Cost. Control
July 21, 2015 1:17 pm Leave your thoughts
Cost control is one of the basic steps in determining a company’s financial safety through volatile market swings and the very first step of cost control is to know your break even points.
What does all this have to do with Mr. Chang?
EVERYTHING! Contraire to popular belief, my work term with West Fraser hasn’t been walking around with a chainsaw chopping down trees. For the past two months I’ve been running the Return To Log studies at Chasm sawmill, a division of West Fraser. Return To Log (RTL) studies are used to determine how much the mill could pay for a log. In other words, how much could the mill make from transforming raw logs into dimension lumber? The results from these studies would eventually aid our log buyer in controlling his/her costs in purchasing logs.
So what are these studies like?
The RTL studies run from 3:00AM to 6:00AM on Mondays (Happy Mondays!) to avoid cutting into production time. We would run the logs through the sawmill and rough grade at the trimmer to project a grade out turn for the specific fibre basket of logs ran through the sawmill. Rough grading is done visually by the sawmill Quality Control and I. In addition, an example for a projected grade out turn would be, 69% of 2+Better grade, 20% of number 3 grade and 11% of economy grade lumber would be produced for the given fiber basket. This would allow us to estimate the net income if we do chose to buy and process the logs. The calculated net income is a strong weapon utilized in our log buyer’s arsenal during the process of log bidding.
For those who don’t know I always get a sneak peak of the beautiful sunrise on Monday mornings.
Remember: Always enjoy the little things in life!
And.. What do you do for the rest of the week?
So I spend most of my other time making coffee (lumber production and coffee production goes hand in hand), routine size checks, machine calibration tests and production reports. Other than that, most of my time is dedicated to the refining of the RTL study’s methodology and the RTL study’s reporting structure. These RTL studies does not only include running the logs through the sawmill and collecting the necessary data, there is also an extensive amount of work done in gathering experience input from employees of different expertise(Quality Control, Superintendents, Kiln Supervisors, accountants etc.) The reason behind this is to mitigate the various amounts of variable factors that limit the accuracy of the study.
Eric! What happens to these studies when you finished your work term?
Removing me from the driver’s compartment won’t stop this train in reaching its final destination. The Return To Log studies will continue to run even after I’ve completed my summer work term. This because the potentials for the applications of the results are endless and accurate forecasting is another major factor in determining the company’s financial future.
So the rat race to complete these studies has already begun as every company is rushing to finish their RTL studies to be able to forecast their profit margins.
Now the question is which company will be the first to finish?
Hmm. Maybe check out the letters in bold?