Why You Should Invest in Your Operators
December 10, 2013 / 
continuous improvement, quality, training
Over the last few years, the industrial metal-cutting industry has invested heavily in technology to ramp up productivity. While this is certainly moving industrial metal-cutting forward, it has also exacerbated the workforce challenge that has been threatening the industry for years. As confirmed by a joint report from Deloitte and The Manufacturing Institute, skilled production workers are one of the largest workforce segments facing retirement in the near future, which will clearly have an impact on the number of experienced workers on the shop floor. This does not bode well for an industry that just ramped up its need for advanced skills.
The good news is that the solution is quite clear: You need to invest in your workers. While having the right tools for the job is important, it is perhaps even more critical to have people with the right skills operating those machines. In a band saw cutting environment, for example, an operator running a saw at the wrong speed and feed settings will drastically reduce blade life, increase the chances of maintenance issues, and create potential quality issues, all of which add up to wasted time and money—the exact opposite of productivity.
The only way to increase skills is to provide training. Unfortunately, this is not always as simple as it sounds. A good training program should provide new employees with a solid foundation, while also making sure seasoned employees know the latest techniques. Below are some suggestions that will help take your training program—and your workforce—to the next level.
- Create a Formal Training Program. If you don’t already have a formal training program in place for new employees, it’s time to implement one. Having a seasoned operator casually show someone the ropes creates a casual attitude toward the job at hand. A formal, organized approach will stress the importance of quality and will also make it easier to hold operators accountable. A recent editorial in Modern Machine Shop magazine provides a good overview of how to develop a formal training program. The article focuses on CNC training, but the general principles could certainly be applied to any production area of a machine shop.
- Define Training as an Ongoing Process. As highlighted in the white paper, Accounting for Operator Inefficiencies in the Metals 2.0 Environment, operator training needs to be ongoing. This is especially important in a machine shop, where there can be multiple shifts and an unequal level of talent on the shop floor. By instituting regular operator training, managers can level the shop floor talent and add consistency to production procedures. This also encourages a spirit of continuous improvement among experienced operators who often resist change.
- Make Training Part of your Quality System. While instituting formal training programs can be challenging, the real challenge is making them actually work. According to the white paper, The Top 5 Operating Challenges Facing Today’s Machine Shop Metal Cutting Operations, many industrial metal-cutting shops have found that the only time training programs became effective is when shop management merged training with their quality control initiatives and auditing processes. This elevates training from a well-intentioned priority to a standard operating procedure that is both effective and measurable.
New Approaches to Cost Management
December 10, 2013 /
benchmarking, Cost Management, LIT
In an ideal world, a fabricator wouldn’t list cost management as a challenge. If production is running smoothly, maintenance is under control, operators are trained, and customers are satisfied, then costs should be relatively stable. However, at a time when the industry hasn’t fully rebounded and uncertainty about market conditions remain, cost is a concern for even the most efficient industrial metal-cutting operations.
The question, then, becomes: How can today’s fabricators better manage their costs? When many companies are already “running lean,” what other measures can they take to keep costs under control or, better yet, save money?
Unfortunately, there are no “one size fits all” answers when it comes to cost management, but the LENOX Institute of Technology (LIT) was able to find a few strategies currently being used by industry leaders. Below are some of the ways top performers are approaching cost:
- Weigh long-term benefits against short-term costs. Whether a hard cost or an opportunity cost, fabricators should weigh their cost expenditures against the benefits or detriments of dollar-allocating decisions. Managers need to make sure they are not shortsighted by upfront costs and, instead, consider the long-term benefits. For example, would investing in a new piece of equipment improve productivity? Would it increase quality? Will it help reduce maintenance costs? This was certainly the case for O’Neal Steel. The company, featured in a white paper from LIT, found that spending $40 more per band saw blade saved the company about $600 a week—a total of $30,000 in annual savings.
- Focus on improving the order-to-cash cycle. An industry study from the Fabricators & Manufacturers Association International (FMA) says top-performing fabricators are focused on increasing the order-to-cash-cycle. The study, covered here by thefabricator.com, says that best-in-class companies are scrutinizing and improving every process in the order-to-cash cycle, including sales, quoting, engineering, customer communication, part flow, packaging, and delivery. According to the article, this shortens the cycle, which improves a host of financial metrics. When employees are able to process more jobs in less time, sales per employee increases and costs per job decreases, all of which outpaces downward pricing pressure from customers and rises earnings before interest, taxes, depreciation, and amortization (EBITDA).
- Set cost-cutting targets using external benchmarks. If your company is focused on reducing costs, make sure you are not setting arbitrary goals. According to a survey from Bain & Company, the problem with many cost-cutting initiatives is that they are based on internal benchmarks that ignore market trends. According to the consultancy, successful companies develop cost-cutting goals after taking into account what their competitors are doing. For example, cutting costs by 10 percent means nothing if all of your competitors are using new technologies that reduce costs by 30 percent. Managers need to make sure their cost-cutting goals are both realistic and relevant.
All three of these methods suggest that successful cost management in today’s marketplace requires managers to look at cost from a high level before implementing any initiatives. In other words, gone are the days of “quick fixes.” By taking the time to approach cost strategically, fabricators can make improvements that have a long-term—and more importantly, sustainable—impact on the bottom line.
