February 25, 2014 / Cost Management, preventative maintenance
In today’s competitive and unpredictable market, managers need to approach cost strategically. While several reports are forecasting a forging industry upswing in 2014, both in the U.S. and globally, many forges remain cautiously optimistic about the market and, as a result, are continuing to watch their costs.
According to the “2014 Business Outlook” from Forging Magazine about 41% of the forges the magazine polled said their capital spending totals will be “about the same” in 2014 as they were in 2013. Another 34.5% of forges indicated their spending total would increase in 2014, and 24% said that spending would decrease, according to the report. The annual business survey also revealed that most new investments would be financed without new debt, and about 12% of respondents said they were hoping to actually reduce their debt levels in 2014.
There are several ways today’s forges and other industrial metal-cutting companies are proactively approaching cost, whether that means cutting back on spending or improving efficiency. Below are a few best practices to consider:
- Proactive care of equipment. Machine downtime is expensive, both in terms of repair costs and reduced productivity. As described in the paper, Top 5 Operating Challenges for Forges That Cut and Process Metal, consistent general maintenance and preventative maintenance programs can help executives better manage costs. On a band saw, for example, low coolant levels can lead to premature and uneven wear of band wheels, which typically cost about $1,000 each. By instituting regular coolant checks as part of a preventative maintenance program or daily operator checks, managers can eliminate this unnecessary maintenance cost, as well as the time needed to replace the band wheel.
- Strategically consider repair over replacement. When downtime does occur, plant managers are often left with the decision to repair or replace equipment and parts. This article from Reliable Plant discusses the benefits of repair and, specifically, outsourced repair services. Another article from Plant Services magazine discusses a decision tool called equivalent annual cost (EAC) that can be applied to the repair-versus-replace question. According to the online magazine, “EAC allows engineers and operators charged with optimizing the left side of the balance sheet assets to speak a common language with managers, who tend to see the right side of the balance sheet liabilities and equity.” You can read more about the EAC tool here.
- Manage Inventory. In today’s “lean” culture, everyone knows that waste is a huge “no-no” and that many times, high inventory costs and abundant scrap can be a sign of root-cause operator quality issues and inefficiencies. That’s why many best-in-class industrial metal-cutting companies have started to adopt the “pick for clean” method in their operations, choosing to use remnants first and striving to keep scrap and inventory levels low. A column from Manufacturing.net also poses some important questions managers should be asking: “How much does it really cost to make your products quarter after quarter? How are you using your space and your facilities to best maximize productivity? How is too much inventory during slower seasons and lack of inventory at busier times weighing you down?” In the end, better inventory management often leads to better cost management.
January 25, 2014 / Cost Management, resource allocation
Strategic allocation of resources is critical in today’s competitive marketplace. As customers continue to demand tighter tolerances and faster turnaround, operations managers need to be tactical with their existing assets while also knowing when it is time to make some upgrades. The challenge, of course, is making the right call by investing in the areas of your operation that will bring the best return.
While there is always an element of risk to any strategic decision, the following are a few best practices today’s managers should consider as they allocate resources in their operations:
- Proper allocation requires measurement. One of the first steps in proper resource allocation is identifying where improvement is needed, and the only way to do that is to measure your processes. In other words, you need a baseline for comparison. As described in a recent white paper from LENOX Institute of Technology, this can be done with sophisticated software or manually. In a metal-cutting operation, for example, managers can use software to automatically track the number of square inches processed by each saw and each blade. This allows managers to easily track trends and quickly detect problem areas. The same procedure can be done manually with a stopwatch. Regardless of your method, the goal is to measure productivity. Once a baseline is established, managers can start to effectively evaluate equipment, tooling, and operators.
- Think beyond cost. The term “investment” doesn’t always refer to money. In the aforementioned scenario, tracking software will require financial investment, while manual measurement will require time and human capital. While at face value the financial investment of software may seem high, there are “costs” associated with the manual strategy as well. The goal is to think long-term while also being realistic about the capabilities of your workforce. As demonstrated in this article from Manufacturing.net, the choice to automate (or not) takes careful consideration. For example, if you take the plunge to automate, what type of training will your workforce need when the new system is installed? Successful managers look beyond the initial benefits and the price tag of an investment and weigh the long-term pros and cons as well.
- Consider all of your options. At the end of the day, budget constraints are a real issue. However, just because you can’t afford a specific piece of equipment or technology doesn’t mean there aren’t alternative solutions out there. Perhaps used machinery is an option. This article from Forge Magazine provides some great reasons to contemplate second-hand machinery, as well as ten critical factors to consider before making a purchasing decision. Managers also shouldn’t underestimate the benefits of investing in human capital. Upgrades in areas such as training and safety can provide huge gains in efficiency and quality. Like any strategic decision, resource allocation requires an open mind. In the spirit of continuous improvement, best-in-class managers need to explore all of the ways they can save their operation time and money.
December 5, 2013 / customer delivery, planning, quality
Like all segments of the industrial metal-cutting industry, forges must respond quickly to changes in the marketplace. This is even more so the case in recent years. While projections from the Forging Industry Association and IHS Global Insights expect the forging industry to pick up again in 2014, a few rough years have heightened competition not only among forges, but also with companies that offer alternatives to forged components. And that competition isn’t just within the U.S. According to a global industry report from ResearchMoz, an Albany, N.Y.-based market research firm, there has been an upward trend in the outsourcing of forged parts to low-cost countries.
This means that meeting customer demands for both speed and quality are essential, especially if you can’t compete on cost. The harsh reality is that today’s customers expect parts to be finished in half the time they took five years ago—with zero errors. The challenge for operations managers is finding strategies that balance excellence and efficiency, making sure that one doesn’t come at the cost of the other.
In some cases, this will require the use of advanced measurement tools and other technologies that optimize production. However, a white paper from the LENOX Institute of Technology suggests several other ways forging operations can ensure they are meeting deadlines and maintaining a high level of quality. Below are a few highlights from the paper, The Top 5 Operating Challenges for Forges that Cut and Process Metal:
- Planning Ahead is Key. Taking the time to forecast can provide an operation with a wealth of benefits, from faster customer delivery and higher efficiency to improved employee morale and a reduction in errors. In one instance, an industrial metal-cutting company was able to reduce its scrap rate to less than 1.5 percent and increase annual sales up to 20 percent after implementing a production schedule that planned out orders six to eight weeks in advance.
- Monitor Inbound Material Quality. Product liability and traceability continue to be huge concerns for industrial metal-cutting companies, and mix-ups can be both expensive and dangerous. Operations managers have to be sure they are tracking the quality and accuracy of the material coming from the supplier. In other words, inbound quality control is just as critical as outbound quality control. By confirming what is coming in the door, forges can confidently supply products that are both accurate and fail-safe.
- Faster Is Not Always Better. This is especially true in an industrial metal-cutting environment. In band sawing, for example, too high of a band speed or very hard metals produce excessive heat, resulting in reduced blade life and poor quality cuts. The scale found on most forged parts only magnifies this issue and can dull blades even faster. Setting the proper band speed and feed rates takes a certain finesse, and it is important that operators are aware that what appear to be short-term gains can cause setbacks in the long run. To help control this, some metal-cutting companies are using automation to “lock in” cutting parameters. In many cases, supply chain partners can also help with education to ensure that operators are trained on proper equipment settings.