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What IS a Production Point?
Here’s the short answer: A production point is a normalised unit of measurement that truss manufacturers use to allocate labour and overhead costs proportional to truss manufacturing time.
Now for the slightly longer answer.
Sisyphus woke up every morning to push a boulder up a hill. At the end of the day, when he finally got the boulder to the top of the hill, it rolled all the way back down. He woke up the next morning to start all over again.
This was Sisyphus’ punishment in his afterlife for angering the Greek gods when he was alive. It makes you wonder which gods truss manufacturers have upset.
Frame and truss manufacturers always have another metaphorical boulder to push up the metaphorical hill. Profiting from a product so commoditised and so highly customised is tough. If a manufacturer can know how much each component costs to make, they are in a much better position to know how much they should sell it for to make a good profit.
The sell price of any truss is made up of 4 things:
Timber + wastage
Nail plates + wastage
Labour and overheads
Margin for profit
Both timber and nail plates are easy to work out, design software punches out a stock tally. Margin for profit is determined by the manufacturer. The cost of labour and overheads is the tricky one, and that’s where production points come in.
Each nail plate supplier has a different production costing system, they were developed to more accurately determine what amount of labour and overheads should be paid for by any one truss. Production points are essentially a way of measuring time.
So how much time does one production point represent? Every shed has a trend in the jobs they do and will have a certain standard truss type and web pattern that they manufacture more than anything else.
It could be a 12 metre 22.5 deg standard truss:
or it could be a 6 metre 2 deg mono truss:
Pick your most common truss and record the time that it takes to lay out the timber, lay out the plates, and press the truss. Whatever that time is, becomes the value of one production point. Simples.
The truss everyone used to measure for this base value was a 7-metre span A type standard truss, which would be 7 or 8 joints (depending on the manufacturer’s splicing settings). I would say an 8-metre truss is now a bit closer to being a universally common truss.
Once you have a time value for 1 production point, you can work out the production value of any other truss by timing them in a time and motion study. Then you can normalise it back to the base labour value you determined earlier.
As an example, if a girder truss takes twice as long to manufacture as your base truss you measured, the assembly value for that truss will be 2 production points.
One thing that production costing systems can’t do very well, is easily compare output from shed to shed. Because production costing systems are so dependent on how the shed is set up and what machinery they have, even the skill levels of your staff, it is not a reliable way to compare output between manufacturing facilities. A little aside, if anyone has a good way of comparing manufacturer outputs I would love to hear about it.
Production Costing Systems are a massively overlooked part of running a truss manufacturing business. Understanding them can be an incredible value unlock for truss manufacturers. It can help manufacturers have a better understanding of their bottom line, win more jobs that are easier for them to make, make more informed equipment purchasing decisions, and even help them decide whether to price match a competitor’s price.
What did you think of this weeks article? Let me know by replying to this email! Thanks for reading and remember to subscribe to Offcut at www.ryanjmclean.com.au
