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Determining which KPIs to Measure in Your Ball and Roller Bearing Operation

September 30, 2016 / , , , , , , ,

Most companies that have adopted lean manufacturing strategies know the importance of measurement. When a manufacturing operation can quantitatively assess their performance, it can start to make significant improvements and set realistic goals to stay competitive. In fact, according to a series of case studies on high production metal-cutting companies, measurement was noted as a key best practice.

However, metrics are only meaningful if they are tied to strategy. That’s where key performance indicators (KPIs) come into play. Unfortunately, some companies fail to understand the purpose of KPIs and, therefore, are unable to take full advantage of the benefits they can provide. All KPIs are metrics, but not all metrics are KPIs. Understanding the difference is critical.

What are KPIs?
KPIs are the measurements selected by a company to give an overall indication of the health of the business. KPIs are typically dominated by historical, financial measurements, but most experts agree that they are more valuable if they also include operational measurements. Unfortunately, choosing the right KPIs to track isn’t as easy as it sounds and takes careful consideration.

There are hundreds of KPIs that can be measured, but experts suggest that companies focus on a select few. According to the University of Tennessee’s Reliability and Maintainability Center (RMC), manufacturers need to make sure all KPIs are aligned with the company’s business goals and strategy. Tasks should be explicit and all actions should support a larger goal. When it comes to KPIs, it is quality—not quantity—that matters.

Choosing the Right KPI
Because they are tied to strategy, KPIs will vary by organization. However, an article from Red Lion outlines seven of the common production KPIs used on automated plant floors:

  1. Count (Good or Bad). An essential factory floor metric relates to the amount of product produced. The count (good or bad) typically refers to either the amount of product produced since the last machine changeover or the production sum for the entire shift or week.
  2. Reject Ratio. Production processes occasionally produce scrap, which is measured in terms of reject ratio. Minimizing scrap helps organizations meet profitability goals so it is important to track whether or not the amount being produced is within tolerable limits.
  3. Rate. Machines and processes produce goods at variable rates. When speeds differ, slow rates typically result in dropped profits while faster speeds affect quality control. This is why it is important for operating speeds to remain consistent.
  4. Target. Many organizations display target values for output, rate and quality. This KPI helps motivate employees to meet specific performance targets.
  5. Takt Time. Takt time is the amount of time, or cycle time, for the completion of a task. This could be the time it takes to produce a product, but it more likely relates to the cycle time of specific operations. This KPI helps manufacturers quickly determine where the constraints or bottlenecks are within a process.
  6. Overall Equipment Effectiveness (OEE). OEE is a metric that multiplies availability by performance and quality to determine resource utilization. Production managers want OEE values to increase because this indicates more efficient utilization of available personnel and machinery.
  7. Downtime. Whether the result of a breakdown or simply a machine changeover, downtime is considered one of the most important KPI metrics to track. When machines are not operating, money isn’t being made so reducing downtime is an easy way to increase profitability.

Making it Count
For many managers, the above list and the resulting data may feel overwhelming. Others may be so afraid of missing something that they end up measuring more information than necessary. For example, research from the Advanced Performance Institute finds that less than 10% of all the metrics that are collected, analyzed and reported in businesses are ever used to inform decision-making.  That means 90% of the metrics are wasted, or worse, used to drown people in data while they are thirsting for insights.

The question then becomes: How many KPIs are enough? Or, even more so, how much data is too much?

An article from IndustryWeek suggests that companies follow the “Rule of Three,” which involves dividing all KPIs into organizational categories and then focusing on the top three metrics within that category. This is a good way to keep managers focused on improvement without data overload.

If you are still unsure where to place your focus, the University of Wisconsin-Madison recommends that manufacturers in 2016 zero in on KPIs that fall under the following four themes:

As a high production manufacturer, odds are that your ball and roller bearing operation is already tracking some of the above KPIs. However, if that is not the case, now is the time to start identifying a few to measure. If the process feels overwhelming, do some research, ask your supply chain for help, and get started. In the words of quality expert H. James Harrington: “Measurement is the first step that leads to control and, eventually, to improvement.”

Benefits of Using Predictive Maintenance Analytics in Your Forging Operation

September 25, 2016 / , , , , , , , ,

With changing customer requirements and an increasingly competitive marketplace, leading manufacturers are finding it pays to be proactive—not reactive—in their strategic approaches. Instead of simply measuring performance, many companies are taking the next step and using measurement to anticipate and prevent future challenges—a concept known as predictive operations management.

This trend has found its way into industrial metal cutting. According to the LENOX Institute of Technology’s benchmark study of more than 100 forges and other industrial metal-cutting organizations, companies can gain additional productivity and efficiency on the shop floor by “investing in smarter, more predictive and more agile operations management approaches.”

One such approach is predictive maintenance. Not to be confused with preventative maintenance, which uses planned maintenance activities to prevent possible failures, predictive maintenance (also known as condition-based maintenance) uses data-driven analytics to optimize capital equipment upkeep.

Reliable Plant defines predictive maintenance as “the application of condition-based monitoring technologies, statistical process control, or equipment performance for the purpose of early detection and elimination of equipment defects that could lead to unplanned downtime or unnecessary expenditures.” By using tools to predict and then correct possible failures, operators can keep machines running while eliminating unnecessary preventative maintenance downtime and reducing reactive maintenance downtime.

In fact, predictive maintenance was identified in a McKinsey Global Institute report as one of the most valuable applications of the Internet of Things (IoT) on the factory floor. The report, The Internet of Things: Mapping the Value Beyond the Hype, says that predictive maintenance using IoT has the potential to reduce equipment downtime by up to 50 percent and reduce equipment capital investment by 3 to 5 percent by extending the useful life of machinery. “In manufacturing, these savings have a potential economic impact of nearly $630 billion per year in 2025,” the report states.

According to an article from Manufacturing Business Technology, the potential benefits of predictive maintenance analytics go beyond predicting machine failure. The magazine lists several wide-ranging implications the technology has for the manufacturing industry, including the following:

  1. Part harmonization. Predictive models are able to show which parts will be the first in line to fail, what will need replacing in the next six months, for example. This then allows teams to better manage inventories, stockpile the right parts, and even bulk order replacements before they are needed.
  2. Cost-benefit analyses. Teams are better equipped to do cost benefit analyses and further understand the risks of not performing maintenance at any given time. Presenting this data to the C-suite, and outlining future risk weighed against a smaller outlay at the present time, is a far more compelling argument than suggesting a piston might eventually need replacing.
  3. Warranty Claims. Defining the optimal cost and duration for any given warranty is a great challenge for many manufacturers. Analytics can help better define these boundaries by modeling usage patterns.

Of course, all of these benefits come with a cost. One of the major drawbacks of predictive maintenance analytics is that it requires a high upfront investment for condition monitoring equipment and software, as well as a high skill level and experience to accurately interpret condition-monitoring data. There are also privacy and security issues that need to be addressed. For smaller forges, this could be a huge stumbling block, although some may discover that the long-term benefits outweigh the short-term costs.

In the end, predictive maintenance may not be an option for every shop or every piece of equipment, but in today’s competitive market, it might be worth the research. Many companies are finding that the potential benefits of the technology are opening up new opportunities for improvement and growth that were once not possible.

Is Minimum Quantity Lubrication a Good Choice for Your Machine Shop?

September 20, 2016 / , , , , , , , , ,

Most metal-cutting professionals agree that lubricants are a critical part of any sawing operation. As explained in the reference guide, User Error or Machine Error?, insufficient sawing fluid can cause a host of metal-cutting issues, from premature blade failure to poor cut quality.

Metal-cutting fluids save maintenance time, improve cut quality, and extend tooling life. However, not all lubricating options are created equally. As this blog post describes, managers have a wide range of lubrication options available to them. And while fluid selection may seem like a small detail, it should be treated like any other operational purchase—with both strategy and cost in mind.

One lubricant choice that many machine shops overlook is Minimum Quantity Lubrication (MQL). This alternative option sprays a very small quantity of lubricant precisely on the cutting surface, eliminating any cutting fluid waste. In fact, many consider it a near-dry process, as less than 2 percent of the fluid adheres to the chips.

MQL is great for smaller saws and for structural applications, but it is also versatile enough to be used in both precision circular sawing and band sawing operations. To help machine shops determine whether or not MQL is a good fit for their operation, below are just a few of its key benefits:

Of course, changing over to MQL is not as simple as just plugging in a new lubrication system. Implementation will require some research, training, and upfront investment. In fact, as a recent article from Modern Machine Shop points out, MQL can also present some manufacturing challenges. According to the magazine, operations managers should consider the following before deciding to implement MQL:

  1. MQL does not have comparable chip evacuation abilities to those of wet machining.
  2. MQL is still not well suited for deep-hole drilling, energy-intensive processes such as grinding, special operations like honing and small-hole drilling, or for difficult-to-machine materials such as titanium and nickel-based alloys.
  3. MQL still produces a very fine mist, which can be more difficult to filter.
  4. MQL implementation may require changes to the machine tool and processing strategy.

Although MQL may not be suitable for every shop, in many cases, it can offer significant advantages to your business, your employees, and the environment—three major reasons to at least consider using it in your metal-cutting operations.

For more information about what is needed to use MQL, including equipment requirements and some “rules of thumb,” you can download a copy of The MQL Handbook here.

Non-Residential Construction Industry Continues to Create Demand for Industrial Metal-Cutting Companies

September 15, 2016 / , , , , , , , , , , ,

The year has started off slow, with low production and shipments for metal products. However, the commercial and industrial construction segment is proving its staying powerful when it comes to creating demand for industrial metal-cutting companies.

As we reported in our “Metal Service Center Outlook for 2016,” the construction industry was expected to help industrial metal-cutting companies ride out the storm with total construction starts forecast to grow 6% in 2016.

Over the last few years and most recent months, the construction industry has seen its ups and down, depending on the segment. The electric utility and gas plant category, for example, saw project starts spike in 2015 only to drop this year, according to the latest construction report from Dodge Data and Analytics. In fact, nonbuilding construction dropped 56% in July 2016 as power plant projects ended, causing total new construction starts to fall 11% from the prior-year period.

However, nonresidential building starts are offsetting the steep drops elsewhere, growing 4% in July after a 7% increase in June. Commercial building starts grew 3%, with 20% of the increase attributed to office construction, according to the report.

Cautiously Optimistic
Despite the slowdown and uncertainty about the upcoming presidential election, experts remain optimistic that the construction industry will continue to remain strong into next year. At a recent mid-year forecast, chief economists from the Associated Builders & Contractors, American Institute of Architects, and National Association of Home Builders predicted growth for commercial projects into 2017, as reported by MetalMiner.

“Nonresidential construction spending growth will continue into the next year with an estimated increase in the range of 3 to 4%,” stated Anirban Basu, chief economist for Associated Builders & Contractors. “Growth will continue to be led by privately financed projects, with commercial construction continuing to lead the way. Energy-related construction will become less of a drag in 2017, while public spending will continue to be lackluster.”

In addition, the Architecture Billings Index (ABI) from the American Institute of Architects has posted six consecutive months of increasing demand for design activity, according to this report. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to 12 month lead-time between architecture billings and construction spending.

“The uncertainty surrounding the presidential election is causing some funding decisions regarding larger construction projects to be delayed or put on hold for the time being,” said Kermit Baker, AIA Chief Economist. “It’s likely that these concerns will persist up until the election, and, therefore, we would expect higher levels of volatility in the design and construction sector in the months ahead.”

Making the Cut
Industrial metal-cutting companies that want to grow with the construction market need to know how the market is evolving and be prepared to meet demand for more I- and H-beams, hollow structural sections, and other structural products. More importantly, companies will need to be ready for changing market conditions.

One way industrial metal-cutting companies can ensure they make the cut is to optimize operations. As cited in the Benchmark Survey of Industrial Metal-Cutting Organizations, there are three key ways companies can optimize operations and, in turn, be better prepared to meet customer demands:

  1. Invest in smarter, more predictive operations management. According to the survey, 73-percent 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.
  2. Embrace proactive care and maintenance of cutting equipment and tools. Ongoing operator monitoring, coupled with corrective instruction and coaching, can have a direct benefit on industrial metal cutting operations—improving their ability to meet customer demands, drive revenues and lower costs.
  3. Invest in human capital. Historically, metal executives have been more likely to invest in technology rather than their people; however, the benchmark survey provides evidence that investing in human capital is critical not only to attack operator error itself, but also to improve on-time customer delivery, drive higher revenue per operator, and lower rework costs.

While industrial metal-cutting companies are set to benefit from another strong year in construction, preparing for changes in segment demand and prices will set the foundation for a solid performance in 2017.

What strategies is your organization taking to take advantage of the construction boom?

Two Automotive Material Trends Metal Fabricators Should Be Watching

September 10, 2016 / , , , , , , ,

For the last several years, the U.S. auto industry has been a growth driver for many industries, including industrial metal cutting. As we reported in our “Metal Service Center Outlook for 2016,” the automotive sector is one of two industries expected to help metal fabricators “ride out the storm” of today’s uncertain market.

While recent reports have shown that U.S. auto industry sales have started to cool, most experts still believe auto sales will remain strong over the next few years, even if they aren’t breaking any new records. In theory, this is good news for metal fabricators and other companies serving the auto segment. However, sales aren’t the only trend suppliers should be tracking.

According to an article from PricewaterhouseCoopers (PwC), the auto industry is in the midst of change, and the supply chain needs to be ready to respond. “It’s not clear how cars will change in the coming years, but automakers and suppliers no longer have the luxury of sitting out the transformation,” the PwC article states. “If you are an executive at an OEM or an auto equipment supplier, your strategic acumen — your ability to place your company in the vanguard of product trends without running afoul of ever more stringent environmental rules — will surely be tested.”

Put simply: if automotive is one of your key customer segments, it’s time to pay attention.

Material Matters
One of the biggest shifts happening within automotive manufacturing has been the growing use of lightweight materials. To meet federal emission standards, a growing number of U.S. automakers like Ford are using lightweight metals to decrease the weight of their vehicles and, therefore, increase the fuel economy. Many in the industry refer to this trend as “lightweighting.”

Of course, with new materials come new equipment and tooling needs, as well as new cutting parameters and techniques. To ensure that fabricators are prepared, below is a short summary of two materials trends worth following:

Steel Still Reigns—For Now
Even with these new materials hitting the automotive scene, steel will likely continue to be the dominant metal used in automotive manufacturing. According to Automotive World, the average vehicle is still made using between 800kg and 900kg of steel.

As Tim Triplett, editor of Metal Center News, said in an archived editorial, the steel industry won’t likely lose any ground in auto design but, instead, will simply adjust to the trends. “Just as many headlines heralded new developments in lightweight, advanced high-strength steels,” Triplett wrote. “Steelmakers claim the auto industry can meet the government mileage standards by using the new steel alloys, in combination with power train innovations, and at a lower cost than switching parts to aluminum.”

Indeed, reports show that auto manufacturers are already testing the use of lightweight steel alloys, and innovators like GM are even trying mixed-metal manufacturing in which steel and aluminum parts are welded together.

Regardless of which automotive material trends take hold, the point is that fabricators and other suppliers serving this market need to be ready: Do the research, ask the questions, and be ready to adapt accordingly.

Three Simple Strategies for Metal Service Center Business Focused on Growth

September 5, 2016 / , , , , , , ,

The manufacturing industry is experiencing a roller coaster market, making it difficult for metal service centers to know when to grow or scale production. As reported in here in IndustryWeek, the Institute for Supply Management’s index recently registered the steepest manufacturing drop since January 2014. The August index dropped to 49.4, marking the first contraction for U.S. manufacturing in six months. New orders in August also declined 7.8% compared to July—the first drop since December 2015—according to the August 2016 Manufacturing ISM Report on Business.

In addition, data from the Metal Service Center Institute (MSCI) shows that U.S. service center steel shipments in July declined by 15.2% compared to July 2015, while shipments of aluminum decreased by 14.8%. In response to lagging shipments, steel and aluminum inventories also decreased in July by 14.5% and 1.3%, respectively, from July a year ago.

The uncertain outlook is causing industrial manufacturers to adjust and carefully manage costs. According to a recent survey by PricewaterhouseCoopers (PwC), only 35% of industrial manufacturers were optimistic about the U.S. economy in the year ahead, down from 69% last year. Despite the slowdown, however, manufacturers continue to invest in growth opportunities, with 80% of respondents planning to increase operational spending and 52% planning on new product or service introductions this year.

Despite current market challenges, many companies are finding that a moderate market can be an ideal time to revisit their growth strategy. In fact, as reported here, research from McKinsey & Company found that transitions between growth phases often predict a company’s success or failure. “Companies that are growing at a slow or normal clip have more time to consider their options and make wise decisions,” the article states. “Rapid growth may be desirable, but slow and steady does indeed seem to win the race.”

The fact is that while business growth may seem impossible right now, there are still simple ways to keep your company headed in the right direction. An article from ThomasNet provides three simple steps manufacturers can take to help them grow their business:

  1. Choose a goal. You can’t grow your business without knowing what you want and need to grow. Will you grow by gaining new customers or doing more business with current customers? Do you want to expand into new product segments? Decide what the best opportunity is for your business and focus there.
  2. Build your credit. Deciding to partner with a company—either on the supplier or customer side—requires due diligence. If a potential customer ran a business credit report for your business, what would it show? Tracking and regularly checking your credit file will help ensure your company’s image is attractive to future business partners and creates credibility. This will also enable you to easily pay increased or unexpected expenses as you grow such as additional payroll for new employees, or loans for new equipment or warehouse space.
  3. Spread the word. Once you’ve decided to grow, let people know and get the word out. Add a listing to online business directories and build your online presence to drum up new orders.

This is also a good time to lean on your supply chain. As cited in the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization, a report from Tompkins Supply Chain Consortium found that 80% of supply chain professionals report the supply chain is an enabler of business strategy. In addition, a majority of companies felt the supply chain is a source of business value and a competitive advantage, leading the Consortium to conclude that “the importance of an integrated supply chain and overall business strategy cannot be ignored.” Identify your strategic suppliers, position them to add value, and see where they can help you grow your business.

While there is a lot to consider when deciding whether or not to expand your business, employing a few basic strategies can help put you on a path to steady growth, even if it is slow moving. As many service centers are finding, today’s market conditions offer a unique opportunity for companies to re-evaluate and improve, not only to survive current market conditions but also to position themselves for growth when the demand rebounds.

Are you thinking about growing your metal service center? What strategies are you employing?

Automation ROI for Industrial Metal-Cutting Companies

September 1, 2016 / , , , , , , , ,

For years, experts have touted the benefits of automation. The efficiency and quality improvements are perhaps the biggest draw for industrial metal-cutting companies, especially as customer demands for faster turnaround and tighter tolerances continue to increase.

However, automation may not always be the most cost-effective solution. According to the white paper, Tackling the Top 5 Challenges In Today’s Metal-Cutting Industry, in today’s uncertain market, managers need to strategically determine whether or not allocating resources to automation and technology will offer a true return on investment.

“For example, precision circular saws can outpace band saws 3 to 1 when it comes to cutting certain materials; however, band saws are more economical and offer cutting versatility,” the paper explains. “Therefore, managers need to carefully consider their costs, customer base, and long-term goals before upgrading equipment.”

Of course, this leads to several questions: What does that look like in practice? How do others determine whether or not automation is worth the investment? Who is—and isn’t—investing in automation?

Over the summer, the Manufacturers Alliance for Productivity and Innovation (MAPI) released the results of a national survey that attempted to answer those questions and more. According to the Executive Summary, the survey polled U.S. manufacturers, gathering data on the prevalence of actual and planned automation investment, the drivers of and impediments to automation investment, and the criteria for evaluating new automation technologies.

In general, the study found that actual, planned automation investment is high among U.S. manufacturers. The following is a summary of the survey’s major findings: (You can read the full report here.)

According to Cliff Waldman, one of the MAPI analysts who conducted the study, one of the most interesting findings of the survey was automation activity by company size. Specifically, the survey revealed that automation investments increase as firms grow larger. “Among other things, larger companies have greater output over which to spread the cost of investments,” Waldman writes here on the U.S. Chamber of Commerce web site.

Waldman adds, however, that the prevalence of automation activity among small manufacturers is also notable. “By allowing for significant efficiency improvements in at least some aspects of production, it is possible that automation makes it easier for manufacturing entrepreneurs to overcome often significant barriers to entry as well as for small manufacturing companies that might otherwise have exited the market to stay and compete,” he states.

Waldman concludes that automation technology “does not offer a complete solution to lagging productivity,” but he believes that “an effective strategy for the development of a globally competitive manufacturing sector requires attention to the promise of new technologies being implemented worldwide.”

In other words, manufacturers both small and large still have a lot to gain from investing in automation. In fact, this article from manufacturing.net states that automation is one of the top-three investments manufacturers can make this year. Do you agree?