Fabricators Discuss the Correlation Between Rework and Profit Leaks
Industry veterans explain that if a shop does not have a handle on how many remakes are being done then it will not realize it has a problem
“Best-in-class shops operate below 2%,” said Geoffrey Gran of The Countertop Factory Midwest in Addison, IL. “Zero is not realistic, but under 2% is achievable with discipline.”
Need to Know
- Rework is a major, often hidden, source of profit leaks in stone fabrication shops.
- Shops that actively track, analyze, and reduce rework are better positioned to protect and grow their profitability.
- The majority of remakes stem from incomplete information at the time of templating.
During a Fabricator Forum at The International Surface Event (tise) several months ago, a question was posed by Geoffrey Gran of The Countertop Factory Midwest in Addison, IL, who was one of the panelists: How many of you track remakes or reworks? “If you are not tracking it, you do not know the problem exists,” he told the fabricators in attendance. “We hired consultants about 12 years ago to come into our shop, and they spent about two weeks looking at every aspect of our business. I thought our sales were amazing — 27% annual growth. They told us that while we run a really good company, we had some profit leaks. We were not collecting enough data in sales. That lack of information caused mistakes downstream.”
On the advice of the consultants, Gran explained that his company started tracking remakes weekly. “It was painful,” he said. “We realized we were making more mistakes than we thought. We began to review them with our management team every Monday — the root cause, department responsibility, cost. Until we started tracking, we didn’t know we had a problem. Over time, it improved.”
According to Gran, the following are key areas to track:
- Material Cost
- Labor to Remake
- Install Labor
- Drive Time
- Opportunity Cost
“I can promise you that if you are not tracking it, you are blind to the issue,” he said. “It might not be extravagant, but I promise you, there are issues. If you only track square footage lost, you are missing the bigger picture.”
Gran advised that a remake rate above 4% is concerning. “Best-in-class shops operate below 2%,” he said. “Zero is not realistic, but under 2% is achievable with discipline.”
The majority of remakes stem from incomplete information at the time of templating, according to the seasoned fabricator. “Implement a no-go policy,” he said.
Gran suggested that a fabricator should not schedule a templating job unless certain points are addressed. They include:
- Material is in stock
- Cabinets are installed and level
- Sink and faucet are onsite
- Edge profile is selected
“There are no exceptions,” he said. “Do not let customers dictate your process.”
“I consider myself a small shop, but I still track,” said Tim Zeng of Zeng Countertops & Surfaces in Lincoln, NE, and executive director of the Stone Fabricator’s Alliance (SFA), who also sat on the panel. “Four years ago, we started to track our numbers. Every Friday, we have a level-five meeting where my managers get together and go over any mistakes we had for the week. We have a spread sheet that allocates whatever the cost of the dollar that we lost was and what department it went to. Maybe one week it was templating and another week installation. That is what you have to keep an eye on because maybe you do not know. It gives you something to look at and to decipher to see where you are losing those dollars. Like Geoffrey said, if you don’t know, then you don’t know.”
“The worst remake you can have is a remake of a remake,” said Gran. “Before we started tracking, it happened to us.”
Gran explained that his company started giving out monthly incentives to each department. “It gives them a vested interest to make sure they are doing everything right. When teams share in performance, behavior changes.”
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