Episode Transcript
[00:00:09] Speaker A: Welcome to the Clear Impact Podcast, brought to you by PGTI University. Thanks for joining us today. My name is Sherry Connor and I am your host.
[00:00:24] Speaker B: Good afternoon. We are here on the Clear Impact Podcast and we are in a series called windows and doors 301. And to day back in studio, we have Bobby Jo Henry. Welcome back.
[00:00:35] Speaker C: Hi. Thank you. Thanks for having me.
[00:00:37] Speaker B: Yeah, thank you. So we recorded last week about glass volumes and sourcing, and I did not realize that you also handled all of the extrusions and all of the hardware and all of that. And so that warranted a whole separate podcast episode. And so I'm thankful that you were able to come in and have conversations around this topic. But before we do that, for anybody that may have missed last week, can you just give us an overview of your history, your experience, and your current role and responsibilities?
[00:01:06] Speaker C: Absolutely. So I have actually been in supply chain for a little over 20 years, 15 years of that in a leadership role, the last three being here at PGT. So I started in the commodities market dealing with metals and have worked in chemicals and packaging. Now obviously doing the extrusions in the glass here for pgt. So my role now is senior supply chain manager for all of the PGT brands and Windor. So my scope of responsibility includes a assembly plant, glass plant, our Fort Myers production facility, and our Windor brand facility here on our Venice campus. So within that role, I have responsibilities for all of the scheduling, production control, purchasing, inventory management, materials management, and our stock rooms. So it's about 60 people total overall through my whole entire team to cover both of those brands as well as all of the different locations. So in my history, I was born and raised in Tennessee, left Tennessee, went to Ohio following my husband's job, and then we followed his job again here to Florida. And after living here for about seven years, we went back to Tennessee to be with family. And after Covid, we decided we were coming back to Florida. When we left, we knew we would eventually come back. So that was my transition here to pgt, while back in Tennessee, did go back to school, finished a second degree and industrial management and business management. So fits in perfect now with the role that I have here at pgt. But we love being back in Florida, even though all of my kids and my grandkids are still in Tennessee.
[00:02:43] Speaker B: Yeah, it's not that far.
[00:02:44] Speaker C: No, it's about 10 hours from here to there.
[00:02:46] Speaker B: Or a quick flight.
[00:02:47] Speaker C: Or a quick flight, yes.
[00:02:48] Speaker B: Yeah, family's important. Well, we're glad you're here. Love that you have a Huge team. And that you get to be in a leadership role. That speaks loudly about the culture here at our company, that we value women in leadership and we're respected and admired and capable.
[00:03:03] Speaker C: Yep, absolutely. I mean, culture here is one of the things that has kept me here and being able to feel like I am part of that culture. I help to embrace that culture. And the leading ladies that PGT offers to us as women in leadership is a huge part of that culture and what we do here.
[00:03:20] Speaker B: Yeah, I agree. So with extrusions being obviously a major component in our products, we can't be without this supply. Like, we have to have what we have to have in order to meet the demand of our customer groups. And so do we have more than one supplier for our extrusions? And do you know where they come from?
[00:03:38] Speaker C: We do. So I've kind of broke the information down into two segments because we obviously offer two large window types, one being aluminum, one being vinyl. Right. So on our aluminum side, we do. We have over seven different extruders that we work with, as well as custom painters. They are both domestic and import. And so we balance between the two just based off what the aluminum market looks like, what we have from a demand perspective. You know, how many of those do we need to get involved. Right. To be able to meet our demand? On the vinyl side, we are a single source supplier. We get all of our vinyl from one supplier. However, they are qualified to run our vinyl in multiple locations. So even though it's one parent brand that we receive all of our vinyl from, it is produced at multiple locations. And if something was to happen with one location, the other location can still provide that same service to us. So even though it's one supplier, it does come from multiple locations.
[00:04:34] Speaker B: And that's wise.
[00:04:35] Speaker C: Yeah. Do you ever want to put all your eggs in one basket or be dependent upon just one source?
[00:04:40] Speaker B: So we have multiple sources for aluminum and multiple locations with one vendor for vinyl. So what does this look like on a volume basis? Like, what does this look like on a week? Like, how many trucks or tons or bundles or. I don't even know how you would count all of that. But, like, what does that look like in terms of volume?
[00:04:56] Speaker C: Yeah. So our demand obviously fluctuates depending on what we're producing at the time. So some of that fluctuates a little more some weeks than others, just based off of where do we get the vinyl, which locations and which aluminum suppliers are providing what we need that week. But on average, from an aluminum perspective, we receive about 20 trucks and or containers per week between our Venice location and our Fort Myers location. And that equates to somewhere around 560 bundles of extrusion. Meaning a bundle could be anywhere from 40 pieces to 240 pieces, depending on the weight, the length, the size, what part of it. Is it a jam? Is it a style? Is it a, you know, whatever it may be that we need. But overall, the average is about 560 bundles of extrusion. On the vinyl side, we max out those trucks because it has to come in on a 53 foot van trailer to protect the vinyl while it's in transit. So we try to max out each one of those trucks to maximum weight. And that usually equates to around 16 trucks per week between here and the Fort Myers plant. And that's about 387 racks. So you can have multiple bundles on one rack. But we measure vinyl in racks and we measure aluminum in bundles.
[00:06:17] Speaker B: Wow, that's a lot.
[00:06:18] Speaker C: Yes. You know, all of the transactions that go in behind that and in front of that, just from the planning side, from the actual purchasing of the POS to the receipt of the material here, ensuring that our inventory stays accurate, that all of those pluses and minuses are correct to ensure that we can meet the lead times that we have from our customers.
[00:06:37] Speaker B: And then you've got to account for different colors, Right? Correct for vinyl and then for aluminum as well.
[00:06:42] Speaker C: Yeah. So on an aluminum side, we have our standard offerings and then we have custom colors. On the vinyl side we have our standard colors, and then we have what we call capstock, which is anything other than our standard. So from an aluminum perspective, we have four standard offerings in white, black, bronze and anodized material. And that actually accounts for about 1200 different part numbers just on the standard, in those four colors. Across all of our product lines, from custom colors, we have three different options. The two and three coat liquid, the four wood grain options, and then we also offer a 20 year powder. Across those we've offered throughout the last six to eight years over 40 different custom color combinations.
[00:07:27] Speaker B: Oh my gosh.
[00:07:28] Speaker C: And those account for about 2,500 different material numbers. So for each color, for each length, for each different piece, everything gets a different material number.
[00:07:37] Speaker B: Those are like massive spreadsheets.
[00:07:39] Speaker C: Yes, very much so, yeah. We actually have several different ways that we monitor that. One being through Excel, we have query programs, obviously our MRP and ERP system. But there's a lot of work and a lot of calculations every single day that goes into ensuring we have the right material at the right time in order to meet customer demand.
[00:07:56] Speaker B: Wow. And so that's on the aluminum side. So for vinyl we have just a four, right?
[00:08:03] Speaker C: Well, we have two standard colors, which is white and tan. And that means that it's white and or tan interior and exterior.
[00:08:11] Speaker B: Right.
[00:08:11] Speaker C: But we also have our cap stock colors that we offer. So we have four different combinations that we routinely stock. But across the standard colors of tan and white, we have about 193 different material numbers. And then across the four standard capstock colors, we have about 256 different material numbers.
[00:08:32] Speaker B: Okay.
[00:08:33] Speaker C: And this again is just for the extrusion, not counting your weather stripping, not counting your hardware, not counting anything else that goes into the makeup of the window or door. And obviously we discussed glass on a previous call, but you obviously need glass as well for all of those too. Right. So these numbers are only relative just to the extrusion parts that are utilized to build the window.
[00:08:55] Speaker B: Wow. Yeah, I heard something like the average window, even this like standard window has like 47 different components that are factored in to just that one product.
[00:09:06] Speaker C: That is correct. And you have to think, so we have a team, one buyer that buys for Windor and then we have three full time buyers and a supervisor that buys for pgt. So four people. So if you think over what we just talked about, I mean, you have five people controlling that for the entire Fort Myers, Venice and Windor assembly plants. So it's pretty crazy to think what they can accomplish with how much variety and how much customization we have here.
[00:09:34] Speaker B: Wow, that's amazing. And so one of the things that I think is helpful for people to understand is just how massive our operation is and the fact that our lead times right now are like three to four weeks, roughly, which I think is amazing for a custom made product. Like if we only have what's coming in the next 30 days, like maybe it takes longer than that to get the extrusion. So you have to do a little bit of guessing or forecasting. Like how does that work?
[00:10:01] Speaker C: Yeah. So we have several different methods that we use. We actually put into place a new strategy two years ago. Now for an acronym. Everything in PGT is made with an acronym. So acronym wise, it's called our dssp, but it stands for Dynamic Safety Stock Program. So every quarter we go in and we review what we've used in the last eight weeks of every single profile and every single part that we use. Because trends change very quickly. So this week we might be building a lot of white vinyl and black aluminum, but next week we could be building a lot of capstock vinyl and a lot of white aluminum. So as that demand changes every week, what we do is we pull the eight week previous demand every quarter, review that along with what we can see in the system for the next three to four weeks, and that's how we devise our safety stock program. And then for extrusions or components that take longer to get here than what our actual lead time to our customer is, we use that same 8 week previous demand plus what we can see in the system to forecast and order ahead of time. So for example, anodized material has a standard four to six weeks lead time, depending on which supplier we're getting it from. So in that case, if we have to build units and provide them to the customer within three weeks, we're not going to see that demand prior to us having to order. So we set our safety stocks to be able to be utilized for that production within that fourth week, and then we forecast out ahead to purchase ahead of time to keep that replenished. So it is a very complex equation. It's a very complex process because we have extrusion lead times anywhere from two to six weeks. So for most of our standard colors, our standard profiles usually from order to delivery is 12 days. So roughly two weeks if you have a weekend in there in the middle. But we do have all of our capstock and some of our custom colors that that ranges closer to the four week lead time. And so we're ordering materials to build products before the products are actually ordered to ensure that we have the correct materials on hand to be able to do that. And again, like I say, those lead times range based off the supplier, based off the type of material. Is it a custom order? Is it a standard order? Is it anodized? Where is it coming from? I mean, we have suppliers all over the US as well as some that are abroad that we import from. So those lead times vary just depending.
[00:12:31] Speaker A: We are sharing our expertise around all topics relating to the window and door industry. Whether you are a customer selling our products or a homeowner doing research, the Clear Impact podcast provides helpful content that makes an impact. Subscribe today wherever you listen to podcasts.
[00:12:49] Speaker B: Sure you don't want to have more cash going out. You know, you don't want to have this giant inventory either. You know, you want to keep it lean. So it is important to hit those right numbers as close as you can.
[00:12:59] Speaker C: Yep. And that's why we started the DSSP program in order to catch that faster. So as demand is ebbing and flowing and as trends are flowing and changing, we have the opportunity to adjust those numbers. Right? Because if we just ordered the same amount all the time, then obviously we wouldn't have what we need, and we definitely wouldn't have it in the quantities we need. We do have to be careful, especially with capstock sitting outside. The heat and direct sunlight can cause warping. And in those cases, you know, that's just a pgt loss. So we as well have to balance that. How much storage capacity do we have? What does the demand look like? What is the shifts? Continuously working with material handling and facilities, ensuring that we have enough storage space. And as we continue to expand our operation and expand our offerings, then that becomes even a bigger challenge because that's additional extrusions, more storage space needed, additional opportunities that we have as a company to service our customers. However, we have to make sure we're managing that from the materials side.
[00:13:57] Speaker B: Right? Yeah, I know. That makes sense. So what is the hardware scenario like? Because you manage all of that too, right?
[00:14:02] Speaker C: I do. So our hardware is actually our biggest bucket. If you talk about the number of different material numbers that we have, there's a lot of things that go into hardware that maybe are something other than handles, right? So you have your screws, you have your weather stripping, you have all of your reinforcements, you have all of the different things that it takes to build the window except the extrusion in the glass, right? So right now we have, across all of our facilities, upwards of 7,000 different material numbers that classify into the hardware bucket. Some of them are very slow movers, some of them are very fast movers. So the hardest one of all of it to manage is the actual components, like your locks, your handles, the bigger units. Especially like if we suddenly have a surge of horizontal rollers, for example, or a surge of casement windows, for example, because those take very specific hardware. So we have to plan very far in advance on forecasting for all of our hardware due to the fact that a lot of it is from an import basis, or at least the suppliers that we use import part of the components to make it. And that side of the business has struggled for a couple years now, maybe even longer. That's just how long I've been involved in it. So we've now, when we first started our DSSP program, we were only doing it on extrusions, because that's your bulk purchase, right? But then we've realized we've seen so many different swings in color of hardware that's being requested as well as we've seen a large increase in the hardware that we offer. So that means you may have 10 handles that can go on the same sliding glass door. Well, obviously the handle color is determined by the color of the door. However, do they want it recessed? Do they want a pull handle that. Do they want pull on the inside and outside, or do they want recessed on one side and a pool on the other? Right. So all of those things have to be taken into consideration. And managing our hardware suppliers is one of the largest tasks of my team. We actually revamped the way the team was focused a couple years ago just due to that fact. So now we have a buyer who focuses solely on hardware. That is their role and responsibility is solely hardware. Where before our buyers focused on a production line. So you might be responsible for aluminum windows, and this one might be responsible for aluminum doors, and this one was responsible for vinyl. And in that case, they managed every component that went with the line that they were working towards. Now what we've done is we've combined all of the hardware into one buyer because it's much easier when you're working with a supplier that you order 3,000 parts from for them to hear from one person consistently over and over instead of hearing from three different people over and over. So we actually changed that strategy. Our impact to out of stock materials for hardware has actually decreased by about 75% year over year for the past two years. Which means our strategy change worked as well as our alignment with our suppliers for them to understand the criticality of ensuring that they were flexible for us to be able to provide materials in a timely manner. So the hardware and the parts and pieces is a huge part of it. Obviously, we have to keep our stock rooms stocked. We have our Kanban inventories on the floor. That's part of hardware and parts and pieces.
[00:17:29] Speaker B: Wait, what was that word?
[00:17:30] Speaker C: Kanban.
[00:17:31] Speaker B: Yeah. What's that?
[00:17:32] Speaker C: So it is a way that you can visually do inventory management so you have a min max set. So there needs to be. We'll do simple math between two and four boxes on the floor. And that would mean that you could sustain production for x amount of time with those two to four boxes. And then we have a stock room that has all of the additional set to it. So our stockroom workers go down to the floor, they monitor all the Kanban locations on the line, and they restock into the kanban instead of trying to provide every single demand as it comes to the line. So you have screws, weather stripping, a lot of different things like that that the line uses over and over and over all day long. And so we stack it into a Kanban rack and it's a way to manage the inventory per line. So you'll have, you know, we need X amount of these screws a day. So we try to ensure we have double that. We'll say on the floor at all times. And then as it needs replenished, we just do that from the stock room into the Kanban location instead of trying to transact it by demand every day.
[00:18:35] Speaker B: Okay, and so what are we looking at in terms of dollars for all of that? Can you talk about that?
[00:18:40] Speaker C: I can somewhat. So when we look at carrying cost of inventory and our, we always roll that in a six week average because every time you take it, it's a snapshot in time. Right. So you could have six trucks waiting at the dock to get unloaded that are physically here, but that haven't been received in inventory yet. Plus we always have all of our WIP inventory. So from an overall perspective between aluminum and vinyl, about 35% of our average inventory cost is associated with aluminum and vinyl. So somewhere in the category of 17 to 22 million dollars at a time, just depending on where we're running with inventory. And then when you take that and you put that into an annual percentage spend perspective of all material costs. Right. Aluminum is about 20% of our annual spend for material cost and Vinyl is about 13% of our annual spend. And then comparing that to last week, glass was about 30%. Right. So it kind of puts into perspective there's your three largest expenses from a materials perspective related to windows and doors. Yeah. So it's a large number and it's an extensive project to manage. But I always say all the time, my official title is supply chain manager. Right. But it could be chaos coordinator.
[00:19:53] Speaker B: Right.
[00:19:53] Speaker C: It could be firefighter.
Because a lot of what I do is to assist and remove the roadblocks from my buyers and from my schedulers to allow them to be successful, which drives our customer to be successful, which is internal operation. If our internal operations and production team is successful, then that means we're successful out to our end users, to our customers and our dealers. So it's a fine line, It's a balancing act, but it's something I love doing every day.
[00:20:22] Speaker B: One of the things I like to point out to our customers, everything has to be built the exact same way with the exact same components that it was Tested and certified.
[00:20:31] Speaker C: Correct.
[00:20:31] Speaker B: So if our supplier is out of this particular screw, we can't necessarily just sub it out with a different thing. We have to have the exact same thing. So supply chain becomes really, really critical.
[00:20:44] Speaker C: Correct. Yeah. I can't just say, oh, you know, I can use this screw instead of that screw. Because you're exactly correct. It all got certified with a certain component, and that's the component we have to use.
[00:20:53] Speaker B: Wow. And so what does this look like in terms of, like, I guess, overall capacity? Like, do you have any of those numbers?
[00:21:00] Speaker C: I do. So with the fact that I have roles and responsibilities on both sides from scheduling and purchasing, One of the things that we work really hard to is to align those two teams. Because if you schedule more than you can buy for or you schedule more than you can produce, then we have step one failure. Right. So one thing that we monitor closely and that we talk about every single day between both teams is what is our capacity to build? How many can we build? What are we seeing the demand come out from our customers? Because that fluctuates. How much material do we have to buy? Right. It could go up or it could go down. And as we've talked about, as we have to sometimes purchase before the actual orders are in the system, we have to balance that accordingly. So right now, across our assembly plant and our Fort Myers production facility, which are both serviced by our glass plant, we have the capacity to build roughly 22 to 24,000 units in a week, which is a pretty hefty number.
[00:22:00] Speaker B: Yeah, yeah.
[00:22:00] Speaker C: And right now, what we're seeing across our aluminum lines, we're operating somewhere between 80 to 90% capacity utilization average per week. And on our vinyl lines, we are functioning at somewhere between 90 to 100% of our capacity week over week. So that being said, I mean, we've got a pretty large build out there every single day. And where this really comes into play is if we do have a supplier failure, then that line is immediately impacted. Right. Because when we're building 95% of our capacity, and all of a sudden we can't build 500 units today because our supplier didn't show up with the material, then that 500 units has to go to the next day or the next day when the material arrives. Well, if you're already scheduled at 95% of your capacity, now you have to catch up 500 units that you couldn't build three days ago. You don't have the available capacity to do that. So it's always a balancing game with either an extra shift or overtime. You know, some of our lines run seven days a week, both shifts. Some of them run five days a week, some of them run six days a week. So it really just depends on the line, what does that catch up look like? So a lot of times we have to get in from a planning perspective and really tie that into the schedule to ensure that we're still making those orders on time. Right. It's a very large feat to ensure that they keep all that balanced. Right.
[00:23:24] Speaker B: It's mind boggling how many different options PGT can provide. One of the reasons our dealers love us is because we can say yes. Our engineers work really hard to say yes.
[00:23:33] Speaker C: Yes, they definitely do.
[00:23:34] Speaker B: And we love that because we want to be the people that you can count on.
[00:23:38] Speaker C: Absolutely.
[00:23:39] Speaker B: Awesome. Thank you, Bobby Jo. Have a great day.
[00:23:40] Speaker C: Thank you. You as well.
[00:23:41] Speaker B: All right, take care.
[00:23:43] Speaker A: The Clear Impact podcast is brought to you by PGTI University. We are a part of Mitre Brands, a family of leading window and door brands united by our passion for quality and relentless pursuit of 100%. One of the missions of Mitre Brands is to unite and deliver the finest customer experience possible across the nation. Our window indoor brands deliver regionalized expertise and products. Backed by a national company. PGTI University is here to educate you, our listener, so that you can be a more informed consumer of window indoor products.
