While we did not increase our sales per se, we have seen a dramatic increase in revenue in our furniture and rustic furniture programs that is a direct result of the project that we undertook with MMEC.
MMEC Business Advisor Doug Roberts worked with MCE to create an Excel-based costing model that detailed various components of direct and indirect product costs, including those related to sales, labor productivity, quality, material costs, inventory levels, overhead costs, product lead time, delivery times and more. The model was customized to include different shop rates for each of MCE’s departments and it allows users to assess the impacts of factors such as production volume on pricing.
Roberts provided training to both management and workers on what’s included in the model and how to use it effectively. By using the model in a series of “what if” scenarios, participants gained a better understanding of the cause-and-effect relationship between costs, pricing, and revenues. The tool has helped management make decisions on product pricing to distributors and assess the viability of offered products.
“When combined with another effort to improve our inventory management, these projects have substantially improved our processes and moved us towards our goal of being 100 self-sustaining, said Joel Miller, Industries Director. To continue this progress, the program is working with MMEC on a new effort to help staff implement lean manufacturing principles.As an added benefit of the costing model, the furniture program participants are learning valuable project management and other “soft” skills to complement their manufacturing skills. “As we say at MCE, out true products are the individuals that leave our program and prison and reintegrate into society,” Miller added. “Projects like these do far more for individual development and increase an offender's opportunity for success than our normal day-to-day work.”