem
Area
The Process

5. Conversion Process Details
Cut out
Department
• Cuts out parts
from sheet
stock
Laminating Department
• Laminates cabinet
parts
• Laminates counter
tops
• Applies edge banding
Drilling Department
• Holes for
hardware and
shelving
Department 1 Department 2 Department 3
Department 4
Applying Hardware
• Shelf pegs
• Drawer slides
• Hinges
• Door pulls
Department 5
Assembly Department
• Assemble cabinets
• Assemble furniture
Department 6
Shipping Department
• Wraps all products
• Delivers to job site
• Ships to customer

6. System Constraints and
Solutions
Constraint Solution
Laminating has to wait for parts Laminate parts before cut out
Laminating has long glue drying time Set up two laminating lines
Lag time between cut out runs Move sheet stock closer to saws
Missing parts in assembly QC to certify parts delivered to
assembly
Drilling robot breaks down Have back up drills put back in shop
Look for the Weak Links Work Together for Solutions

7. Revised Conversion Process
• Laminating Line 1
counter tops
• Laminating Line 2
cabinet parts
Department 1 Department 2
• Cut out counter
tops and cabinet
parts
Department 3
• Edge banding
counter tops and
cabinet parts
Department 4
• Drilling
Department 5Department 6
• Applying
Hardware
• Assembly
Department 7
• Shipping

8. Comer's Cabinet Works, Inc.
Income Statement
For the Quarter Ending
03/31/15 % of Sales 6/30/2016* % of Sales* % Change*
Sales Revenue $ 375,000.00 100% $ 487,500.00 100% 30%
Less: Cost of Goods Sold 158,000.00 42% 167,500.00 34% 6%
Gross Margin 217,000.00 58% 320,000.00 66% 47%
Expenses:
Advertising 2,500.00 1% 2,500.00 1% 0%
Depreciation 2,000.00 1% 3,750.00 1% 88%
Interest 500.00 0% 525.00 0% 5%
Payroll 150,000.00 40% 146,000.00 30% -3%
Utilities 1,825.00 0% 2,650.00 1% 45%
Net income before taxes 60,175.00 16% 164,575.00 34% 173%
Income taxes 26,250.00 7% 47,000.00 10% 79%
Net income $ 33,925.00 9% $ 117,575.00 24% 247%
What I Expect Will Happen
• By adding an edge banding department and making these other changes,
we will be able to increase our on time delivery rate and quality
• We will be able to complete 30% more orders while decreasing payroll,
decreasing COGS, and increasing Net Profit as a percentage of Sales
• Remember: The Goal is to make money at Comer’s Cabinet Works, Inc
* Estimated data

9. • Be sure to read The Goal if you
haven’t
• These changes will begin this Monday
• This will be a collective team effort.
The
End