August 30, 2016 / agility, best practices, Cost Management, industry news, LIT, Output, productivity, strategic planning, supplier relationships, value-added services
There is no question that the supply chain is evolving. As reported in a previously published blog, instead of treating supplier relationships as a series of business transactions, more and more manufacturers are treating their supply chain as a valuable part of their business strategy. In fact, this trend is listed as a best practice in the eBook, 5 Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization.
With an increased focus on building closer partnerships with suppliers, it’s not too surprising that many companies are starting to move back to sourcing suppliers closer to home. As one article from Automotive World quips, “local sourcing—it’s the new global sourcing.”
According to the AW article, local sourcing can bring cost savings across the entire supply chain, especially in light of rising costs in traditionally low-cost regions. “This phenomenon of local sourcing is being witnessed across the globe, with leading OEMs sourcing locally from developed as well as emerging countries,” the article states.
A report released by MFG.com, an online manufacturing marketplace, shows similar trends. Based on the data gathered from buyers of custom manufactured parts from the MFG Watch 2016 marketplace survey, 80% of U.S. sourcing professionals chose to source their parts predominantly in the U.S. The report also found that since 2012, buyers have seemingly moved away from sourcing from Chinese suppliers, as sourcing in China has fallen by about 14% in 3 years.
It is worth noting that the MFG.com report found that U.S. sourcing professionals nearly doubled their sourcing activities in regions like Eastern & Central Europe, as well as South America and North Africa. In other words, not everyone has jumped on the bandwagon.
However, there are definitely some benefits for ball and roller bearing manufacturers that choose local sourcing. Local suppliers, for example, can quickly and easily respond to any troubleshooting or maintenance problems with your tooling and equipment, often in-person. They can also assist with other key business areas, such as preventative maintenance and operator training.
Of course, those are just a few examples. An article from Thomasnet gives a more comprehensive list in its article, “Top 6 Benefits of Local Sourcing:”
- More Reactive. Local suppliers are typically more reactive than suppliers who are farther away. They are able to deliver products quicker, and it is much easier for a supplier to coordinate a shipment across the neighborhood than around the world.
- Greater Control. The further away you are from elements of your supply chain, the less control you have over them. There’s also less chance of things being “lost in translation,” which often occurs when working with far-flung teams of people, many of whom aren’t actually on the floor and touching your products.
- Reduced Supply Chain Costs. North American businesses send and receive parts and products all over the continent, and the expenses can add up as quickly as the miles. Localizing your supply chain can reduce many of these costs. And, with less money being sunk into logistics, there will be less weighing down your bottom line.
- Better for Business. Local sourcing doesn’t just help save money; it can also help you generate more of it. That’s because companies in your region may be impressed by your efforts to keep a tight and fast-paced supply chain, which can help you attract new customers.
- Good for the Community. It stands to reason that if sourcing locally increases your bottom line, it would do the same for other suppliers and manufacturers in your area, which can be a big boon to your local economy and the people who live there.
- Helps the Environment. Localizing your supply chain represents a tremendous opportunity to help the environment. When you reduce shipping and storage, you also reduce emissions and energy usage.
Whether building cars or manufacturing ball bearings, more and more operations managers are finding that their success is directly tied to collaborative vendor relationships—relationships that go far beyond the sale of a product. While not everyone believes in local sourcing, it is one of the many ways you can build closer, more valuable relationships with your supply chain.
To read more about building valuable supplier relationships, including some key areas where suppliers can help, check out the white paper, Managing Your Blade Manufacturer Relationship.
August 25, 2016 / benchmarking, best practices, blade failure, bottlenecks, continuous improvement, LIT, operator training, Output, performance metrics, preventative maintenance, productivity, quality
Any manufacturing executive tracking industry trends will no doubt run across terms like “big data,” “cloud computing,” and the “Internet of Things.” In fact, according to the results of a survey from Deloitte and the Council on Competitiveness, these types of advanced technologies have the power to put the U.S. back on the map as the most competitive manufacturing nation.
“CEOs say advanced manufacturing technologies are key to unlocking future competitiveness,” the report summary states. “As the digital and physical worlds converge within manufacturing, executives indicate the path to manufacturing competitiveness is through advanced technologies, ranking predictive analytics, Internet-of-Things (IoT), both smart products and smart factories via Industry 4.0, as well as advanced materials as critical to future competitiveness.”
As a forging executive, however, the question becomes: How does this technology apply to my operation? Or to put it another way: How do these “buzz words” play out on the shop floor?
One technology application, featured here in Forging magazine, gives a good indication of what cloud-computing and connectivity could look like in a metal-cutting operation. Specifically, the article features a cloud-based bandsaw monitoring system that offers three key features:
- Blade Life Assessment. Monitoring and alert notification of a saw blade’s remaining useful life. The technology will provide advance notice of required saw blade replacement.
- Increased Machine Efficiency & Machine Life. The technology provides real-time analysis of individual components and overall machine health status. It can send notifications of abnormal conditions from motors and bearings. It also alerts on frequent consumable items like hydraulic and cutting fluid.
- Increased Operational Efficiency. The technology can provide production reports to aid in identifying best practices and training needs. An advanced monitoring and notification system alerts the operation when machine maintenance is needed which aids efficiency in the scheduling of planned events.
These are no small benefits. In fact, they fall right in line with two of the strategies listed in the Benchmark Study of Industrial Metal-Cutting Organizations from the LENOX Institute of Technology. According to findings from the study, forges and other industrial metal-cutting organizations can gain additional productivity on the shop floor by investing in smarter, more predictive operations management approaches and by taking a more proactive approach to equipment and blade maintenance. By using cloud-based monitoring to track blade life and machine health status, managers can do just that by anticipating downtime, which, as the study states, “translates into more jobs completed on time.”
Of course, bandsaw monitoring is just one possible application. As we reported here in our annual forging industry forecast, controls and sensors are also being developed and implemented to monitor the forging process in a bid to automatically sense and compensate for any variation in the process. This type of consistency not only boosts efficiency, but could have some major quality benefits as well.
An article from IndustryWeek provides a few more application examples. The article describes how three leading companies are using advanced technologies to connect just about everything and anything—video cameras to monitor workflow process, safety helmets to track employees, and end products to predict reliability—all of which shows that the potential applications are only as limited as a manufacturer’s creativity.
What possible applications could cloud-based monitoring and other advanced technologies have in your forging operation?
August 20, 2016 / best practices, continuous improvement, lean manufacturing, LIT, maintaining talent, operator training, preventative maintenance, workflow process
Improving productivity is a constant goal for any manufacturer. In today’s increasingly competitive and uncertain market, machine shops are no different.
To boost efficiency, manufacturers have long implemented lean manufacturing practices as part of their overall operational strategy. As cited in this eBook, 5 Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization, there are a host of lean manufacturing tools to consider, including:
While lean manufacturing practices are anything but new, machine shop managers can take a more simplified approach to improve efficiency at even the most customized shop set-up. According to LeanProduction.com, manufacturers can experience great improvements in productivity through small daily increments. The idea is to identify and fix one problem each day using three questions (one each for Information, Focus, and Action) to identify problems from plant floor information, decide which issue to fix, and then take action to correct it. (Click here for some examples of the three questions.)
A Modern Machine Shop blog, however, notes that while improving productivity is essential to maintaining competitiveness, productivity on the shop floor comprises much more. “Productivity on the manufacturing floor depends on a combination of efficient employees, equipment, and processes,” the blog states. “Before you can adopt any method for productivity improvement, you’ll need to measure your existing output levels, create a baseline, and implement solutions for measuring change.”
The blog article goes on to list eight steps to help manufacturers design a more productive and successful manufacturing floor. Read on for a summary of five of the eight steps (Read all eight steps here.):
- Examine the workflow. Analyze the people, technology, and processes required for production, as well as the procedures, communication tools, and resources available. Identify the pain points and note how changes would impact the overall system.
- Update business processes. Share workflow problems with project managers to make improvement plans. Evaluate performance and interpret any appropriate changes.
- Invest in continued employee education. Be sure to keep your workforce up-to-date on the latest machining and manufacturing technologies. New advancements often require new skills for certain tasks and regular training will keep your machine shop running efficiently.
- Get smarter machining tools. Even if your workforce is trained, they can only work as fast as their tools. While advanced machinery can be costly, the investment pays off in the long run by helping companies stay competitive.
- Invest in maintenance. While new equipment can boost productivity, it also requires maintenance to ensure that it continues working efficiently. Employees should know how to troubleshoot in instances of system downtime, quickly find root causes of errors, and then correct them. Remember to consider the process, the blueprint, and the material when making adjustments.
Whether you run a high-mix or a small-scale shop, increasing productivity is essential to remaining competitive in today’s industrial metal-cutting industry. While there’s no sure-fire formula when it comes to boosting productivity, taking the time to drive improvements across the shop and making small adjustments from a baseline assessment can make a big impact.
What strategies has your machine shop used to increase productivity on the floor?
August 15, 2016 / benchmarking, best practices, bottlenecks, continuous improvement, KPI, lean manufacturing, performance metrics, productivity, quality, supplier relationships, value-added services, workflow process
As part of the push toward continuous improvement, more and more industrial metal-cutting companies are measuring overall equipment effectiveness (OEE). This is definitely a good trend, as measurement is the first step in making quantifiable change. However, some companies have jumped on the OEE bandwagon without being fully informed, which can cause a lot of misunderstanding and misuse of this important metric.
Knowing what OEE is—and what it isn’t—is the only way to make sure you are using it effectively. The following is a quick primer.
What is OEE?
According to leanproduction.com, OEE is a best practices metric that measures the percentage of production time that is truly productive. It takes into account all six types of loss, resulting in a measure of productive manufacturing time.
In simple terms, OEE can be described as the ratio of fully productive time to planned production time. According to leanproduction.com, it can be measured in one of two ways:
(Good Pieces x Ideal Cycle Time) / Planned Production Time
Availability x Performance x Quality
(You can find a more detailed description of the calculation here, as well as a sample calculation.)
A plant with an OEE score of 100 percent has achieved perfect production—high quality parts as fast as possible, with zero down time. While that’s ideal, it’s not quite possible in the real world. According to oee.com, studies show that the average OEE rate among manufacturing plants is 60 percent, which leaves substantial room for improvement. Most experts agree that an OEE rate of 85 percent or better is considered “world class,” and many companies use that number as a long-term goal for their operations.
Managers can use OEE as both a benchmark and baseline. Specifically, leanproduction.com says it can be used to “compare the performance of a given production asset to industry standards, to similar in-house assets, or to results for different shifts working on the same asset.” It can also be used as a baseline “to track progress over time in eliminating waste from a given production asset.”
How to Use—and not Use—OEE
It’s important to note that OEE is not necessarily a useful metric for every manufacturing operation. “Measuring OEE only makes sense if you are trying to meet a certain demand on a daily basis,” explains Paul Bryant, senior OPEX manager, LENOX Tools. “If you have a problem with yield, then I would definitely suggest OEE.
“If you have a problem with inconsistent production output and/or downtime on a piece of manufacturing equipment, OEE is a great way to measure and identify how to where to improve your operations,” Bryant continues. However, for smaller metal-cutting operations that are more custom and low volume, Bryant says OEE probably isn’t worth measuring.
Bryant also says that a lot of shops use OEE incorrectly. Specifically, he says there are two common ways metal-cutting operations misuse the metric:
- Too Focused on the Benchmark. “Everyone knows that world-class OEE is 85%, but too many people get hung up on that number and how their shop compares to it. When I look at OEE, the number doesn’t mean much to me. I look at three components—availability, performance, and quality—and then break them apart and look for opportunities. That is the true essence of OEE: To find opportunities that help keep your machine and production system optimal.”
- Too Focused on the Operator. “Another misuse is that people use OEE to measure the operator. OEE is used to measure equipment. If you run into an issue with the metric, look at the machine first. There are so many variables, don’t always assume it is the operator. Once you’ve evaluated the machine, look at the material and then the operator last.”
An article from IndustryWeek (IW) adds that OEE should be used as an improvement measure, not a Key Performance Indicator (KPI). It also states that it is best used on a single piece of equipment or synchronized line.
Finally, if your shop is ready to start measuring OEE but doesn’t know where to start, enlist the help of some key suppliers. As stated in the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Company, many companies don’t possess all of the knowledge, resources, or infrastructure necessary to do in-depth measurement. This is where a willing supply partner can help. In today’s competitive market, there are plenty of equipment and tooling suppliers that are willing to share their knowledge and experience as a free, value-added service.
A Helpful Tool
There is no question that OEE can be misused and misunderstood, but as the IW article reiterates, it is not a “bad metric.” When calculated and applied correctly, OEE can be a very useful tool to help industrial metal-cutting companies quantify and uncover new improvement opportunities.
August 10, 2016 / best practices, continuous improvement, Cost Management, lean manufacturing, LIT, material costs, resource allocation
For any industrial metal-cutting operation, inventory management is an ongoing challenge. Ensuring the right amount of inventory in-house while simultaneously working to reduce overall operating costs is not an easy task.
This has been especially true in recent years. As we reported here in our annual industry outlook, high inventory levels were a major challenge for fabricators in 2015.
As a result, many fabricators are now re-evaluating their inventory management tactics, and more and more shops are moving away from holding large amounts of inventory. According to industry survey results published by The Fabricator, a little more than half (54 percent) of the respondents said they hold less finished-goods inventory today than they did three years ago. “Custom fabricators don’t want to drown in inventory,” states an article from thefabricator.com. “In fact, for fabricators having customers requiring them to hold finished-goods inventory, those inventory requirements aren’t as high as they once were.”
Many metal-cutting shops are also starting to use more remnants, a strategy often known as “pick for clean.” As explained in the white paper, The Top 5 Operating Challenges Facing Fabricators’ Metal-Cutting Operations, this tactic “promotes a cleaner inventory, which makes shops safer, more productive, and profitable.”
Of course, there are many strategies shops can use to better manage their inventory. In fact, supply chain expert Lisa Anderson says she could write 100 articles on the subject because there are so many ingredients to an effective inventory management system. However, Anderson does say there are three key questions every manager should address when it comes to inventory:
1. Do you have the right talent? “It is surprising how often this question is overlooked, yet it is #1 to achieving bottom line results,” Anderson writes. “Although inventory could be considered a ‘basic’ fundamental skill and is often on the resume of every supply chain and operations job applicant, all talent is not created equal.”
She also says there is vast confusion surrounding inventory skills and which skills are needed for which job functions. For example, do you need inventory control? Inventory accuracy? Inventory planning? Supply chain planning? Inventory tracking? “Most of these roles require far more than inventory expertise,” Anderson explains. “They require the right combination of analytical skills and communication skills.”
2. Is your system working? This question, Anderson notes, should cover both process and system. “The second most common mistake is to try to put a square peg in a round hole,” she writes. “Instead of dictating the process or system based on whatever worked in a previous life or what your ERP system says is ‘best practice,’ I’ve found the key to success is to understand what works for each particular situation (unique combination of people, processes and systems).”
3. Have you eliminated complexity? “I gain tremendous traction in delivering bottom line results solely from eliminating complexity,” Anderson writes. “I find that complexity is enticing – the more complexity, the more people feel valued and indispensable. So, instead of getting lost in complexity, encourage and reward simplicity.”
Anderson suggests getting a team together to brainstorm ways to unscramble the complexity. In what ways can you categorize your inventory in order to prioritize? Can you start with one machine? One commodity? One location? One customer? One supplier?
In the end, taking a close and honest look at your inventory management system can have real, bottom-line results. As Anderson explains, if you improve inventory accuracy by 10%, you can end up with anywhere from 10 to 100+% improvement in on-time delivery and/or efficiency. If you improve inventory turns by 10%, you could end up with more cash and increased efficiency. Put simply—it pays to evaluate your inventory management system. How does yours stack up?
August 5, 2016 / best practices, continuous improvement, Cost Management, industry news, LIT, operator training, strategic planning
With yet another recent decline in metal shipments, industrial metal-cutting companies are paying close attention to cost management as a part of their business strategy.
According to recent data from the Metal Service Center Institute (MSCI), U.S. service center steel shipments declined in June by 5.1% from the prior-year, while shipments of aluminum decreased by 6.5%. Inventories also declined, with steel down 16.5% and aluminum down 1.5% from the prior-year. The story is equally bleak in Canada, where shipments of steel are down 14.4% and aluminum declined 16.5% from a year ago.
As stated in the white paper, The Top Five Operating Challenges for Metal Service Centers, managing costs is one of the top five operating challenges for metal service centers. However, at a time when uncertain market conditions remain, manufacturers are laser-focused on the bottom line to ensure they stay competitive.
Traditionally, there are a few manufacturing cost areas that companies typically zero in on as they try to boost their profit margins. According to an article from Chron, these include:
- Labor costs
- Material costs
- Overhead costs
- Capital investment
Another way metal service centers keep costs under control is ensuring equipment is operating as efficiently as possible. This includes running at the proper settings and using the right blades. For example, as explained in this blog post, although a coated saw blade adds a premium cost upfront, the blade’s life is nearly double and can slice cutting time in half, ultimately leading to savings and increased productivity.
While all of these tactics can certainly be effective, an article from IndustryWeek (IW) notes that companies can do more than simply focus on the “traditional” costs to help manage the bottom line. Specifically, the article says that companies can indirectly manage costs for the long-term by incorporating specific goals into their overall improvement plans. In fact, the article suggests that focusing simply on costs can be detrimental to a company’s success.
According to the IW article, costs should not be the main goal or focus of any improvement program, regardless of how tempting it can be to make changes solely for the impact on the bottom line. Disguising cost-cutting as an improvement can lead to low morale, resistance to support other improvements, and lack of engagement. Instead, the article states that companies should consider the following four action steps to realize cost improvements as part of a larger improvement plan:
- Employee training. Make sure everyone from the CEO to every worker in every function receives training in the improvement tools and philosophies. Make sure top management backs the changes and keep the session impactful and memorable.
- Spend time with and discuss finances upfront. Spend time with the financial community and hold discussions on costs and savings before the improvement project starts. Work with the financial team to develop a tracking system for possible problems to prove cost savings in the future.
- Include financial colleagues. Be sure to include a person from the financial community in each improvement team. This person will be able to validate cost savings and ensure all costs are tracked accurately.
- Include costs as part of a larger plan. Improvement initiatives need to be part of a long-term plan in order to really change operations, including realized cost savings. Otherwise, the improvement will only be temporary with the risk of the organization returning to its old habits or making them worse.
By including employees and financial community members in an overall improvement plan from the start, metal service centers can experience both operational and financial efficiencies. The goal is to think about costs strategically. Balancing cost savings as part of a larger plan will benefit the organization in the long run by offering continued returns.
What cost management strategies have worked for your metal service center?
August 1, 2016 / best practices, Cost Management, Employee Morale, lean manufacturing, LIT, productivity, quality, Safety, strategic planning
Over the last decade, the term “lean” has become synonymous with “success” in manufacturing. In today’s market, only the “leanest” survive.
This trend has hit almost every segment of manufacturing, although some have jumped on the bandwagon faster than others. At this point, most leading industrial metal-cutting organizations have incorporated some form of lean principle into their operation, and those that haven’t are starting to consider it. In fact, our eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Company, recommends that lean manufacturing should be at least part of your operational strategy.
However, is it possible for your metal-cutting operation to be too lean? According to a recent article from EHS Today, the answer to that question is yes. “The more you reduce costs – the more you do with less – the more you believe is accomplished and the closer you approach maximum efficiency,” the article states. “The drawback of this popular leadership strategy is that the line of acceptance is a moving target with the point of failure centered about the moment of imbalance.”
The article goes on to say that over time, “the reduce-reduce strategy” can stretch an organization beyond the elastic limit, usually without anyone noticing. “Like our bodies, organizations need minimal resources to function properly,” the article explains. “Year-over-year reductions compounded with additional performance requirements will cause the organization to rely on calories they do not have to burn.”
How do you know if your organization has reduced beyond its limits? Below are a few warning signs, according to EHS:
- Untimely and numerous early retirements by the most knowledgeable resources.
- Unexpected and voluntary separations from early and mid-career professionals.
- Organizational culture indifference to change.
- Missed commitments.
- Lower quality productivity.
- Higher injury experience.
- Lower customer satisfaction.
- Higher absenteeism.
- Lower standard of excellence.
- Loss of leadership credibility.
- Long working long hours.
- Organizational undercurrents of frustration.
Another dangerous outcome of being “too lean” is being unable to adjust to changing market conditions. An article from Lean Manufacturing Tools explains: “Too many people in the past have used a lean definition that concentrates purely on waste reduction and have created anorexic processes that fail as soon as customer demand changes.”
This is not to say that lean manufacturing tools are short-term and cannot be used over a long period of time. Instead, experts suggest that lean manufacturing tactics should evolve as a company evolves and improves. In addition, this article from IndustryWeek says that management needs to be sure they treat lean manufacturing as “a way of life,” not just a project.
Like anything, the key is finding a balance. Efficiency and waste reduction should be a priority, but they can’t come at the cost of safety, quality, or the overall financial health of the company. As the article from EHS explains, “Success comes in realizing how much ‘efficiency’ is the right amount to preclude organizational excellence from reaching the point of inevitable failure.”
Are there any areas of your industrial metal-cutting organization that have become too lean?