Sheet metal and HVAC contractors today describe a number of industry issues that can make profitability elusive, challenges such as manpower shortages, pricing pressures, scheduling compression, and increasing owner demands.
“Historically, contractors have employed a ‘work harder’ approach to solve these challenges,” says Michael McLin, author of the new report Transforming Your Organization for the Future, part of SMACNA’s Contractor Operations Manual. “However, contractors are faced with the reality that solving these challenges may require a different approach. Enter lean transformation.”
Lean transformation is all about eliminating waste, and the key element of lean transformation, McLin notes, is for contactors to move toward a 100 percent “kitting strategy.”
What is kitting? “It means that every piece of material, every tool, and every drawing, flows through a centralized fabrication and logistics facility,” says McLin. “Gone are the days of tradesmen walking around jobsites looking for tools, materials, and information. The object is to have tradesmen doing what they love to do – installing work.”
Kitting, which has been used for years in the shipbuilding and automotive industries, involves packaging all the materials, tools, and installation drawings into a kit, which makes the tradesmen far more productive, he said. Furthermore, kitting can be a long-term strategic solution to the challenges of manpower shortages, pricing pressure, and schedule compression.
“Kitting is a term that is becoming more and more common in some industries,” said Bobby McCally, director, operations support, Brandt Companies, Dallas, Texas, “and we are trying to apply that to some degree in the mechanical world. What it really resembles is prefabricating and sectioning. We are taking prefabrication and adding more layers to it. For example, you might go buy a kit at Ikea and everything is in there, even tools. It’s in a container that is delivered to the job that has everything that the crew needs to install that work.”
“The point is that we are trying to get more work done offsite, so when it arrives at the site you don’t need a large crew to do that work,” he explained. “Because of the prefabrication they don’t need to go chasing tools.”
McCally, who serves on the Contractor Operations Manual Task Force, suggests that those who want to start the transformation process begin by reading the section on “How to Implement.” McCally adds, “Start there, and you will understand why and how some fail.”
This section outlines how to make the transition from a traditional company to a 100 percent kitting strategy. To understand how the present company operates, McLin recommends contractors outline a value stream mapping process that includes the four enterprise-level value stream maps present in business: human resources, design development, accounts payable, and accounts receivable.
“Most contractors do not take the time to truly understand the issues the organization is dealing with,” McLin says. “It is not until a core team of people in the organization map out and recognize the waste and complexity that is created, that understanding and cultural buy-in can be achieved.”
Some large contractors, such as The Brandt Companies are pursuing a kitting strategy to impressive results, and they see how it can scale to small and mid-size companies as well. “We fabricate as much as possible and ship it to the site. We have over $500 million in revenue each year, and although my company is on the large side, this SMACNA manual and kitting are geared to span the spectrum of company size, even for small contractors.”
“Kitting is going to be foreign to some people,” he reflected. “But we have to think outside the box and take advantage of these new ideas. It’s important not to become complacent, but to strive to improve always. One of our core values at Brandt is agility, and sometimes people think agility adds costs, but agility is actually a way to balance costs.”
McCally added, “Also, people need to be thinking about logistics. It’s become a paramount piece of what we do. Not only with the workforce channels and the issues with supply chains , but also with trucking distribution and meeting deadlines. That is where kitting can help people manage the workflow process.”
SMACNA’s Contractor Operations Manual covers the business and non-financial aspects of running a contracting business. Members can download a free copy of the new manual Transforming Your Organization for the Future
on SMACNA’s Contractor Operations Manual web page smac.news/logina129c