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#292 Machining is the coolest thing ever
219 Plays2 years ago
Topics:
- Machining is the coolest thing ever
- "failing as a business leader if we don't purge our junk"
- "what do I want in the next 6 months"
- how to hire and train new people quickly?
- Variance accounting
- SMW online training classes
Recommended
Transcript
Podcast Introduction and Hosts
00:00:00
Speaker
Good morning. Welcome to the Business of Machining, Episode 292. My name is John Saunders. And my name is John Grimsmo. John and I talk each Friday to keep each other honest, reflecting on how our past lessons and such things influence our present and future business and manufacturing thoughts. How are you doing?
00:00:22
Speaker
I'm sorry. Good. You look like you were thinking things are good. I was going to say like, and we've been doing that for 292 episodes, right? Weeks. That's awesome. I, um,
Saunders' Career Reflection
00:00:35
Speaker
did sneak away for a couple of days with my wife and some friends for her 40th and randomly. I'm sorry, that's actually completely irrelevant. But I was gonna say, prior to that, we had lost something at home, like whatever silly and I was then led to cleaning the basement. I'm sure everyone has been through this where you're like, okay, I'm frustrated. I need to clean, I need to purge. And I ended up finding some old work stuff. And
00:01:02
Speaker
it reminded me in a wonderful way, how much I it's not that I didn't like my job or
00:01:11
Speaker
that I hated my job, but how I found no identity in it. I just remember, so basically, it's not that I didn't realize the value of it and did it and worked, because I think there's a lot to be said for like, look, you may not like everything in life, but you got to do it and then figure out your next move. But I mean, you literally, you couldn't offer me a shop
00:01:36
Speaker
you could offer me a shop filled with 100 kerns and hermlas and whatever to do this for like two years. And I would say, No, I'm good. I'll pass. I'll go it another way. So some usually the absence of a negative I find doesn't create like happiness, but it did make me think back to how much I wanted to figure out how to become a machinist like it just
00:02:00
Speaker
When I did it, I realized in that New York apartment with that tag, I realized, oh my God, this is the coolest thing ever. And now when I see a Haas do a Cat40 tool change, it couldn't be less interesting. But there was a point in my time where that was a just pause for a moment and witness the amazingness of what I just saw. And that kind of jumped me back to those memories of when I wanted to be in manufacturing and wanted to figure out how to make it work. And it was good. It was a fun little journey.
Grimsmo's Keychain Story
00:02:30
Speaker
The funny part of that is when you said you found old work stuff, I thought you meant like your first CNC machine or something. I am probably most people who follow you forget that you had a life before machining. Yeah, right. So yeah. That's cool. Yeah, very cool. That's good. Yeah, I've definitely got the
00:02:52
Speaker
I've got the box at home of my first machine parts kind of thing. That's like hidden. I never see it. Although I did dig into it the other day to find a key chain that I made because like 10 years ago, I made a bunch of these Volvo key chains. Back when we were anodizing aluminum, I anodized them all different colors and then
00:03:13
Speaker
when I picked up a yellow Volvo, I had a yellow key chain already from the past. And then just a few, like a month ago, I picked up that old 1968 Volvo Amazon and it's like this weird off green color. And I look in that box and I had a green key chain away 10 years ago. And I'm like, Oh, this is where the keys live. Yes. That's actually amazing. Yeah, it's cool. And I had another one. I had a gray one when our, one of our employees sky bought an old Volvo a few months ago. Um,
00:03:42
Speaker
I had a gray one I could give to him too. So it's like, it's just great. Yeah, that's really cool. The funny thing is I've got to do a video of these key chains because they're atrocious.
00:03:55
Speaker
like the quality and the, there's, you can see the backlash in my X2 mini mill on this part. It's horrendous, but so cool. Yeah. It's funny. It's all relative. There was somebody, somebody was, Dennis was sort of saying like, you know, get a microscope and then you realize how bad you are. Yep. Yep.
Evolution of Machining Industry
00:04:17
Speaker
Your iconometer is only so good until you put under the microscope. That's awesome. Yeah.
00:04:24
Speaker
Oh, man. What was I gonna say? Oh, so that's the other thing that I hit me this week was I am actively what? So I made a joke because the only note I wrote from that whole conversation is machining is the coolest thing ever. And I'm like, Oh my gosh, that has to be on a t shirt. Right? Yeah.
00:04:47
Speaker
It really is. But it's also different because when we started this in 2007, it was not...
00:04:58
Speaker
I don't think it was as normal to do what we did because there weren't the tormachs of the world and the fusions of the world and the social media of the world that helped educate you, helped show you you could do it, or even if you happened to be doing it, because there were plenty of backyard gunsmiths and so forth that had a lathe or a mill, but you didn't necessarily know about it outside of perhaps a local machining club or something. So now I don't think it's as,
00:05:25
Speaker
uniquely cool if that makes sense.
Shop Clutter and Organization
00:05:28
Speaker
Yeah, it was weird back then. You wouldn't brag about it in a weird way. It was fringe and weird and everybody's like, are you sure you want to do this? You should go to school and get a real job. Yeah. Well, that's another thing to your point. I don't think people were talking about manufacturing in the US or re-shoring, I guess, if you will. Wasn't even a word back then.
00:05:55
Speaker
Yeah, right. Well, think about like where some of our friends work in machine shops in the tech space or in aerospace that's not aerospace at like, you know, ISO nine thousand one three shift, you know, 100,000 shops. That is I don't say it's new, but seemingly different. Yeah. OK, so. I am failing as a
00:06:22
Speaker
business leader in that if we don't recognize our need to do a bigger purge than I've even alluded to before, because we've talked about this on prior episodes, I worry
00:06:37
Speaker
And I don't worry, we will become the shop that we've all been into that's now been around for 10 years or 20 years or 50 years. No one ever wants to turn their shop into a blank hole. And ours is far from that. But the truth is, when I walk up to call myself out, if I walked up to any of our machines right now, you would not be proud of what you see on the shelf, on the toolbox, on the floor around it.
00:07:07
Speaker
Yeah, I think we talked about this as well, which is how do you get things done? Setting goals generally doesn't help. It's what is the plan? And so what I ended up doing is
00:07:21
Speaker
kind of a, okay, what do I want in the next six months? Which is also a way of recognizing I got too much on my plate. Again, another one of my weaknesses of recognizing that thinking that I could tackle more than I can. Um, but you know, we've got some, we've got some, um, ways to tackle this. You know, I've got, we've got some help coming on board. Um, I've got a key person starting Alex who's been, uh, an intern slash college student. I will be coming to full on full time soon. That will help.
00:07:51
Speaker
Wonderful. Yeah. Let's start putting together a plan. As it relates to the purge, I actually do think we are going to schedule probably just a one-hour downtime. I think doing more than that
00:08:07
Speaker
is falsely beneficial at first, but like everyone, like we're gonna have all the machines stopped and we're all, we need to do it all together so that we can all within the shop kind of collectively make decisions, at least everyone that's been here for more than like six months. Like, hey, all these like half inch nuts that are laying around or extra like little part things, either throw them away or potentially put them into kind of a junk box. The junk boxes I think
00:08:34
Speaker
It's probably that last glimmer of hope where you think, just throw it away. At the end of the day, it'll probably lead to us spending a few hundred dollars rebind stuff we threw out over the next few months for years, whatever. I don't want to not do that. Yeah, that's where I'm at. Similar here.
00:08:58
Speaker
came to our shop and walk through each cell and kind of looked in each drawer. And you know, the lean perspective is like in our shop, if it's not here to make a knife, what's it doing here kind of thing. And we definitely are holding on to some old junk that is, it's not bad. It's they're not useless parts in, you know, our tools or hand tools or nuts and bolts or whatever, but how long have they been sitting there?
00:09:28
Speaker
And there's, there's some 10 year answers to that one. Yeah. Some piles of nuts and bolts in a, in a rack that I look at maybe once a year when I'm looking for this weird M five, like low head socket screw. Yeah. Yeah, exactly. But like, I know I have some, um, and we've noticed there's definitely a benefit to.
00:09:51
Speaker
finding the balance to organizing your junk, especially for nuts and bolts. Because if they're just scattered everywhere, you don't know if it's intermetric. You don't know where to find them. But in air fittings, too, we've consolidated all of our air fittings into bins. We bought this huge Uline cart with 50 bins in it. And now that's where all the air fittings live. And all of the air hose quick connectors are in one bin. All of the push to connect hoses thingies are in another bin.
00:10:20
Speaker
So even though they're all kind of random and not necessary at any one time,
00:10:25
Speaker
Yeah, totally. It's like, we know what they are. Yeah. And still yesterday, I knew, you know, like on an air hose, you have a quarter inch quick connect fitting, like everywhere in the shop, right? So McMaster sells an eighth inch version, eighth, eighth inch version of that, which is like a quarter of the size. Yeah. And it's adorable. And I bought one like two years ago, and I knew it was on the Maury. And I spent a good 20 minutes yesterday looking for it.
00:10:51
Speaker
I know we took it off the Maury and I'm like, it's summer. I want it for another project. I looked at all of the boxes and all of the shelves and all of the toolboxes. I couldn't find that thing anywhere. Then I looked on McMaster and it would cost me like $14 to buy a new pair of those fittings. I'm like, okay, add to cart. Why do you want a choked down
00:11:15
Speaker
Q quick connect for vacuum, a vacuum fixture, like with a Venturi. Um, that's what I was using it for before where the quarter inch push to connect hose, um, went to that fitting and then, uh, quick connected to the valvi thing that gives you vacuum pressure. So, but why did go? I go eighth inch over quarter. Oh, that's smaller.
00:11:43
Speaker
Oh, I don't think I don't think the ID of that fitting is any smaller than the ID of the quarter inch blue push to connect to us. You know what I mean? No, I did. Okay, now I gotcha. Got it. Because that's the classic like, gotcha on like the stuff no one tells you when you're newer to this is that some of those quick disconnects choke the internal airflow more than others. Many of them choke it down quite a bit. That's a very good thing. And I didn't even consider that really. But
00:12:11
Speaker
that would take that one second of brain power. You look at the hose and you look at the fitting and you go, okay, they're the same ID. Yeah, that'll work. That's a good thing to keep in mind for sure. Yeah.
Process Documentation and Training
00:12:22
Speaker
My list of stuff, it's not a specific timeframe like year-end per se, because frankly year-end is going to be here quite quickly. But over the next six months is
00:12:34
Speaker
All of those things would be more than I could accomplish full-time without other distractions or obligations. That was the step one of the 12-step problem is admitting that. How does that translate back into today? Today is Friday. It is difficult because right now our shop is in a pretty major transition because of
00:13:03
Speaker
the need to retrain around the shipping and operation side of things, which again, out of all tragedies has come great things. Be a fighter, figure that out. We just this week had released our
00:13:20
Speaker
It's meant to be a video on hiring. It's not some like, you're going to watch this video and find the secrets to where all the machinists are hiding. It's not hiring in that sense, but it is in that how we think about it, how we build relationships, how we find people. I think there are definitely some applicable
00:13:40
Speaker
nuggets in that video for anyone who's in this trade or industry. But the other thing we talk about is... Actually, it was great. When I saw that video, I really got into a groove. I got into that McDonald's analogy again to where McDonald's average employee duration is like 40 days. So you're not in the business of selling hamburgers, you're in the business of training people
00:14:05
Speaker
very, very quickly how to sell hamburgers. And so what we're doing now is spending more time streamlining some of the way we have our products stored on shelves or ready to pick orders so that we
00:14:21
Speaker
and avoid tribal knowledge and key man sort of scenarios around that, or just building processes out. So like, hey, we have a new person in. They're going to pick orders and lay them out so that then the person that has that ability to review them or knows more can quickly do so. Mm-hmm. Yep. And we've been on a similar path lately. We hired two new people. They started the other day on Monday.
00:14:51
Speaker
similar thing. We're trying to document and analyze all of the processes. I even wrote a document in GURP that says how to hire a new employee. Okay, here's all the steps. Add them in QuickBooks. Add them to GURP. Add them to this. Do this. Get this information from them. Yada, yada, yada. It's this whole document.
00:15:11
Speaker
our accountant Spencer also wrote a similar document and we compared notes and there were gaps between the two and it's like, okay, let's consolidate this and let's keep it together. It was great. And yeah, I had things he didn't think about and he had things I didn't think about. It was like, this is why we're consolidating. This is perfect. But yeah, how do you train people for key roles in the kind of quickest way possible? Because in some of our roles, like it could
00:15:35
Speaker
Take a year to be like really good at something but how do you shorten that up or what's what's the bottleneck was the hurdle to that really. Yeah yeah we. I wonder I'll be curious to see how it works having those in group.
00:15:52
Speaker
I suspect it could be great because GURP is GURP. Otherwise, we've all done that where we've written PDFs or Word documents or Asana things or whatever Trello where it's like, hey, here's the shipping guide or here's how you add a machine to the network and then they get lost or no one knows where to look for it. Having it in GURP seems like that internal wiki thing, right? Yeah, it's working so well. I've used it.
00:16:21
Speaker
We've hired four employees in the past six months or so. And I've used it for all four of them. And I'm like, I know where it is. Now I don't have to think about all those steps, and it's getting better and better. And same thing, how do I add a machine to a network? I've got a procedure in GURB with every IP address that I'm aware of in the shop. Really? Yeah, so Maury Nakamura, every computer, every Raspberry Pi, everything. And I'm like, oh my gosh, this is the best.
00:16:48
Speaker
And it's in GURP, it's like three clicks away at any one moment. Yes. Okay. Love that. So good. Lex is not designed that way, period. We could easily add a WordPress wiki plugin, I'm sure. But what we've done for now, which is working, is we have on our shared drive,
00:17:13
Speaker
We have a folder called resources or shared resources and we have things like the fall intern schedule because we've got people here on different days and times of the day. That's pretty old school like we're manually typing in a text file, their names, their schedule, but that's fine. Then I just started adding links to Google Sheets because I do find that's kind of the downfall of Google Sheets is it's sometimes hard to find your own
00:17:40
Speaker
Yes. I absolutely love sheets and docs and everything, but I probably have a hundred of them. Yeah, exactly. How to ship a package to Ireland or whatever. There's a sheet for that or some document with some notes from four years ago that I don't remember where it is.
00:18:04
Speaker
I assume everybody knows this, but if you just share a Google Sheet with the correct link permissions that creates a link, which on any Windows computer, you can just create a new shortcut and it creates a shortcut during that sheet. In that shared resources thing, we now have links to... We have a Google Sheet for all of our emergency contact info. We have a Google Sheet for this thing that's actually worked out great.
00:18:29
Speaker
PO process form. It's probably worth like a full video on it because we got, we went for it. Okay. So, um,
00:18:38
Speaker
Pre pre having this when we were only sort of e-commerce someone would go on Shopify on our website They do they don't even know what shop I own or I would say they buy something and we're good like everything happens, you know, the Shopify can handle the inventory If we have it set to handle inventory on that product and the shipping info goes into ship station The payment takes gets taken care of because they have to pay with a credit card or PayPal. Basically you're done totally
Efficient Purchase Order Handling
00:19:03
Speaker
flip that on its head when the Acme Corporation wants to send in a PO for 17 products. So what we now do, it doesn't make sense to explain this whole process, but we create that order in Shopify manually. Actually, we have them created as a quote, which is great. But that way, Shopify still handles
00:19:30
Speaker
all of that stuff. Even distributor orders get run through Shopify from a process standpoint, not in a payment standpoint. Then we have a PO checklist that we staple the PO to and that serves as the runner. It has this critical information about the purchase order number, if there's a distributor involved. Then we have this checklist of things like, hey, PO needs to be on the box or shipping notes like, hey, this is getting shipped on the customer's account or they want it. Some of our customers, believe it or not, want their
00:19:55
Speaker
their fixture plate shipped next day air freight, which is crazy. So it's become a foolproof process that allows anybody to follow the process. And when there are red flag pivots, like, hey, example, like don't ship this, you need to reach out to the customer because they have their own logistics team that will handle it. It's easy to make that note, which will cause a person who doesn't know to at least come ask somebody who doesn't. It's great. I love it.
00:20:26
Speaker
Yeah. Um, yeah, I don't even know where we were at, but that's, that's what we've been up to there. Um, yeah, we've, we've started doing some internal training videos, um, for specific processes like, um, sky did one for heat treat, uh, but a month ago and I watched it, it's eight minutes long and it's just him one shot talking about the process for heat treat. And I'm like, I'm watching it going,
00:20:53
Speaker
This dude really knows what he's talking about. This is great. I know him very well. But to watch the video, and I'm like, we should just post this. This is fantastic. So we've got three of them. Some for finishing. Eric's got one for assembly knives. And it was nice. It's just nice. I want to do more of this. And they don't have to be high dollar. They don't have to be fancy. They give me cell phone footage that's just document the process from the person doing it and get their real life, real time thoughts.
00:21:24
Speaker
of all the little nuances.
00:21:26
Speaker
I'm laughing because we have instructional videos more for stuff like how do you create freight bill of leanings on our trucking website and that video exists and then we had another employee come in and proudly say, hey, I just typed up a two-page document with photos annotated on how to do this and you're just facepalming because you're like, we already have a video on that. It's a lose-lose all around because then that employee doesn't feel like they get credit for going above and beyond.
00:21:54
Speaker
They waste the time, the duplicated work. It's in an inferior format compared to a very short video. Everyone would rather watch a 40 second video than read through annotated photo write up. I just realized what you said is a great point, which is on our resources folder. We should have links to some of the instructional videos that we've got. I remember touring Pearson's shop years ago.
00:22:20
Speaker
and he's got the QR codes that go right to a video at each station for doing whatever. We haven't done that, but I do love that idea, especially for specific nuanced weird stuff. Yeah, that's where we're now that we've had to turn operations up on its head or shipping. Some of our stuff
00:22:42
Speaker
is fine. But some things like our pallets, they are a pain, frankly. So what would be wonderful is we have one of those, you've seen those wire rack carts we use from Sam's Club or whatever. So we have plenty of them or we can buy more of them at like 100 bucks. So instead of having that inventory for those
00:23:04
Speaker
products interspersed throughout the shop. What I mean by that is packaging, screws, boxes, labels. Let's create for that product their own cart because then we can have on that cart the shipped. An example of what it should look like shipped, we can have packaging foam, we can have the custom boxes we have for them, the stickers that we have to label them.
00:23:25
Speaker
And then it's so easy because you just say, oh, everything we needed to do for the palace is right here rather than walking around and be like, oh man, because all boxes look the same when they're flat because they're flat packed like they're... Yes, yes. It's a pain in the butt to go find out what's where. That's the whole mentality is how do you streamline and simplify and make things obvious so that anybody including a very experienced person in the shop doesn't have to brain power to
00:23:55
Speaker
find what they're looking for and understand it. Um, on that note, uh, they had a very proud, uh, you know, business leader moment this morning. So I walk into the shop, um, a little bit before we hit record on the podcast, I go to my desk to get my water and put something down and do a spin to warm up on the speedio so it can warm up while we're doing the podcast. And so I walk in and on one of the Uline carts that we have, the big red ones, there are, there is a sea of yellow do waltz drills. Like we use the dual hand drills.
00:24:25
Speaker
everywhere. But there's like 15 of them on this cart. And I'm like, did we just buy a whole bunch more? Because I'm unaware of this. And I didn't know we needed more. And then I started looking at them. And there's labels on each one, Maury, Kern, you know, Nakamura. And I'm like, Oh, no, they just consolidated. They cleaned them all really well. And they put labels on each one. And I'm like, this is fantastic. Because we've definitely had it. We're like, sometimes you just need a drill for a weird job. But
00:24:53
Speaker
you're drilling a hole in the wall or something, so you borrow the closest one. But then the person running that cell is like, where's my drill? You can't take the drill from this cell. It's not allowed. Right. It's like you're so used to it being there. That's like, I don't know what to do. It's not right within arm's reach anymore. That's wrong. Something's wrong.
00:25:16
Speaker
And then the person who borrowed it might forget to put it back. It might be on the floor while they're working kind of thing, little things. Yes. Yeah. So I think that's what the guys are trying to solve outside of my involvement whatsoever. But it was just so funny. I'm like, did we just buy a bunch of drills?
00:25:31
Speaker
Yeah. No, that's great. Got cleaning stuff even with those. We're sort of buying those tub of, what do they call it, tub of rags? They look like the kids wipes that come in that container with the plastic lid that you can tear them out of. Are they like new rags or old t-shirts kind of thing? I'm sorry. These are more like wet wipes that are wet shop rag things, not rags. Oh, they're actually wet.
00:25:54
Speaker
They are wet and they are one-time use. They're like baby wipes for cleaning the ship. Tubba rags. Can't think of what they're called. Anyway, but coming back to that whole six-year purge thing, we have these generic bin containers with all the socket adapters and scissors and knives and screwdrivers, but
00:26:18
Speaker
I struggle as the business owner to not wear my bootstrapper hat and be like, oh man, I just can't bring myself to throw this away. But what I really want is a socket set. And we've done a good job. I will give ourselves credit. If you go into our toolbox drawer, there are two socket sets that for over a year, year and a half have remained perfectly intact. Love it. But you still have the gravel at the top that has all the random stuff. We should probably just get rid of that.
00:26:48
Speaker
Well, it's like you go to a garage sale and you see grandpa's toolbox of stuff like you're becoming that, you know what I mean? It's like you have your bins that are in 40 years are going to become that garage sale item because they haven't been touched.
00:27:02
Speaker
Yeah, no, I know. So I think what we'll do is go over the next few months through that process and then in the spring, we'll do a yard sale sort of thing. I don't really care what we get for it monetarily. I just can't bring myself to go from there to the dumpster with perfect stuff. There's plenty of, yeah.
00:27:27
Speaker
Can I change topic? Yep. You and I were talking last week, right after we hung up, after we hit end report, but we were talking for a hot second about
Understanding Variance Reports
00:27:38
Speaker
about this idea of variance accounting. And I used to have to deal with variance reports more on the expense side of things. So working at a larger company, somebody is required to put together a budget for their department. So in real estate world, this would be snow removal and landscaping and roof repairs. And you have to create an estimate for a building of what you think you're gonna spend or a portfolio of buildings. And then each month,
00:28:08
Speaker
If it's, let's say, round numbers, you're going to spend $12,000 a year on window repair. Actually, snow removal is a better example. You're going to spend no money in the summer months, but then each winter month, you're going to spend $1,000 on snow removal. Well, variance reporting is pretty simple. It didn't snow or snowed more than you thought, but you've got to give some descriptive explanations that goes beyond just what the numbers say.
00:28:32
Speaker
And so, you know, why are you doing that? It's for your own internal team or it could be for, I guess, you know, shareholders and big companies, a public trade companies or, or external stakeholders. Like if you're interacting with a board or something, a board of directors. So you and I were talking about ebbs and flows, oddly more on the revenue side of things. And it's kind of like, why are we up or down? And, you know, I know for us, you know, I,
00:29:00
Speaker
We've gotten some really nice purchase orders from companies. They're truly wonderful, except they're not really recurring. They don't represent ongoing organic growth of Saunders Machine Works e-commerce from strangers. It's not fair to say a PO that could be 10% or 15% of your whole month's revenue is not going to be there next month. So we don't do variance reporting.
00:29:27
Speaker
explicitly, but I do now do a monthly roll-up where I look at
00:29:36
Speaker
what I call non-recurring expenses more so than revenues. So I sort of say, hey, like this month, great point. Last week I spent the money to buy the last two tombstones for the horizontal. Tombstones won't repeat in cost necessarily. Now, collectively, tooling in general, there's some amount for it. So it's not zero, but it's not that amount.
00:30:00
Speaker
And I care about that a lot because I look at what the run rate is versus the actual. That makes sense? Yep. Yeah. Because you might finish up a big order, and whoa, it was our best month ever. But that order is now done, and it's not coming back. And we might not have that kind of order again. So next month might be tight or not. Yeah. No, for sure. On the revenue side for us, it's production dependent.
00:30:30
Speaker
If everything's going good, we can have a really good month. If we're having a lot of issues, if we're slow, if we're down on staff, if the shop's down to a power outage, whatever, it hurts. On the spending side, we definitely have variable spending, whether we're investing in machines or one-time purchases.
00:30:50
Speaker
or whether it's the burn rate at the shop, which is a very good number to know. How much are you spending on rent, staff, recurring materials to do your average monthly sales and utilities and all that other stuff? That's a good number to know, but it's not the whole number because we might spend $50,000 on a new air compressor and a whole bunch of tooling and devices
00:31:16
Speaker
Yeah, but next month, we're not spending that money. It has to average out through the month. On the actual accounting side, that gets allocated differently, whether it's an investment into the equity of the company.
00:31:29
Speaker
versus it's that balance sheet, profit and loss sheet, both sides thing, which I'm working on understanding deeper and deeper over time. I was just going to say, I mean, for those of you that have hung up right now on the podcast, I understand, but if you're in any way in this role, you have to go watch our video on accounting basics for
00:31:52
Speaker
manufacturers, and even assets equals liabilities plus equity. If you understand that, rock on. If you don't, you have to understand that. It's simple, it's not complicated. But it's also not necessarily something you would learn without somebody teaching you. Right, right. And being in business for yourself in any kind of business, you need to understand at least the basic concepts. You don't have to do it, like you can pay an accountant to do it. But as the owner of the business, you have like,
00:32:21
Speaker
Over the past five years specifically, I've progressively learned more and more and more and more about accounting. Before that, I knew very little and I could spreadsheet my way through a month, but I didn't understand what a balance sheet was. But even the word accounting or accountant gets thrown out, and by all means, a perfectly acceptable or excellent accountant may still just be processing
00:32:47
Speaker
numbers and not actually thinking. You need somebody who can function in a critically thinking role to understand offering more insight into those numbers. In the past when we were outsourcing our accounting and bookkeeping, we always had very small
00:33:06
Speaker
a one man shop or one lady shop accounting or bookkeeping service that was happy to sit with us over tea and explain things and offer advice.
00:33:20
Speaker
help. Yeah. So do you now do any form of, I'll use the word variance, but like any sort of like analysis or thoughts on, you know, pay this month, we only made $7,000, but we also spent 17 on new vices or whatever. Yes, yes. We've been we've been doing more of that for the past two years probably.
00:33:42
Speaker
And right now Spencer, our accountants really hounding me for accurate inventory costs so that he can actually like help with those numbers because otherwise by costs, like how much inventory are we sitting on right now? Okay. That's a dollar value. Um, and then he's been here for five months. So he understands the business, but needs to further understand like,
00:34:07
Speaker
the difference between end mills and vices like, you know what I mean? Recurring costs versus assets and investments, things like that. And that's just communication back and forth. And I need to provide him with more numbers, which is another point is why as of today,
Inventory Management with GURP
00:34:24
Speaker
GURP is handling inventory completely through the shop. That's great. Well, as of today, it will be handling inventory. There will be some stumbling blocks over the next few weeks, I'm sure. But yesterday, I pulled the trigger and I was like, this is happening now. The system is good enough functionally. I've tested it as far as I can before I need everybody else to throw numbers at it. And that's exciting. Yeah. That's awesome.
00:34:50
Speaker
Can I ask you a question? If you don't know the answer, do you mind bringing it back up next week? Which is, if you purchase $1,000 worth of Delrin to make pivots and that'll last you six months or maybe a year, do you expense that when it
00:35:08
Speaker
gets paid for, which expensive means your income statement for that month would reflect $1,000 cost or reduction in profit. Or does your accountant do what's called capitalize that $1,000, which means it now $1,000 with the Delrin sits on the Grimsmough Knives books as an asset and then each month as you pull a little piece of it out literally to put in the lathe and convert it, then it gets expensed over that period of use.
00:35:39
Speaker
We have been, I guess you'd say sloppy at that over time, because especially because accounting and machining don't talk to each other enough to know that we pulled a bar every month, which is part of what is driving GURP to track costing as well. So I know on our balance sheet we have
00:35:59
Speaker
a lot of weird things that are left over from a couple years of like, you know, $50,000 in lathe bars. And I'm like, yeah, but nothing's ever pulled from it. Yeah, right, right, right. Like, like, you see the invoice, we purchased it, so you added it, you applied it to there, but nothing's removing from that cost. So it's, it's just wrong. Yeah, if you're really nailing it down to nuts and bolts and trying to provide the company with valuable information. So yeah, I don't know the actual answer to
00:36:30
Speaker
what we're going to be doing, but I just know that having the information is going to really help us.
00:36:35
Speaker
The short answer for us is we don't capitalize over shorter periods of time like that. I wish we could. I just can't figure out practically how to. What we end up doing is more periodic inventory, more to be correct on accounting stuff. In a weird way, you have accounting inventory that doesn't necessarily relate to what Lex has. That sounds wrong. It's just a different process.
00:37:06
Speaker
Yeah, it gets tricky. Yeah, right. But it's important, it sinks too, because, and this comes back to me doing manual adjustments in our books, because if we have a huge order, the revenue may not get booked until September, but in July, we may have bought the material, so you can have this huge hit
00:37:28
Speaker
to August numbers or whatever. I just said you paid for the material and then a huge spike in September because you got the revenue, but they had no costs associated with it. Now that just also has to do with the granularity of looking at months and that can get smoothed out by looking at orders or year. You guys know this, but like, man, it'd be great to have perfect information. I know. And it's tricky. And like,
00:37:51
Speaker
one number I like to know but I realize it's not the full picture is like how much cash is in all of our bank accounts if you add it all up because we've got US bank accounts and Canadian bank accounts.
Cash Flow Awareness
00:38:02
Speaker
Just I like to know what that number is in total. The caveat is I don't with that number I don't know
00:38:09
Speaker
if we have $50,000 in expenses going out tomorrow. So it's not the most accurate number to know. But I don't know that the child inside me likes to know what the pot is and compare that like month to month or whatever. It just gives me a feel for the business even though it's not really because I don't know the whole picture from that number. You know what I mean? Do you use QuickBooks? Yeah. It should show you
00:38:36
Speaker
your accounts, don't they all get pulled in automatically? They do. Maybe there's one that's not for whatever reason, but they don't convert them all to Canadian necessarily. And it doesn't add them all up into like one number. You can add them up from there. I think. No, that's I mean, I will never under having a
00:39:03
Speaker
idea of your cash position is critical in cash management period. Tracking payables, receivables, cash position, it's really hard to look at it unemotionally, which it just really is for me. Like you said, even our payroll is well into the double digits
00:39:29
Speaker
percentages of our normal cash balance. Does that make sense? Yeah. So I might look at a number on a Thursday and think, oh, that's pretty good. Note to self, not supposed to be emotional about it. Not realizing that payroll comes out on Friday. Yeah, 20% or 30% of it may be gone tomorrow. Yeah.
00:39:47
Speaker
Yeah, exactly. Okay, can we finish up with some machining
Fusion 360 Online Classes
00:39:50
Speaker
stuff? Yeah, and I have, I have a big question for you as well. Oh, where you go? I took my second week till next week. So a couple of our guys at the shop listened to the podcast. What's up, guys. And they heard you talking about sending people to your training classes. Okay. And so one of our guys, Grayson looked on your website and saw a, um,
00:40:11
Speaker
online training course for $100 or $150. I had no idea about this. Can you explain? What is this? So that is hosted through the website Teachables. That doesn't really matter. It's just Teachables is a web service that offers a online platform for taking classes. So we have a Fusion 360 CAD class and a Fusion 360 CAM class.
00:40:40
Speaker
where we have a bundle for both of them and there is a full blown curriculum that goes through the basics of each, the fundamentals, what's what, and then through numerous examples. So in the CAD side, we model up, I think we model up a fixed plate knife, we model up a screwdriver, we model up a Geneva gear type mechanism. So it's kind of one of those like, you can go through and learn a lot. And some of this super basic like,
00:41:07
Speaker
shapes and extrusions. There's some best practices around dimensioning and drawing. And then you get into stuff that I think is kind of that next level if you're new to CAD, which is sweep or loft or understanding more interesting use cases around the combined feature. And then the same sort of thing in CAM. We focus on the fundamentals. You can do so much if you learn facing 2D contour and adaptive, but then all of the different multi-axis type of toolpaths.
00:41:37
Speaker
The only thing I'll readily admit is a drawback is, first off, it is still an online class. It's not the same as being in a room with a teacher and being able to engage. The other drawback is that to Fusion's credit, Fusion is changing their user interface and menus and capabilities and features, and that class is now a couple of years old. We've gone through the videos and we've added commentary and new videos and tweaks to clarify some things, but especially for folks that are
00:42:06
Speaker
that really want the video to match exactly perfectly. It's really hard because fusion might have changed one menu or something. For a lot of the folks in your shop, I wouldn't anticipate that that is any sort of a hindrance. But yeah, not your need perspective because like you find some YouTube tutorial learning about whatever loft and it's from four years ago and fusion looks different. And you're like, Oh, wow, that's funny. But yeah, okay. Is it more geared towards people who've never used fusion before or
00:42:37
Speaker
either any. It is absolutely a class we would recommend to folks that are new to CAD or CAM or diffusion. The great thing is that the way the courses laid out and each thing is described within the curriculum, if you realize, oh, no, no, I'm good, you can jump ahead to say, okay, let me just start looking at the screwdriver tutorial because I don't need to sit here and have someone tell me the D key is for dimension.
00:43:03
Speaker
But sometimes you just don't know that stuff. You might have been using Fusion for a long time and you wait. There's keyboard shortcuts or like you can parametrically put dimensions together or all these weird little things that user parameters you fall into your own routine. And I mean, Fusion has probably stuff that I've never even heard of that could be useful, you know? And every now and then somebody will drop a little bomb on me and I'm like, what? That changes everything. Do you do you use manufacturing models?
00:43:34
Speaker
for the machines? What do you mean? I'm laughing because I'm kind of right there with you. I don't use them, but manufacturing models in Fusion allow you to take a CAD, a solid model of a part and make changes to that model that only relate to the CAM tool pass. For example, deleting all the chamfers. Cool.
00:43:54
Speaker
Yeah. That way, you can have a cam model that doesn't have all these darned features that stop your holes from working, and T-conchos from working, and blah, blah, blah. But if you go back to the CAD workspace, it's the exact same product as you designed. They're kept. It keeps the manufacturing model. It's not like a five-second temporary thing. Correct. The manufacturing model is sort of like a variant of the CAD that exists in the manufacturing workspace that can be toggled on and off. It's just stripping a couple of features off, basically.
00:44:24
Speaker
Yep. We should do a model on that. Yes, please. So keep an eye on your online training classes report log. Okay, absolutely. You might be getting some sales here. Yeah, totally. Sounds awesome, actually. I was surprised and really happy to hear that. Yes, good.
00:44:48
Speaker
I think it will be great for you to get more people able to be comfortable. 100%. And even if this is the barrier to entry, like the first step up the mountain, huge, like huge, huge. Yeah, agreed. I'm going to wrap up because I'm going to help actually with orders today. That's amazing. Anything else? No, that's great. I'll see you next week.
00:45:17
Speaker
So it was good, Ben. Take care. Bye.