The Finishing Bottleneck at Northline Cabinetry
Northline Cabinetry builds semi-custom kitchen cabinets in a single plant. Weekly demand is steady at 60 cabinet sets. Each set sells for $2,400 and uses $1,050 of materials. The plant runs three sequential operations on one eight-hour shift: cutting, assembly, and finishing. Weekly capacities are 72 sets at cutting, 66 at assembly, and 52 at finishing. Finishing has run six hours of overtime in most weeks, paid at a $22 hourly premium to each of nine workers, and still shipped only about 50 sets in 8 of the last 13 weeks. Rework at finishing averages 7 percent because assembled units arrive with misaligned door frames, a defect traced to worn jigs at assembly. A local shop can finish 10 sets a week on subcontract for $380 per set. Adding a second finishing shift would cost $14,000 a week in wages and supervision and would lift finishing capacity to 90 sets.
1. Quantify the capacity gap and compare the options for closing it. Which do you recommend for next quarter?
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The gap. Finishing, at 52 sets, is the constraint; cutting (72) and assembly (66) have slack. Demand is 60, so the shortfall is 8 sets a week. The 7 percent rework consumes finishing time, so effective good output is closer to 52 × 0.93 ≈ 48–49 sets - which explains why shipments have been stuck near 50 rather than 52.
Contribution per set = $2,400 − $1,050 = $1,350.
Option 1: overtime. Six hours × 9 workers × $22 = $1,188 a week; at 40 hours producing 52 sets, six extra hours yield about 7.8 sets. Overtime closes the gap for roughly $1,188 and adds about 8 × $1,350 = $10,800 of contribution - a net gain near $9,600 a week.
Option 2: subcontract 8 sets. Cost 8 × $380 = $3,040, contribution 8 × $1,350 = $10,800, net about $7,760. Positive, but it still requires materials and upstream work and it hands finish quality to an outsider.
Option 3: second shift. $14,000 a week buys 38 more sets, but only 8 can be sold. Even at full absorption of 38 sets the contribution would not justify it against current demand; it is a growth decision, not a fix.
Recommendation: overtime now, with subcontracting held as a surge valve for committed orders. But overtime is treating a symptom, so move immediately to the jig repair (next task).
2. Should the 7 percent rework be managed as a quality problem or as a capacity problem? Recommend a sequence of actions and say what evidence would change your mind.
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It is both, and that is precisely why it should be attacked first. In a line where the constraint is finishing, every reworked unit consumes constraint time twice: once for the original pass and once for the rework. Seven percent rework on 52 sets removes roughly 3.6 sets of finishing capacity - more than a third of the 8-set gap - at no marginal labor cost. Overtime, by contrast, costs $1,188 a week and is permanent until the cause is fixed. Eliminating rework is therefore cheaper capacity than either overtime or subcontracting.
Sequence:
- Repair or replace the assembly jigs. Estimate the one-time cost - if it is $5,000–$8,000, payback is about five to seven weeks at $1,188 of avoided overtime alone, before counting recovered throughput.
- Track first-pass yield at finishing weekly to confirm the defect rate falls and stays down; a one-time fix without measurement tends to drift back.
- Use overtime for the residual gap while the fix is implemented.
- Subcontract only for orders with a firm delivery date where the $970 net per set is worth protecting.
- Revisit the second shift only when demand approaches 52–55 sets and rework is under control.
What would change this: if rework remains above 5 percent after the jigs are replaced, the cause is upstream of tooling - likely assembly training or design tolerances - and the analysis shifts to a process redesign rather than a repair.