General Metals Industry
October 1, 2016 / best practices, continuous improvement, customer delivery, lean manufacturing, LIT, productivity, quality, resource allocation, root cause analysis, workflow process
Being a leader in today’s industrial metal-cutting industry is tough. In addition to dealing with external challenges like high inventory levels, falling commodity prices, and a slowdown in China, managers still have to deal with operational pain points such as process and workflow bottlenecks, resource allocation, and delivery schedules.
As stated in the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization, thriving in today’s unstable market requires metal-cutting executives to focus on continuous improvement. “Whether implementing a lean manufacturing tool to improve processes or investing in training to develop people, proactive leaders are focused on making positive changes in their operations so they can quickly respond to today’s changing customer demands,” the eBook states.
One methodology many leaders are using as part of their continuous improvement initiatives is DMAIC. As explained here by American Society for Quality (ASQ), DMAIC is a data-driven quality strategy used to improve processes. Although it is typically used as part of a Six Sigma initiative, the methodology can also be implemented as a standalone quality improvement procedure or as part of other process improvement initiatives such as lean.
DMAIC is an acronym for the five phases that make up the process:
- Define the problem, improvement activity, opportunity for improvement, the project goals, and customer (internal and external) requirements.
- Measure process performance.
- Analyze the process to determine root causes of variation, poor performance (defects).
- Improve process performance by addressing and eliminating the root causes.
- Control the improved process and future process performance.
According to an archived article from Six Sigma Daily, the heart of DMAIC is making continuous improvements to an existing process through objective problem solving. “Process is the focal point of DMAIC,” the article explains. “The methodology seeks to improve the quality of a product or service by concentrating not on the output but on the process that created the output. The idea is that concentrating on processes leads to more effective and permanent solutions.”
DMAIC can be used by any project team that is attempting to improve an existing process. For example, SeaDek, a manufacturer of non-skid marine flooring, used DMAIC methods to reduce major inventory stockouts in 2015. The company went from 14 major stockouts in 2014 to one stockout in 2015, resulting in a materials cost savings of more than $250,000 and improving on-time delivery from 44 percent the previous year to 95 percent in 2015. (You can download the entire case study here.)
Paul Bryant, senior OPEX manager of LENOX Tools, says there are two key ways companies can identify when and where to apply the DMAIC method:
- Target highest scrap cost by machine and/or cost center
- Areas with low production yield or poor quality (i.e., high defective parts per million)
In his experience, Bryant says that DMAIC can be especially helpful in lowering scrap costs. Last year, LENOX made the strategic decision to start making wire internally; however, the blade manufacturer was working 10-15 hours overtime to keep up with weekly demand. “Using the DMAIC process, we reduced scrap and improved production speeds by 19.2%, resulting in $75K plus an additional $30K in overtime reduction,” Bryant says. “In 2017, we expect to pick up an additional 15% in production using the DMAIC methodology.”
Of course, the real payoff is what DMAIC can bring to the customer. “The ultimate expected benefit is that customers receive products of the best quality, on-time, and at lowest possible costs,” Bryant says.
Could DMAIC help your industrial metal-cutting organization? To learn more about this Six Sigma continuous improvement tool, click here for a detailed DMAIC roadmap or here for an overview and short video tutorial.
General Metals Industry
Non-Residential Construction Industry Continues to Create Demand for Industrial Metal-Cutting Companies
September 15, 2016 / best practices, Cost Management, human capital, industry news, maintaining talent, operations metrics, operator training, Output, predictive management, preventative maintenance, productivity, strategic planning
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.
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:
- 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.
- 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.
- 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?
General Metals Industry
September 1, 2016 / continuous improvement, Cost Management, industry news, LIT, productivity, quality, resource allocation, ROI, strategic planning
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.)
- Widespread automation investment suggests a fundamental reshaping of the production landscape that could eventually have implications for most aspects of manufacturing activity. Since the Great Recession, automation investment has been widespread in the U.S. manufacturing sector, with 83% of respondents to a December 2015 national survey having automated some part of their product-producing process in the five years prior to the survey, and 76% indicating that they plan to do so in the three years following the survey.
- Increased global manufacturing integration is raising the pressure for automation investment, as cost minimization with quality maximization looms ever larger as an operating paradigm for U.S. manufacturers. The survey reveals that the two most common criteria used by U.S. manufacturers for evaluating the performance of new automation technologies are whether they lower total production costs and whether they improve product quality.
- As supply chains become increasingly global, it is likely that automation activity by U.S. manufacturing companies will spread around the world. Supply chain pressures are at work in motivating automation activity. Among the top drivers of automation investment by U.S. manufacturing companies are use by competitors, use by customers, and use by suppliers.
- Global macroeconomic pressures that are affecting every manufacturing industry are catalyzing automation investment more than industry-specific factors. While the survey data show that larger manufacturers have a greater propensity to engage in automation investment than smaller manufacturers, there is no significant difference in the incidence of automation investment between major manufacturing subsectors.
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?
General Metals Industry
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.
General Metals Industry
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?
General Metals Industry
July 15, 2016 / employee incentives, Employee Morale, industry news, LIT, maintaining talent, operator training, productivity, skills gap
With more baby boomers leaving manufacturing jobs than entry-level candidates choosing a career in manufacturing, there’s no doubt that the manufacturing skills gap exists. However, a recent study by PricewaterhouseCoopers (PwC) and The Manufacturing Institute found that while some manufacturers aren’t feeling the gap yet, others are worried the gap will widen.
According to the June 2016 PwC study, 33% of manufacturers say they have little or no difficulty hiring talent while 41% have “moderate difficulty.” This doesn’t mean, however, that a worker shortage isn’t on the horizon: 31% of manufacturers see no skills shortage now but expect to see one within the next three years. In addition, another 26% believe the gap has already peaked and 29% think it will only get worse.
While no one knows if or when the gap will worsen, the point is that companies need to address it now. In most cases, managing the gap will require companies to change the way they train and maintain talent. According to the eBook, Five Performance-Boosting Best Practices for your Industrial Metal-Cutting Organization, companies are rethinking their hiring tactics and beefing up training programs to help bridge the gap.
Aluminum manufacturer Alcoa, for example, has quadrupled the number of its internships at its Technology Center in New Castle, Penn., in the past three years to ensure it attracts and retains top talent, according to an article from IndustryWeek. In addition, the company is partnering with a community college to train 60 students in additive manufacturing and 3-D printing.
The Fabricators & Manufacturers Association Intl. is also working to boost enrollment in metal forming and fabricating career paths. As reported here, the association developed a multi-media site to showcase stories, videos and interactive resources to raise awareness of technical education. Educators at 12 schools across the country will have memberships to the site (www.eduFACTOR.org) in an effort to attract and develop a new-generation workforce.
In addition to new hiring strategies, companies also need to be sure their training programs are designed to take on a new generation of workers. According to an article from American Machinist, there are a few ways to implement effective training to help bridge the skills gap:
- Make training mobile. As we discussed in this blog post, mobile technology is changing the manufacturing landscape. Besides increasing productivity, portable devices can be used as virtual textbooks. Create web-based training that is optimized for smartphones and tablets so your workforce can brush-up on best practices, learn new techniques, and develop new skills anywhere and at any time.
- Make it easy to digest. Keep training content short and sweet, especially given that manufacturing and engineering subjects can be detailed and, let’s be honest, not the most exciting to read. Create training content that is streamlined, divided into short chapters or sections, and that is clear, concise, and geared toward employee engagement.
- Teach skills they won’t find somewhere else. Training, in general, will help your industrial metal-cutting operations run more efficiently, but it can also help you edge-out the competition when it comes to attracting and retaining talent. Provide training that equips employees with the skills unique to your operation and products, especially with entry-level employees. Custom training will not only boost operational productivity, but will also create an incentive for those employees to grow along with your operations.
Proactively attracting new talent and investing in training can help bridge the skills gap within your industrial metal-cutting operation, but they are only two pieces of the puzzle. Cultivating a company culture that actively and continually invests in its employees can have a long-term effect on not only the quality of your workforce, but the quality of your operations as well. People affect process and can play a huge role in an operation’s success.
Do you think the skills gap is affecting your metal-cutting operations? What strategies are you implementing to bridge the gap?
General Metals Industry
July 1, 2016 / best practices, continuous improvement, Cost Management, industry news, LIT, operator training, productivity, Safety
Safety is one of those issues that every manufacturer knows is important, yet as evidenced by the unending list of OSHA fines, it is pretty clear that it often slips through the cracks. Even big name companies like Anheuser-Busch have been known to fall short.
If it has been a while since you have evaluated or updated the safety policies and procedures used in your metal-cutting organization, it may be time to re-focus your efforts. One simple safety tool that is often overlooked is the use of visual devices. According to visual management expert and author Gwendolyn Galsworth, the “visual workplace” is a huge opportunity for managers to create a safer, more efficient, and reliable manufacturing operation.
“Visual devices translate the thousands of informational transactions that occur every day at work into visible meaning and imbeds that into the living landscape of work,” Galsworth writes on her website. “This visible meaning doesn’t just impact performance—it creates performance.”
This means it may also help save on costs. According to the 2016 Liberty Mutual Workplace Safety Index, the most disabling, nonfatal workplace injuries amounted to nearly $62 billion in direct U.S. workers compensation costs. This translates into more than a billion dollars a week spent by businesses on these injuries. In addition, as stated in the white paper, Accounting for Operator Inefficiencies in the Metals 2.0 Environment, neglecting to identify and address safety issues can negatively affect operator efficiency, which can reduce output and impact the bottom line.
Put simply: It pays to keep your employees safe, and visual cues are an easy way to accomplish that.
How can you utilize visual devices to improve safety in your facility? The following are just a few ideas:
- Use Color. LENOX Tools has implemented a color-coded Safety Sticker program that visually displays whether or not its operation has had any safety incidents. Sticker dispensing stations and a safety calendar are located at every entrance to the facility, and every employee is required to put on a green sticker with the number of days “accident free” written on it. When a recordable accident occurs, everyone in the facility changes from a green sticker to a red sticker for a seven-day period. After seven days, everyone reverts back to the green sticker. According to Matt Howell, senior manager, the program has been “a good rallying point for the facility and builds energy around safety.”
- Go Digital. An article from Reliable Plant lists several benefits of investing in digital signage. “In today’s visually oriented world of YouTube videos, film and television, digital screens may capture attention far more effectively than static, textual media, especially in business environments where people are focused on their work,” the article states. In addition, unlike static communication tools, digital signage uses sound and can be conveyed and refreshed regularly, improving the likelihood that an audience pays attention and internalizes critical safety information. (You can read the full article here.)
- Demand Attention. While tried-and-true safety assets like warning signs, stripes on the floor, perimeter fencing/blocks, and lock-out/tag-out procedures can be valuable, an article from Canadian Metalworking points out that these tactics are passive. “Over time they tend to become invisible or are just plain ignored,” the article states. To demand attention from workers, the article suggests operations managers consider investing in warning beacons. Light features such as size, color, output and mounting options can all be used to enhance safety and promote employee awareness in key areas of the facility. (Click here to read the full article.)
What visual strategies are you using to improve safety in your industrial metal-cutting operation?
General Metals Industry
June 15, 2016 / agility, best practices, blade selection, industry news, material costs, strategic planning
As we reported in our 2016 Industrial Metal-Cutting Outlook, this year has started off much slower than experts had hoped or anticipated. However, there are still a few industry segments that are sparking demand for industrial metal-cutting companies. One of these segments is solar power.
Over the last few years, the solar power industry has experienced exponential growth. In 2010, solar only totaled 4 percent of all forms of electric generation but has since grown to 30 percent in 2015, according to the latest U.S. Solar Market Insight report from the Solar Energy Industries Association (SEIA).
The sector shows no signs of slowing down either. In the first quarter of 2016 alone, solar accounted for 64 percent of all new electric capacity in the U.S., adding more capacity than natural gas, coal, nuclear, and wind industries combined. SEIA forecasts that the solar industry will nearly quadruple by 2021. In addition, Congress recently extended the Solar Investment Tax Credit (ITC) until the end of 2021, which provides a substantial federal tax credit for both residential and commercial projects until a permanent 10-percent credit takes effect in 2022. The Solar ITC also allows owners who start construction before the end of 2021 to claim a larger credit as long as it’s complete and in service by the end of 2023.
According to an article from IndustryWeek, one of the reasons solar is booming is due to large-scale installations, which will account for approximately 75 percent of all installations this year. The utility and large-scale solar installations require many metal products for towers, including structural tubing, racking, and torque tubes for fixed and tracking systems—all of which have to be cut and shipped.
Industrial metal-cutting companies that want to grow with the solar power market need to be aware of customer needs and how the market is evolving. Based on our research, there are two trends worth noting.
1. Metal Wars
Following suit with other industries, price is driving metal material preferences for solar power installations. According to this article from American Metals Market (AMM), Aaron Faust, vice president of business development and co-founder of Applied Energy Technologies (AET) explained: “During our first four years, we sold predominately stainless products. In the last three years, galvanized steel has taken the lion’s share of our products. For a long time, it was the perfect storm—stainless could complete with aluminum and galvanized. But margin has been squeezed so tight across the board. Prices are driving everything now.”
In addition to price, solar requires high quality and durability to withstand the weight of the installation itself and weather conditions. While aluminum and stainless steel have long been used in solar applications, many aluminum rack suppliers are now offering galvanized steel products, as they not only meet strict specifications for custom utility and large-scale installations but also are highly resistant to corrosion. “Two things that will define next year are the availability of steel and the capacity of companies to process it,” Faust tells AMM. “There’s not much concern over availability, but the market could face some limitations with the market concentrated on certain forms.”
Given a shift in material preference, it is important for metal-cutting companies to have the right tool for the job. For example, carbide band saw blades are designed to cut faster and last longer for a variety of applications, including aluminum and hardened materials like galvanized steel. However, high-performance bi-metal blades may provide a cost-effective solution for carbon steel and structural steel tubing. (For more information on choosing the right blade, check out the Blade Selector tool from the LENOX Institute of Technology.)
2. Fixed vs. Tracking Systems
Besides the preferred metal type for utility grade solar installations, the type of installation itself will have an impact on what industrial metal-cutting companies will be cutting. GameChange Solar, a New York-based manufacturer of commercial and utility scale solar racking and tracker systems, recently switched to pre-galvanized steel for its production after aluminum prices increased, according to an article from Modern Metals. In addition to the material switch, the company recently increased its use of metal tubing and sourced 40 million pounds of sheet and tubing due in part to the growing use of solar trackers. Unlike fixed systems that simply collect sunrays as they pass over the panel, tracking systems follow the sun throughout the day with the use of structural tubing. Panels are then installed on the tube so they can pivot back and forth to increase a panel’s efficiency. GameChange Solar’s President Andrew Worden estimates that the tracker market will total $1 billion this year in the U.S. alone, with the world market growing to an estimated $3 billion.
With nothing but growth in the forecast for the solar power industry, the metal industry is poised to grow alongside it. Industrial metal-cutting companies that stock the right material and cutting tools will be prepared to take full advantage of this market opportunity and gain a competitive edge.
General Metals Industry
June 1, 2016 / best practices, Employee Morale, human capital, LIT, maintaining talent, operator training, skills gap
Like any fad, management trends come and go. However, that isn’t to say that they aren’t valuable and worth considering. In fact, most of the time, management trends are in direct response to shifts in cultural expectations and work attitudes.
The incoming millennial generation is a good example. As the manufacturing industry attempts to fill the widening skills gap, experts and manufacturing giants like IBM have been suggesting several ways companies can attract this new generation and get them excited about careers in manufacturing.
One trend that continues to gain ground is the push for transparency. In fact, Forbes lists this is as one of the top management trends of 2016 based on research. “Simply put, people like and appreciate being dealt with openly and honestly,” Forbes notes.
According to an article from the Harvard Business Review, there are several terms that describe this trend, including open-book management (OBM), economic transparency, and ownership culture. “Whatever you call it, it means encouraging employees to think and act like businesspeople rather than like hired hands,” the HBR article explains.
In other words, today’s managers should treat employees in a way that engages them and encourages them to take ownership of their jobs. “At open-book companies, it’s part of everyone’s job to contribute to the success of the business,” the HBR article states. “Managers help employees understand, track, and forecast key numbers. They welcome ideas for improvement. They reinforce the ownership mindset by sharing profit increases with everyone, usually through bonuses funded by the increase itself.”
LeanWerks, a contract manufacturing shop featured here in Modern Machine Shop, has instituted an OBM style that allows operators to readily see how their performance affects the company’s bottom line. Reid Leland, president, uses OBM in his shop to facilitate a better line of communication and understanding between management and employees, creating a more transparent and “flattened” organization.
According to the MMS article, Leland’s shop bases its OBM style on three key elements:
- Financial Training. New employees are formally trained on topics such as the time value of money, project management, income statement, balance sheet and cash flow, and ratios such as debt to equity and gross profit to operating expenses (GP/OE).
- Shared Information. Leland’s shop has a large viewing monitor located in a prominent area of the shop that displays a spreadsheet that is updated regularly. The spreadsheet includes company financial information, a list of all shop machine tools, and the gross profit that individual machines produce each day of the month.
- Profit Sharing. At the end of the month, if the GP/OE ratio reaches a certain level, part of the monthly profits is shared with the employees. This information is readily available on the spreadsheet for employees to view so they can monitor profit levels themselves.
Of course, not every shop owner will feel comfortable sharing financial details and may not be able to share profits, but there are certainly benefits to actively engaging employees and creating more of a reciprocal relationship between the executive office and shop floor. According to the eBook, Five Performance-Boosting Best Practices for your Industrial Metal-Cutting Organization, a growing number of managers are finding that operators who take ownership of their process or work area can be invaluable assets to the company.
“Employee “buy-in” can positively affect all aspects of an industrial metal-cutting operation, including quality, productivity, and in the end, the bottom line,” the eBook states. “Similarly, when employees feel disconnected, those same business areas can be negatively affected.”
As the eBook points out, operators who feel valued are more likely to value their jobs and their employer. Even if you aren’t ready to open up your books for the whole company to see, strategies such as collecting feedback, investing in continued education, and setting goals and incentives can all help encourage employee ownership, foster better communication, and improve morale.
How transparent is your industrial metal-cutting organization? In what ways could you encourage employee ownership and facilitate better communication?
General Metals Industry
May 15, 2016 / best practices, continuous improvement, human capital, KPIs, lean manufacturing, LIT, productivity, root cause analysis
There’s a well-known saying that a business is only as good as its people, and industrial metal-cutting operations are no exception. Effective teams are an essential component to the overall success of a business, especially one that aims for continuous improvement.
According to the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Company, “continuous improvement initiatives need to be a team effort to be sustainable.” In other words, to improve your industrial metal-cutting operations to its fullest potential, you need to have the right people with the right skills to keep your plan on course. Without a team backing the process, the very notion of any continuous improvement program is impossible.
Of course, the real challenge is building a strong continuous improvement team. As a recent article from IndustryWeek points out, just because a company works in teams doesn’t mean it is good at teamwork. Management’s goal has to be more than simply building a team; the goal needs to be building an effective team.
What does a successful continuous improvement team look like? An article from the Institute of Industrial and Systems Engineers provides nine best practices used by highly effective continuous improvement teams:
- Look at more than just numbers. Continuous improvement is very metric-driven, but don’t forget about inefficiencies that might show low numbers or those that aren’t easily quantified such as infrastructure, sanitation and preventative maintenance.
- Develop cross-functional teams. Expand your team to include more than just members from operations, engineering and quality. Cross-functional teams discuss and agree to solutions minimizing negative impacts before they happen.
- Define goals. Know what you want to achieve and how you are going to achieve it. More importantly, make those goals focused and achievable. Focusing on one set of challenges will allow you to see improvements quickly.
- Use automated KPIs. Collecting the right information at the right time will enable you to improve performance and eliminate inefficiencies.
- Utilize operators selectively. Operators are there to operate the line, not report data. While they can provide focused information when needed, don’t abuse their knowledge.
- Determine root causes. Whenever an issue arises, conduct a root cause analysis to find the real reason why it occurred.
- Focus on impactful, measurable change. You’ve analyzed the root causes, utilized cross-functional teams to prioritize issues and established a consensus for your process change. Now is the time to implement it and make sure it has the impact you thought by checking in with your team, tracking metrics and making adjustments as needed.
- Implement incentives that motivate. Reward hard work with an incentive program. Improve your operations by investing in your people.
- Benchmark. Competition is healthy. Know what others in the metal-cutting industry are tracking and their results. Use the comparison to further improve your operation.
Do you have a continuous improvement team? What habits do you feel make it an effective team?