Is It Time to Change How You Allocate Resources within Your Service Center?

February 5, 2014 / , , ,

One of the most common pain points for metal service center executives is allocating resources in the most efficient and economical way. From a strategic standpoint, it would be ideal for managers to make continuous changes within their operations, in terms of both equipment and human capital resources. However, budget and time constraints have made that a challenge for many industrial metal-cutting operations.

As stated in this article from McKinsey Quarterly, most executives find themselves stuck in the trap of allocating resources the same way over and over again and expecting different results. Specifically, the management consulting firm states, “Every year, they turn the handle on the same strategy-development, capital-planning, talent-management, and budgeting processes, and every year the outcome is only marginally different from the one they reached in the previous year and the year before that.” Alternatively, McKinsey suggests that managers who refocus these processes have an opportunity to deliver different results.

A separate article from goes one step further and says that 2014 should be the year that executives dump all “tribal knowledge”— the tendency to do things simply because “it’s the way we’ve always done it” — and start using actual facts and data to make decisions. “The bottom line in today’s mobile-enabled, hyper-connected world: Companies that continue to rely on tribal knowledge and myths alone are falling further behind enterprises that are dealing in reality and actionable fact,” the article says.

Perhaps it is time to take a closer look at how you are distributing resources within your metal-cutting operation. Do you find yourself using the same resource allocation strategies you have used for years? Are you using facts and hard data to make those decisions? Are those decisions improving efficiency? And, last but definitely not least, do you know what other metal service centers are doing?

A recent white paper from the LENOX Institute of Technology (LIT) lists several ways leading metal service centers are choosing to reallocate their resources to improve efficiency. Below are two examples from the paper that show how technology investments like software can pay off:

Of course, managers can make other, non-technology related investments in areas such as training and safety and also get a high return. Every operation is different, with its own unique strengths to build on and weaknesses to improve.

The first question managers need to ask themselves is whether or not it is time for a change. Are you making strategic, proactive decisions for your industrial metal-cutting operations, or are you simply doing things “the way they’ve always been done?” As suggested in the McKinsey Quarterly article, today’s unpredictable market requires managers to be more agile in all of their business decisions, including resource allocation.