June 28, 2014 / agility, best practices, continuous improvement, customer delivery, customer satisfaction metrics, lean manufacturing, LIT, predictive management, preventative maintenance, productivity, root cause analysis, strategic planning, value-added services
As customers continue to redefine delivery expectations, manufacturers need to have strategies in place to not only meet those changing requirements but, even more so, anticipate them. Getting ahead of customer needs is the key to both retaining and gaining customers in today’s metals industry. As many leading manufacturers are discovering, agility is what sets you apart.
What does it mean to be an agile manufacturer? According to this overview from leanproduction.com, agile manufacturing “places an extremely strong focus on rapid response to the customer—turning speed and agility into a key competitive advantage.” An agile company is able to take advantage of short windows of opportunity and adapt to fast changes in customer demand. This tactic can be especially attractive for industrial metal-cutting companies that are trying to gain an advantage over offshore competitors.
Whether you are a high-production machine shop or a low-mix metal service center, below are a few best practices we gathered to help your industrial metal-cutting organization move from an “on-time” service provider to an agile, customer-focused partner:
- Invest in Smarter, More Predictive Operations Management. Manufacturing agility starts with adopting more predictive operations management approaches. For example, don’t just focus on avoiding downtime; find ways to plan for it. According to a recent benchmark study from the LENOX Institute of Technology, 67% of industrial metal-cutting operations that follow all scheduled and planned maintenance on their machines also report that their job completion rate is trending upward year over year—a meaningful correlation. The implication is that less disruptive, unplanned downtime and more anticipated, planned downtime translates into more jobs being completed on time. By implementing a strategy as simple as adhering to a preventative maintenance schedule, managers can actually anticipate maintenance bottlenecks and turn “interruptive downtime” into “predictive downtime.” This not only makes it easier to schedule and meet time demands, but it can also help with other operational aspects such as improving cutting performance and extending equipment life—all of which add up to happy customers and lower costs.
- Think (and Plan) Like Your Customers. Being agile goes beyond completing a job on time. It also means taking the extra step to anticipate customer needs and then plan accordingly. Karay Metals, a metal service centered featured here in Modern Metals (MM) magazine, has taken this approach with its mandrel tubing customers. Typically, drawn over mandrel tubing comes in certain standard lengths, usually anywhere from 17 feet to 24 feet, the MM article states. However, Karay discovered that such a wide variance creates guesswork for its customers and as a result, can hamper their productivity. In response, Karay now offers tubing in 20- to 24-in bundles so its customers know exactly what they are getting, adding a convenience that its customers have come to expect and appreciate. As the MM article reports, the service center takes the same approach with inventory, stocking items its customers may need quickly. These strategies may veer away from traditional “lean” approaches, but they also build customer trust and loyalty—benefits that may not be measurable, but could prove to be valuable. This also a great example of how being “lean” isn’t necessarily the same thing as being “agile.”
- Above all else, communicate. Put simply, agile manufacturing requires fast turnaround. However, as this article from thefabricator.com confirms, on-time delivery continues to be a struggle for most industrial metal-cutting companies. Why? According to thefabricator.com article, most manufacturers would blame overproduction, subcontracting, customer mix, and scheduling. And while those issues certainly contribute to late deliveries, the article suggests that they are not the root causes. The real culprit, it states, is often poor communication and documentation. For example, improper labeling may cause an operator to cut the wrong material, or a sales person may fail to explain certain job specifics. Neither of these issues has anything to do with the actual cutting of the part. “Often a part spends more time in the virtual world, being discussed in e-mail after e-mail, than it does on the shop floor,” the article states. As senior editor Tim Heston suggests, this means that today’s managers should be focused on breaking down departmental barriers with strategies like cross-training and procedural documentation, to name a few. This type of communication is especially critical for manufacturers looking to achieve speed and agility. There is simply no time for mistakes.
June 25, 2014 / best practices, Cost Management, Employee Morale, human capital, KPIs, LIT, operator training, productivity, Safety, strategic planning
While most managers would list safety as a top concern and maybe even a priority, only a select few would list it as a strategy. A growing number of industrial metal-cutting companies are finding, however, that building their operations around this critical business area offer benefits that can improve the bottom line.
As we stated in an earlier blog post, safety has a direct impact on operations. Put simply, injured operators can’t be productive. The concept seems basic, but even leading manufacturers often fail to realize this. In a recent IndustryWeek (IW) article, Craig Long, a vice president at Milliken & Company, admits that this was something Milliken failed to do in its early years. While the manufacturer had always worked hard on safety, it was doing so in a silo. “We saw no connection between safety and operations. We were in survival mode,” Long writes in the IW article.
Long goes on to describe the safety journey of another leading manufacturer, Alcoa, and how its intentional safety efforts improved profitability to record-setting levels. Following the lead of Alcoa and other leading manufacturers, Long states in IW that Milliken spent several years repositioning its operations around safety and, as a result, has seen tremendous financial benefits, including doubling the S&P 500’s rate of earnings growth.
An increasing number of leading-edge forges are also using plant safety as a strategic lever. Every year, the Forging Industry Association (FIA) recognizes three forges for their exceptional safety efforts, and this year’s winners all stressed that safety is at the core of their company’s success. However, as one winner emphasized, the top goal should be ensuring that every employee goes home without an injury. “To us, the impact of an employee being injured, regardless of where it happens, has a negative impact on the injured individual, his/her family, and to our company, in that order of importance,” John P. McGillivray, Safety & Environmental manager at Scot Forge Co., told Forging Magazine.
So how do you build your forge around safety so that both your employees and business benefit? Below are a few tips we gathered to help you begin a safety-first journey:
- Start at the Top. In the IW article, Long lists nine keys to safety, but he starts with the most important—executive buy-in. Like any company-wide value, safety needs to have top-level commitment and support. Long even suggests that companies appoint a chief safety officer. “This moves safety from just another program to an uncompromised value within the organization,” he states in IW article. You can read the entire article and its safety suggestions here.
- Look at the Numbers. If you need proof that safety has bottom-line implications, take a look at the facts. A recent editorial from The Fabricator says that managers should start by evaluating workers’ compensation costs, lost time related to injuries, time spent in incident investigations and follow-up, and direct medical costs. These numbers will quickly demonstrate the cost of poor safety. The article also encourages manufacturers to be proactive with safety actions and develop key performance indicators (KPIs). TheFabricator.com provides a list of possible safety KPIs here.
- Communicate, communicate, communicate. The only way to encourage a safety-first environment is to make sure that everyone—from the top down—hears the message loud and clear and often. Safety reporting sets the tone of an organization by reminding operators that 1. Their safety is important to you and 2. You are serious about it. Structural Steel of California, a leading industrial metal-cutting company featured in a series of case studies from the LENOX Institute of Technology, is intentional about making sure that employees know that safety is a critical aspect of the metal products it fabricates, and that mindset has evolved into an overall culture of safety within the company’s two North Carolina facilities. The manager holds a safety meeting every morning with the operators and a safety committee meeting every month. In addition to enforcing the safety message, this constant communication provides ample opportunities for the manager to discuss any other production issues that need to be addressed.
Best-in-class forges know that a tactical approach to plant safety provides benefits beyond meeting OSHA requirements or winning awards. Today’s managers need to value safety because it actually holds value that can positively—or negatively—impact their workforce and, in the end, the bottom line.
June 20, 2014 / agility, best practices, industry news, LIT, operations metrics, performance metrics, ROI, strategic planning
According to research quoted in a recent article from MetalForming Magazine, 45% of manufacturers list “improving business execution” as a primary goal for 2014. In today’s uncertain marketplace, this isn’t much of a surprise. In short, agility is key.
However, manufacturers are finding that achieving this goal is a lot harder than it sounds. As the MetalForming article states, companies need to start by clearing “some common hurdles, most notably delays in decision-making due to a lack of timely information, and an inability to quickly react to change.”
This is why more and more companies are focused on data-driven manufacturing. As stated in the 2014 Industrial Metal-Cutting Outlook from the LENOX Institute of Technology (LIT), best-in-class machine shops are forming strategies, making decisions, and optimizing their operations using hard, quantifiable information. Anything else is just guessing.
The challenge is finding an efficient way to not only gather “timely data” but also store it, interpret it, manage it, and share it across your entire organization. Odds are you don’t have a fully staffed IT department waiting in the wings.
This is where business management software like Enterprise Resource Planning (ERP) can be helpful. ERP software is typically a suite of integrated applications that allows an organization to efficiently manage their business and automate back office functions. It combines all facets of an operation, including product planning, development, manufacturing, sales and marketing. It can be managed in-house, or as is the case with many machine shops, purchased as software as a service (SaaS).
Top-tier manufacturers and large enterprises have been touting the benefits of ERP systems for years. They can improve productivity, enhance cross-functional communication, and speed the “quote to cash” cycle. Even so, smaller shops often shy away from these systems because they can also be expensive, complex, and far too often, fail to provide bottom-line results.
That’s not to say you should write off ERP systems all together. It just means a little research is in order. Below are a few resources we gathered to help you dig a little deeper into the benefits ERP can offer your machine shop, along with a few pointers to ensure success.
- Key Considerations Before Implementation. A recent article that appeared in Project Times provides five key points to consider before you decide whether or not to implement an ERP system. Written by supply chain consultant Lisa Anderson, the editorial starts by warning manufacturers to refrain from getting all the bells and whistles. “Take a step back and focus 80% of your efforts on the 20% of functionality that drives your business,” Anderson suggests. You can read the rest of the article here.
- Purchasing Tips When Selecting a System. Once you have decided to move forward and invest in an ERP system, choosing the actual system can be overwhelming. This article from ThomasNet provides some important tips to follow when choosing an ERP system for a manufacturing business. The article goes through six critical points, such as taking a look at your company’s technology strategy and capabilities, as well as closer evaluation of the cost implications of the system.
- Lessons From Your Peers. Knowing what has worked and hasn’t worked for other machine shops can provide valuable information and reduce the trial-and-error phase for your shop. Check out this Modern Machine Shop article, which provides links to several case studies of shops that have implemented ERP systems. You should also consider speaking with your supply chain partners to see if they have had success with an ERP system. As LIT’s white paper on managing supplier relationships suggests, they may even be willing to assist you in determining key data points.
June 15, 2014 / best practices, continuous improvement, LIT, operations metrics, operator training, performance metrics, productivity, quality, ROI, strategic planning, value-added services
Most manufacturers understand that they are only as good as their supply chain. Quality starts well before a product enters the doors of a production facility.
Industry leaders, however, are finding that with a little strategy, the supply chain can add a lot more than a quality service or product. When positioned correctly, they can add value.
A recent report from Tompkins Supply Chain Consortium confirms this philosophy. After polling 172 supply chain professionals, a strong 80% of respondents reported that they felt that the supply chain is an enabler of business strategy. A majority of companies also felt that supply chain is a source of business value and a competitive advantage. This, along with the report’s other findings, led the Consortium to conclude that the importance of an integrated supply chain and overall business strategy cannot be ignored. “The better the level of alignment is, the more likely it is that companies are achieving their objectives for cost reduction, customer service, and other metrics,” the report stated.
What’s interesting, however, is the report revealed that a fairly high 35% consider the supply chain a standalone function. This indicates there still is some work to be done. Positioning and treating your supply chain as trusted partners—not just as independent service providers—can be an effective strategy in helping you achieve company goals. For instance, if your goal is to increase productivity, perhaps your suppliers can offer troubleshooting expertise and even training in specific areas of your operation. Or, as was the case with leading metal service center Aerodyne, they may even be able to provide useful, practical tools like free software to help your operators work smarter.
As this Forbes article states, long-term, worthwhile suppliers should treat manufacturers as more than just clients. They, too, should treat you like a partner, which means they should be willing to offer more than one-dimensional service. If that isn’t the case for your organization, it may be time to reevaluate your supply chain or, even more so, reevaluate how you are utilizing your supply chain.
How do you position your supplier relationships to bring value to your company? A recent white paper from the LENOX Institute of Technology offers the following strategies:
- Schedule on-site visits. Expect your prospective supplier to assume a “partner” role from day one by focusing more on service than on the sale of the product. To facilitate this relationship, start by asking for an on-site needs assessment. This gives you the opportunity to discuss your business goals in person, as well as providing the vendor with a full overview of your operation.
- Do your homework on supplier claims. While many companies often promise unmatched service and technical support, the key is to look for companies that provide resource allocation metrics that support their claims. Do they have adequate field coverage? What is the tenure and continuity of their support team?
- Include training in your purchase agreement. Most suppliers should be willing to provide some level of value-add training as part of the purchase agreement. This is especially important when it comes to your equipment and tooling providers. No one knows your production equipment better than the people who designed it, and they should be willing to share that expertise with you.
- Expect thought leadership and self-service tools. Industry-leading partners should be able to support your business by providing informational and educational materials, as well as practical tools and services. You can and should rely on your supplier to be an industry thought leader that provides a steady stream of valuable industry trends data, operational strategies, and technical product information.
- Have your partner help you measure performance. Most managers have heard the mantra, “You can’t improve what you can’t measure.” However, most industrial metal-cutting companies don’t possess all of the knowledge, resources, or infrastructure necessary to collect efficiency data, let alone analyze it. This is where a supply partner can help. By working closely with your supplier, you should be able to gather some quantifiable, useable data.
In the end, today’s competitive marketplace requires manufacturers to focus more on value than on cost if the objective is long-term success. While cost-effective products provide short-term benefits, aligning the right suppliers with your business strategies—and then leveraging their services to achieve company goals—will likely offer a greater ROI than any product ever could.
June 10, 2014 / benchmarking, best practices, blade failure, bottlenecks, continuous improvement, Cost Management, customer delivery, human capital, LIT, maintaining talent, productivity, quality, root cause analysis, Safety
When quality hiccups or bottlenecks occur, the first instinct is to blame the machine. A quick blade replacement or tooling adjustment is the go-to response, and in the short-term, the problem is addressed. Production continues, and the order is eventually filled.
However, industrial metal-cutting leaders know that quick fixes are not doing anyone any favors, especially when quality is involved. Fabricators with high quality standards need to be sure that all areas of their cutting operation are optimized; otherwise, their costs are going to go through the roof. For instance, an operator that doesn’t understand the proper speed setting for a specific type of metal might end up going through a half a dozen blades to maintain a square cut, when the job should have only required two blades.
The harsh reality is that today’s customers are demanding tighter tolerances and higher quality without the added cost. While it is tempting to make knee-jerk responses to meet tight timetables, fabricators that want to remain competitive need to focus on long-term solutions to improve cut quality. Really, you can’t afford to do it any other way.
With the right strategies in place, maintaining premium cut quality doesn’t have to cost a premium. Here are a few to consider:
- Evaluate your operators. Sometimes the root cause of quality or cost issues isn’t what it is cutting your metal; it’s who is cutting your metal. According to research from ARC Advisory Group, the global process industry loses about 5% of annual production due to unscheduled downtime and poor quality. But here’s the kicker: almost 80% of these losses are preventable, with 40% largely due to operator error, ARC estimates. When problems arise, don’t fail to consider the human variable. A lack of skill sets, business knowledge, and low employee morale can affect quality, as well as other areas like cost, maintenance, and safety. One way to address this is by implementing a strong ongoing training program, either internally or with the help of a trusted supplier. To read about more strategies for attacking the human variable, check out the white paper, Accounting for Operator Inefficiencies in the Metals 2.0 Environment.
- Break in blades. According to LIT’s benchmark study, breaking in band saw blade is a best practice among fabricators and other industrial metal-cutting companies. According to the study, 45% of organizations surveyed reported they “always” break in blades, 30% said they do it “most of the time,” and 15% said they do it “occasionally.” While breaking in a blade may seem tedious, highly skilled operators know that it pays off in the long run. A new band saw blade has razor sharp tooth tips, and in order to withstand the cutting pressures used in band sawing, tooth tips should be honed to form a micro-fine radius. Failure to perform this honing will cause microscopic damage to the tips of the teeth, resulting in reduced blade life and poor-quality cuts. Completing a proper break-in on a new blade will dramatically increase its life and cut performance.
- Communicate. As this Quality Digest article states, quality is no longer a topic for the Quality department; it should be a company-wide mindset. Talking to operators and maintenance personnel about how their actions affect quality—and then holding them accountable—promotes a bigger picture understanding of the role everyone plays in company success. You may even want to consider including a few key shop floor employees in quality meetings. According to the QD article, a growing number of companies are developing internal cross-functional quality councils that pull in personnel from across the value chain to gain different perspectives and identify new solutions to problems. This type of management encourages employee “buy-in” and creates a team atmosphere— both of which can help build a commitment to quality.
June 5, 2014 / continuous improvement, lean manufacturing, LIT, maintaining talent, operator training, productivity
As the manufacturing industry evolves and the dynamics of the market change, many companies are adjusting their lean strategies. Metal service centers that “got lean” years ago are focusing on continuous improvement, and a growing number of high-mix, low-volume operations are tweaking traditional lean methodologies to fit their specific situation. In fact, this article from the Harvard Business Review actually criticizes traditional lean methods and suggests that today’s companies should be nuancing their approaches.
While lean strategies are shifting, most experts agree that creating a lean culture is a critical aspect of any successful implementation. Unfortunately, many companies fail to understand this basic principle. Oftentimes, manufacturers treat a lean initiative as a one-time project, and as a result, aren’t able to achieve sustainable results. As most experts would attest, lean is not an event; it’s a culture change.
Of course, creating culture change within an organization is not nearly as simple as it sounds. According to PEXNetwork.com, a peer-to-peer network of companies focused on operational excellence, “most lean implementation failures are not due to failure to grasp lean tools and techniques, but a failure of change management.”
Below are a few resources we’ve gathered to get you thinking about what makes up a lean culture and, even more so, how you can create it:
- Understand your culture. Before attempting to make any changes, managers should first understand what defines their company culture. This blog post from author and lean management expert Lawrence Miller lists seven “levers” that makeup an organization’s culture as well as specific examples of what those levers look like in a successful lean organization.
- Focus on the customer. While many companies think that change starts by looking within, this article talks about creating a lean culture from the “outside-in.” The article lists four essentials to building a lean culture, starting with looking at your organization from your customers’ perspective (the “outside”). In addition, the article suggests that managers “make the customer everyone’s business.”
- Follow-up is key. Many companies undergo “kaizen” or continuous improvement events to achieve change within their operation. However, as an article from the Association of Manufacturing Excellence argues, many managers fail to follow-up on these initiatives and, therefore, are unable to achieve the cultural shifts necessary to promote continuous improvement. “By introducing a robust means of follow-up, you can improve the speed by which change is integrated, and ensure an effective cultural shift is both supported and nurtured,” the article states. Check out a reprint of the article here to read about common kaizen mistakes, as well as three action items that promote cultural change.
- Engage Employees. People will naturally resist change; however, they are more likely to jump on board if they are involved in the process. As this white paper from LIT notes, the so-called “magic” happens on the shop floor when an operator or process area becomes committed to their operation and, more importantly, takes pride in hitting company goals. However, this type of operator “buy in” requires both communication and accountability. It also requires managers to build a bridge between what is decided in the executive offices and what is happening on the manufacturing floor. One lean strategy to accomplish this is to take a Gemba walk, which you can read about in more detail here.