May 20, 2017 / agility, best practices, continuous improvement, industry news, LIT, operator training, predictive management, resource allocation, strategic planning
The year started out on a high note for machine shops, and current reports suggest the upward trend will continue throughout 2017. How should machine shops respond?
A Bright Picture
The new year meant good things for machine shops and other industrial metalworking companies. According to the Gardner Business Index, the metalworking industry grew in January for the first time since March 2015, reaching its highest point since May 2014.
That momentum has continued throughout the year. Both February and March registered growth, with the Index hitting its highest points since March 2012. Growth continued in April as well, although at a slightly slower rate. However, as Steven Kline, director of market Intelligence at Gardner Business Media, states here, “Expansion is still the greatest it has been in three years.”
Customer segments are also experiencing growth. According to Kline’s report, power generation was the fastest growing industry in April, growing for the second time in three months. Twelve other industries recorded strong growth as well. Industrial motors/hydraulics/mechanical components grew at an accelerated rate for the fourth month in a row; aerospace continued its streak of growth at six months; and job shops and oil/gas-field/mining machinery also grew in April.
Other economic indicators point to good news. As reported here by Cliff Waldman, chief economist at the MAPI Foundation, manufacturing employment has now increased for five consecutive months, with an average of 14,200 new jobs gained per month. “Overall, this is the most convincing evidence that the broad manufacturing picture is starting to show some real improvement from years of weakness,” Waldman states.
Getting Smart for the Future
Yes, the near-term picture looks bright for machine shops. However, industry leaders can’t rest on their laurels and need to be sure they are prepared for where the market is heading. Perhaps the biggest trend happening within manufacturing is what many call the “fourth industrial revolution.” As explained in a previously published blog, the fourth industrial revolution (also called “Industry 4.0”) is the advent of the long-awaited “smart factory,” in which connectivity and advanced technologies are being used to streamline decisions, optimize processes, eliminate waste, and reduce errors.
Companies like EVS Metal, a precision metal fabricator headquartered in Riverdale, NJ, have already started thinking about what this means for their operation and how they can adapt. From a practical standpoint, shops can start by equipping components and machines with necessary Industry 4.0 features, such as sensors, actuators, machine-level software, and network access to measure productivity of metal-cutting equipment.
However, according to an article from Production Machining, companies need to more than just invest in technology. Matthew Kirchner, managing Director, Profit 360, explains here that manufacturers that wish to capitalize on the coming revolution will require a new level of knowledge, aptitude, and disciplines in the following four areas:
- Understanding throughput: The ability to understand a basic throughput equation, and how throughput is affected by machine speed, setup time, white time between operations, first pass yield and the like is fundamental to succeeding in a cyber-physical plant.
- Jacks of all trades: The lines between departments become increasingly grey as information and manufacturing technology connect and integrate them. The manufacturing operation of the future requires team members that can work fluidly across myriad industrial equipment and technology.
- Networking and control systems: Manufacturing technology will evolve relatively quickly to where every device has its own IP address. This will create what has been called a “hyper-connected Smart System of Systems” where endless streams of data are collected. A working understanding of this interconnectivity will be necessary.
- Inform-Actionable Data: The challenge of the manufacturer will not be a lack of data, but too much of it. Collecting, scrubbing, discerning, and analyzing this information will be fundamental to our ability to improve performance and process. Thus, industrial maintenance, factory automation, IT, and accounting will no longer be individual members of different departments or teams. Instead, they will become members of the same team whose charter is to drive enterprise-wide performance improvements using the tools now afforded them by the advent of cyber-physical systems.
Equipped for Success
As machine shops move into the second half of the year, the key will be to not only make the most of current market conditions, but to also strategically prepare for the future. Like any trend, it will take a while for the fourth industrial revolution to fully materialize. However, many experts are saying that industry leaders are embracing this next generation of manufacturing and, more importantly, are starting to make investments. Is your shop in a position to do the same?
May 5, 2017 / agility, best practices, continuous improvement, Cost Management, industry news, optimization, strategic planning
Although 2016 didn’t end on a high note for metal service centers, many industry leaders and experts are confident about 2017.
Overall, 2016 wasn’t a stellar year for service centers. According to the Metals Service Center Institute (MSCI), service center shipments in the U.S. and Canada finished 2016 with year-over-year declines in both steel and aluminum. Inventories mostly remained below prior-year levels, though stocks crept up at year’s end.
Coming into 2017, forecasts were hopeful but guarded. As reported here by Metal Center News, analysts like Chris Kuehl of Armada Corporate Intelligence warned that factors such as the interest rates, inflation, the strong dollar, government grid lock, and tax reform would all play a role in determining the health and strength of the U.S. economy in 2017. In late January, M. Robert Weidner III, president and CEO of MSCI, voiced his concerns and urged the new Trump administration to take serious and immediate action to restore growth and to help the industrial metals supply chain fully recover from the lingering effects of the Great Recession and government policy.
Confidence, however, is growing in recent months. As stated in LIT’s 2017 Industrial Metal-Cutting Outlook, metal service centers and other industrial metal-cutting organizations are getting more and more optimistic about the near future, and the latest market data looks promising.
After a flat February, U.S. service center steel shipments grew substantially across the board in March. Specifically, steel shipments increased by 9.7% from March 2016, and shipments of aluminum products increased by 13.0% from the same month in 2016. Inventory levels also showed improvement.
Meanwhile, industry leaders like Reliance Steel & Aluminum Co reported strong first-quarter results. According to the company, sales were up 11.9% from the first quarter of 2016 and up 17.4% from the fourth quarter of 2016. Gregg Mollins, president and CEO, said that improved demand, higher metal pricing, and continued strong execution resulted in record quarterly gross profit dollars and Reliance’s highest earnings per share and net income since the first quarter of 2012.
“2017 is off to a great start,” Mollins said in a news release. “Both pricing and demand levels are better than they were a year ago, and we are optimistic with regard to increased infrastructure and equipment spending on the horizon. We will continue to focus on maximizing our gross profit margin while diligently managing operating expenses and inventory levels as well as maximizing market opportunities to drive our earnings higher.”
In an April press release, Ryerson said it is “cautiously optimistic on demand for metal products in the first half of 2017.” The company anticipates higher revenue for the first quarter of 2017 compared to the fourth quarter of 2016 and the first quarter of 2016, with higher average selling prices and higher tons sold for the current quarter as compared to both periods. The key, the company states, will be to see “how positive sentiment ultimately converts to real demand for industrial metals.”
According to a report from MetalMiner, positive sentiment was also evident among attendees and speakers at this year’s S&P Global Platts Steel Markets North America conference, held in Chicago in late-March. Presentations and forecasts were mostly optimistic, MetalMiner writes here, although there were differences in opinions of what attendees should focus on in the coming months.
One of the conference presentations, given by Roy Berlin, president of Berlin Metals; Donald McNeeley, president of Chicago Tube & Iron; and Michael Lerman, president of Steel Warehouse, offered attendees three ways service centers can offer more value to the market. As reported by MetalMiner, these included the following:
- Embrace change but find an identity. Berlin noted that finding an identity in the industry is key. “Decide what it is you’re going to do and do it well. No, do it great, actually,” he said.
- Do more with less. According to McNeeley, service centers have to interject more automation. He said they need to do more with less and they cannot drive input costs down any more. On output costs, McNeely said companies cannot get customers to pay a premium for the market, so the only thing left in that channel is “operational excellence.”
- Tackle your internal costs. Lerman concluded by sharing that his company stays competitive by attacking its main internal costs: logistics, scrap, safety and healthcare. He also said that in today’s volatile market, service centers should seriously consider learning how to use and apply financial hedges where appropriate. “I know we have been taking advantage of it, and I think it is going to be more and more important as we move forward,” he noted.
Another key strategy will be for service centers to think outside the box when it comes to spending—and saving costs. According to the news brief, Resource Allocation Strategies for Leading Industrial Metal-Cutting Organizations, managers focused on continuous improvement should explore all of the ways they can save their operation time and money. For example, if new equipment isn’t in the budget, perhaps second-hand equipment is an option. Although there is some risk in buying used equipment, when done correctly, this can be a cost-saving alternative for companies looking to expand their capacity or capabilities.
Onward and Upward
Most companies know by now that there are never any guarantees when it comes to the industrial metals sector. As stated in a recent article from Modern Metals, projections “still err on the side of caution, but much less so than their forecasts of previous years.” With renewed confidence and a few strategies in their back pockets, service centers can position themselves for both new opportunities and growth in 2017.
March 1, 2017 / agility, blade failure, blade life, blade selection, customer service, industry news, LIT, strategic planning
As we reported in last month’s blog, experts consider aerospace to be one of the strongest industries. In one report from the Metal Service Center Institute, Richard Aboulafia, vice president of analysis at the Teal Group Corporation, said that aerospace was the only industry that saw growth acceleration through the recession and that the civil aviation sector in particular offers “major opportunities for long-term growth.”
This, of course, is good news for industrial metal-cutting companies serving this sector, and prospects continue to look good for the near future.
Set to Soar
According to a report from Defense News, the aerospace and defense industry set a new record for international sales in 2016, delivering $146 billion in exports. The article went on to say that 2017 could be “another banner year” for the defense and aerospace industries thanks to some anticipated government orders.
As reported by Defense News in December, the U.S. State Department approved in the first quarter of this fiscal year foreign military sales worth an estimated $45.2 billion dollars, which is said to be more than the total foreign military sales for all of fiscal 2016. “If approved by Congress and manufactured this year, some of those purchases could help rack up the export total for 2017,” the article states.
Deloitte’s 2017 Global Aerospace and Defense Sector Outlook is also optimistic. According to the Executive Summary, Deloitte expects industry revenues for the global aerospace and defense sector to resume growth, driven by higher defense spending. Following multiple years of positive but subdued rate of growth, Deloitte forecasts that sector revenues will likely grow by about 2.0 percent in 2017.
Forecasts from industry leader Boeing show similar trends. According to a January report from Reuters, Boeing expects to deliver between 760 and 765 commercial aircraft in 2017, topping 748 deliveries in 2016. Honeywell, on the other hand, forecasts a slight decline in 2017; however, the company expects deliveries will begin picking up in 2018 due to the strength of several new aircrafts entering service, AINonline reports.
This could spell opportunity for many industrial metal-cutting companies. As an article from IndustryWeek states, the aerospace industry is a good business in which to be competitive because the underlying drivers of demand are very strong. “Since the end of the Great Recession, new commercial aircraft orders have typically been double, and in some years, triple the number of annual deliveries,” the article states. “This reflects explosive growth of air traffic in the emerging world as rising incomes and declines in ticket fares make air travel affordable for increasing numbers of households.”
Equipped for Growth
As a critical part of the supply chain, there is no question that metal-cutting companies could reap the rewards of aerospace’s success. However, companies serving this sector need to be sure they are doing what it takes to win the business of both existing and potential aerospace customers, even if that means investing in advanced metal-cutting tools designed to meet the unique demands and shifting trends within the industry.
For example, as reported here by The Fabricator, Superior Machining & Fabrication has upgraded its 110,000-sq.-ft. machine shop to better serve the aerospace sector. “Changes include the addition of CAD/CAM software, a larger 5-axis bridge mill for hard metals, and a 5-axis SNK bridge mill,” the article states. “The company also has tripled the size of the quality room, added an assembly room, created a staffed tool/fixture room, introduced lean manufacturing/5S throughout the shop, and segmented the shop into cells with their own leaders/supervisors to help improve product flow.”
Shops should also be sure they are equipped to handle the material demands of customers, including the growing use of titanium in aerospace components. In a recent interview with American Metals Market, Rich Harshman of metals supplier Allegheny Technologies, Inc., says he sees a significant mix shift happening within the aerospace industry. Specifically, he says there is a “growing demand for our differentiated next-generation alloys as well as growing demand for our isothermal and hot-die forging and titanium investment castings.”
For metal-cutting operations, this means having a carbide-tipped band saw blade. Since titanium and other high-performance alloys are stronger and harder, they need more than the average bi-metal blade. Using a carbide-tipped band saw blade not only allows for the successful cutting of hard metals like titanium, it simultaneously offers longer blade life and faster cutting as well, according to the white paper, Characteristics of a Carbide-Friendly Bandsaw Machine.
In today’s unpredictable market, the truth is that no one really knows what the future holds for aerospace. However, industry leaders know that it pays to be prepared. Tailoring your operations and processes to meet the unique demands of the industries you serve will not only position you as a valued supply chain partner, but as an agile, industrial metal-cutting leader that is ready to fly when demand takes off.
February 20, 2017 / agility, best practices, blade failure, blade life, blade selection, Cost Management, customer delivery, industry news, LIT, maintaining talent, operator training, productivity, quality, resource allocation, skills gap, strategic planning
Thanks to an unstable marketplace, capital spending among machine shops and other metalworking companies has been down for the last several years. However, new reports suggest a rebound in the near future.
According to data from Gardner Business Intelligence (GBI), machine tool consumption peaked at $7.5 billion in 2014, and then contracted 3 percent in 2015 and 7 percent in 2016. Based on GBI’s Capital Spending Survey, projected total machine tool consumption in 2017 will be down an additional 1 percent. However, as reported here by Modern Machine Shop, the survey also shows that demand for core machine tools will increase in 2017 by 9 percent. In addition, GBI’s new econometric model for machine tool unit orders indicates that the rate of contraction in overall machine tool demand bottomed in July 2016 and will improve through the end of 2017.
Steven Cline, Jr., director of Market Intelligence at GBI, says the driving force behind the projected rebound is the need for increased productivity. “Shops need to increase productivity in order to remain competitive in a global manufacturing marketplace and to counteract the much-talked-about skills gap,” Cline writes in Modern Machine Shop. “More and more shops are turning to lights-out and/or unattended machining to achieve this increase in productivity, but new equipment, including machine tools, workholding and automation, is needed to run lights-out.”
As reported in the news brief, “Strategies for Training and Maintaining Talent in Industrial Metal-Cutting Organizations,” industrial metal-cutting companies have spent the last few years investing a lot of time and resources into their workforce. This has helped boost productivity and address some of the skills gaps, but the GBI survey suggests that shops are seeking a balance that requires investments in both human capital and equipment.
For example, Speedy Metals, an online industrial metal supply company and processor, recently upgraded its band saws to improve efficiency. “We had been searching for a reasonably priced, high-production band saw to add to our saw department and boost our production,” Bob Bensen, operations manager, tells Modern Metals. “We needed a reliable band saw that was going to stand up to the rigors of our fast-paced environment.”
Bensen went on to say that the new band saw, which has nesting capabilities and allows his operators to cut a variety of metals, has improved productivity. This, he adds, has given Speedy Metals a competitive edge and allows his company to continuously offer same-day shipping on quality parts and customized saw cuts that meet the closest tolerances.
Similarly, metal-cutting companies like Aerodyne Alloys are investing in new metal-cutting tools to further improve efficiency. Working with hard-to-cut metals like Inconel 718 and Hastelloy X, the metal service center decided to upgrade from bi-metal blades to carbide-tipped blades to get higher performance out of its band saws. After upgrading to a carbide blade, Aerodyne was able to tackle hard, nickel-based alloys, while also improving cutting time on easier to cut materials like stainless steel. According to a case study, this helped improve operational efficiencies at Aerodyne by up to 20 percent.
Of course, not all capital investments offer a good return. If your shop is considering investing in new equipment or tools this year, be sure to measure cost against productivity. According to the white paper, Selecting the Right Cutting Tools for the Job, managers need to weigh the following:
- upfront costs against overall operating and maintenance costs
- long-term productivity of a machine and its intended use
- equipment and blade life, as well as cost per cut
There is no question: Staying competitive in today’s market is tough. Demands for high quality and quick turnaround continue to increase, while cost pressures and issues like the skills gap remain. How will your shop respond? As the GBI survey suggests, it may be time to consider making some capital investments to ensure that your team is fully equipped to meet demands.
February 1, 2017 / agility, customer delivery, customer service, industry news, LIT, strategic planning, supplier relationships, value-added services
Although there is still a lot of uncertainty surrounding the economy, many metals companies and experts are fairly optimistic about the short term. According to the January 2017 Precision Metalforming Association (PMA) Business Conditions Report, metalforming companies expect strong business conditions throughout the next three months.
Much of this optimism is based on positive forecasts for end-use markets. At the Metal Service Center Institute’s Forecast 2017 Conference, for example, economists and industry experts shared positive outlooks for several customer segments, giving the metals supply chain an idea of where to place their focus this year.
Below is a summary of segments that show some growth potential for industrial metal-cutting companies this year, as reported by MSCI. (You can access the full report here.)
- Aerospace. According to Richard Aboulafia, vice president of analysis at the Teal Group Corporation, aerospace continues to be the strongest industry and “the only one that saw growth accelerate through the recession.” Aboulafia said that commercial deliveries to China are setting a new record, but now, in part due to a lot of backorders on jets, it is the civil aviation sector that is offering “major opportunities for long-term growth.”
- Military. Aboulafia expects military aircraft to be stable and profitable, but says he is only cautiously optimistic about any growth over the next five years or so. The good news for steel and aluminum producers and processors, however, is he doesn’t expect a lot of competition. He believes that both civil and military aviation will “continue to favor legacy products” in their manufacture.
- Energy. Experts are the most optimistic about the renewable energy sector. “Federal tax credits are the heart of what is driving this industry,” said Andy Lubershane sector specialist at IHS Energy. “And those credits have now been renewed, so we are looking at a lot of strength for both wind and solar perhaps into 2021.” Costs are dropping in both segments, Lubershane said, and efficiencies are increasing, both good signs for industry strength.
- Construction. A continued demand for new housing is adding muscle to residential construction, according to Ken Simonson, chief economist at AGC of America. He judged the outlook for this sector as “very positive” for the foreseeable future.
While these are broad-based outlooks, they should provide metal-cutting companies with some confidence as they invest in existing customer segments or consider branching out into new markets. Knowing where the growth is located is a critical part of strategic planning.
Of course, the other key element is knowing how to best serve those customers—both new and existing. As reported in the news brief, “Strategies for Improving Customer Service and On-Time Delivery in Industrial Metal Cutting,“ on-time deliveries are no longer enough. Today’s customers are looking for trusted suppliers that go the extra mile. “Whether offering a new, value-added service or investing in certification, metal-cutting companies have several opportunities to cultivate a strategic customer relationship built upon premium service,” the brief states. (For some specific strategies for improving customer service, you can download the full news brief here.)
It is far too early to tell how this year’s market will shake out, but as the above forecasts show, there are several segments that offer growth potential for industrial metal-cutting organizations. With a little strategic planning and a strong focus on customer service, companies may find they can make this year one of their best.
December 1, 2016 / agility, best practices, blade selection, industry news, material costs, productivity, skills gap, strategic planning
Over the last few years, uncertainty has plagued the manufacturing industry. Currency fluctuations, material costs, customer demands, labor shortages, and political issues are just a few of the factors feeding into an overwhelming feeling of doubt and apprehension among manufacturers.
Instead of fearing change, most companies have come to expect it. This has led many industry leaders to focus their efforts on becoming more “agile” so they can quickly respond to changing customer demands. As explained here in a blog post, “agile organizations operate on a ‘sense and respond’ mode rather than the ‘predict and control’ mode.”
An agile company is able to take advantage of short windows of opportunity and adapt to fast changes in customer demand. According to a previously published blog, this tactic can be especially attractive for industrial metal-cutting companies that are trying to gain an advantage over offshore competitors.
However, the question is whether this renewed focus on agility should come at the cost of long-term planning. While short-term goals and gains are important, is it really wise for today’s manufacturers to ditch long-term strategic planning because the future looks uncertain? Does it really pay to be shortsighted?
An article from Forbes suggests that the answer to that question is no. According to the article, one of the top-five questions managers should ask during a strategic planning session is where they want to be in the next three years. “While some might balk at long term plans, they help people to frame a future vision,” the article states. “When teams don’t articulate long-range goals, they get trapped into incrementalism. Each year a little more growth is expected, a few changes are made and revenue and profit targets are increased. The result is a business that probably inches forward.”
According to an editorial from IndustryWeek, there are also risks associated with companies that are fixated on the short term. In fact, the article asserts that short-term goals can often lead to long-term problems. “I am a firm believer in capitalism but capitalism cannot thrive if we remain focused on short-term profits at the expense of long-term sustainability,” the article author states.
From an operational standpoint, this theory holds some weight, as short-term decisions can have long-term consequences. The white paper, Tackling the Top Five Operating Challenges of Industrial Metal Cutting, gives two examples:
- Some metal-cutting operations use the “pick for speed” method to meet growing demand and improve short-term productivity. This means operators are grabbing fresh material every time and ignoring scrap. However, many industry leaders are finding that “pick for clean” is a better long-term solution. In most cases, using remnants first and striving to keep inventory low leads to increases in productivity and quality in the longer term because operators take the time to perform cuts right the first time. This also keeps material costs low, which affects the bottom line.
- One machine shop found that upgrading to a carbide-tipped band saw blade provided a substantial improvement in efficiency. Previously, the shop was using bi-metal band saw blades to cut stainless steel, which could take up to two hours. Now, with the carbide-tipped blade, cuts are performed in minutes, which has provided huge time savings and has freed up the sawing equipment to do more cutting. While the short-term cost of the newer blades was higher, the machine shop found that the long-term productivity benefits were well worth the investment.
While there is no question that today’s companies need to be able to adapt to change, long-term thinking and planning are still an important part of business success. An article from Harvard Business Review puts it this way:
“Don’t just say that the future is uncertain, and that you will act when it gets here. It is the responsibility of a forward-looking leader to share a point of view about the role the company might play in specific scenarios. Communicate how customers are changing, and how your organization can address those needs in the future.”
What is your company’s long-term point of view?
November 25, 2016 / agility, best practices, blade life, continuous improvement, customer delivery, customer service, LIT, quality, strategic planning, workflow process
There is no question that customer expectations are changing. Companies like Amazon have raised the bar on what customers should expect from a service provider, whether that means Sunday deliveries or using the latest technology to improve the purchasing experience.
Not surprisingly, the so-called “Amazon effect” has found its way into industrial manufacturing. Supply chain consultant Lisa Anderson says she has seen this first hand with all of her manufacturing and distribution clients. On-time deliveries, she says, are no longer enough. Today’s customers are looking for suppliers that can offer faster lead times and value-added services that will benefit their bottom line.
While same-day delivery may not yet be feasible, industry leaders are finding several ways to enhance customer service. According to the brief, “Strategies for Improving Customer Service and On-Time Delivery in Industrial Metal Cutting,” the following are just a few of the strategies industrial metal-cutting organizations are using to better meet the demands of their customers:
- Put Quality First. Balancing speed with quality has always been a pain point for manufacturers, but as any metal-cutting company can attest, customers are now asking for tighter tolerances in half the time. Growing demand has made this an even greater challenge. While speed and agility are certainly key attributes of any leading metal-cutting operation, they cannot come at the expense of accuracy. In sawing, for example, if an operator increases the speed of the saw to get more cuts per minute without considering the feed setting or the material, the end result will be decreased blade life, possible maintenance issues, and lower quality cuts. In the same way, companies focused solely on speed and delivery without considering the quality aspect of customer service will likely see other areas of their business suffer, including customer retention and costs.
- Standardize Processes. Standardization is one of the key aspects of lean manufacturing. However, experts believe it is often the missing link within many so-called lean factories. By taking the time to standardize manufacturing processes, metal-cutting operations can keep production moving smoothly while also maintaining consistency. This is especially true for shops that run multiple shifts. For example, managers can create standardized cut charts so operators know the right blade to use for every process and type of job. Procedure checklists, sign-off sheets, and training reference documents are additional tools managers can use to maintain quality throughout the production process.
- Consider ISO Certification. Many industry leaders are finding that becoming ISO 9001 certified helps them maintain quality standards during times of high volume. The ISO standard is based on a number of quality management principles, including a strong customer focus, the motivation and implication of top management, and continuous improvement. The basic goal of the ISO standard is to help companies provide customers with consistent, good quality products and services, which, in turn, often brings business benefits like improved financial performance. In most cases, it is used to strengthen existing quality programs by making it a formal, documented procedure.
- Engage Customers. As many leading companies are discovering, the voice of the customer can be a valuable tool. According to research from consulting firm Aberdeen Group: “The customer has become much more than a product delivery channel and instead has morphed into an integral stakeholder with the clout to determine the viability of the organization, and their voice can no longer be taken for granted.” Of course, customer feedback requires some form of measurement, which can mean anything from tracking every call to your service center to having your sales team proactively reach out to customers for input. The goal is to both gather and leverage customer feedback to identify problem areas and reveal new service opportunities.
Many forges and other industrial metal-cutting companies are also diversifying their services to better serve new and existing customers. In fact, Ampco-Pittsburgh Corporation has built diversification into its corporate strategy. Earlier this month, the Carnegie, PA-based forging operation announced the acquisition of ASW Steel, Inc., a steel producer based in Welland, Ontario, Canada.Commenting on the acquisition, John Stanik, Ampco-Pittsburgh’s CEO, said:
“This acquisition is a very important element in Ampco-Pittsburgh’s strategic diversification plan. ASW’s proven broad expertise in flexible steel refining methods will provide us with the capabilities to manufacture the additional chemistries needed to expand our reach in the open-die forging market. The transaction also enhances our ability to grow in markets in which we currently participate and to add new markets for customers in the oil and gas, power generation, aerospace, transportation, and construction industries.”
What does it take to keep your customers satisfied and, more importantly, gain their loyalty? In today’s demanding market, most industrial metal-cutting companies would say high quality, competitive costs, and on-time delivery. However, those have always been the hallmarks of any good manufacturer, and some might argue that the last few years weeded out any companies that even remotely lagged in these key areas. How you “amp up” your customer service game will largely depend on what you already have in place, but the above strategies are just a few ideas to get you started.
What is one thing you could do to improve customer service in your forging operation?
October 30, 2016 / agility, benchmarking, best practices, bottlenecks, continuous improvement, Cost Management, industry, LIT, predictive management, preventative maintenance, quality, strategic planning, workf
In today’s competitive and quickly changing market, manufacturers are finding that it pays to be proactive—not reactive—in their strategic approaches. That’s why a growing number of industrial manufacturers are starting to take a serious look at advanced technologies like predictive analytics, which allows them to not only measure performance, but to also predict and prevent future challenges.
According to Deloitte’s 2016 Global Manufacturing Competitiveness Index, more than 500 senior manufacturing executives from around the world ranked predictive analytics as the number one technology vital to their companies’ future competitiveness. As reported here, another report from Aberdeen Group shows that 86 percent of top-performing manufacturers are already using predictive analytics to reduce risk and improve operations, compared to 38 percent of those companies with an average performance and 26 percent of those with less than stellar results.
The trend has found its way into industrial metal cutting as well. According to the LENOX Institute of Technology’s benchmark study of more than 100 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.”
What is Predictive Analytics?
Predictive analytics utilizes a variety of statistical and analytical techniques to develop mathematical models that “predict” future events or behaviors based on past data. As the Deloitte study explains, this allows companies to uncover hidden patterns, relationships, and greater insights by analyzing both structured and unstructured data.
In a manufacturing environment, companies can use predictive analytics to measure the health of production equipment and detect potential failures. However, the possibilities are virtually limitless. According to one analyst’s blog, manufacturers could potentially use software and predictive analytics to forecast potential staffing or supply-chain interruptions, such as a flu outbreak that could cause a temporary personnel shortage or even a blizzard that could disrupt deliveries.
Bearing manufacturing leader Timken has taken a different approach and is using predictive analytics to improve inventory optimization and supply chain performance in the automotive aftermarket sector. As reported by SearchAutoParts.com, Timken is leveraging sales history, registration data, and other information, along with complex analytics, to improve sales and reduce costs.
“Timken’s catalog team matches parts and vehicles, and combines that information with vehicle registration and replacement/failure rates, along with internal sales data,” the article explains. “Crunching that data using proprietary algorithms helps them predict how many parts will be needed in a given geography, and how those parts sales will fall within the premium aftermarket, economy aftermarket and OEMs.”
Common Use Cases
Because predictive analytics is an emerging technology, applications are typically specific to each manufacturer’s products and processes—as in the Timken example. However, an article from Toolbox.com describes four common use cases for predictive analytics that are applicable in most manufacturing environments:
- Quality Improvement. Improvements in databases and data storage and easier-to-use analytical software are the big changes for quality improvement. Standard quality improvement analysis is being pushed toward less technical analysts using new software that automates much of the analytical process. Storing more information about products and the manufacturing process also leads to analysis of more factors that influence quality.
- Demand Forecast. Predictive analytics takes historical sales data and applies forms of regression to predict future sales based upon past sales. Good predictive analytics modelers find additional factors that influenced sales in the past and apply those factors into forecasted sales models.
- Preventative Maintenance. Predictive analytics increases production equipment uptime. Knowing that a machine is likely to break down in the near future means a manufacturer can perform the needed maintenance in non-emergency conditions without shutting down production.
- Machine Utilization. Predictive analytics applications for machine scheduling combines forecast for demand with product mix to optimize machine utilization. Using new predictive analytics techniques improves accuracy.
While there is no question that predictive analytics is still new to many ball and roller bearing manufacturers, industry leaders know that proactive strategies are key in today’s uncertain market. Finding ways to anticipate future events and reduce unplanned downtime can not only help your operation gain efficiency but, more importantly, help you stay competitive.
October 25, 2016 / agility, best practices, continuous improvement, Cost Management, industry news, LIT, predictive management, productivity, resource allocation, ROI, strategic planning
As smart phones and other mobile devices become ubiquitous among consumers, it’s not surprising that mobile technologies are starting to be used increasingly in the manufacturing world. Although manufacturing hasn’t gone totally mobile, a growing number of shops are deploying some form of mobile technology to improve efficiency and communication on the shop floor.
Slow to Adopt
There is no question that manufacturing has lagged other business sectors in adopting mobile technology. However, this is not to say that plant managers don’t want to go mobile. In an interview with Design News, David Krebs, executive vice president of VDC Research, says that the interest is there, but issues like budgetary constraints, security concerns, and a lack of IT resources are holding back a lot of manufacturers.
“In addition, many existing manufacturing environments are not conducive to wireless technologies and its infrastructure,” Krebs tells Design News. “Low penetration of WiFi in manufacturing environments and the difficulty of wirelessly interfacing with shop-floor equipment also represent gating issues.”
However, most experts agree that the tide is starting to change as technologies advance and the Industrial Internet of Things becomes more prevalent. In fact, according to PwC’s 18th Annual Global CEO Survey, mobility was the top technology priority among industrial manufacturing CEOs in 2015. Specifically, the survey found that industrial manufacturers regarded mobile technologies as a strategic way to engage with customers.
Other reports confirm that interest is growing among manufacturers. “Given mobile’s role in improving information flows, it is not surprising that 78 percent of manufacturing companies agree that mobile solutions provide their company with a competitive advantage,” writes Matthew Hopkins, an analyst at VDC Research. “This advantage is demonstrated by tangible use-cases, such as predictive maintenance, workforce management, and energy management, which yield real returns on investment (ROI). Companies’ quick to realize these benefits have embraced mobility for some processes, such as inventory management, in large numbers.”
Last year, VDC conducted a survey among technology influencers at manufacturing companies and found that 36% of organizations actively used mobility solutions to support business initiatives. The survey also revealed the following key trends:
- 61% of manufacturers currently support mobile inventory management
- 44% currently support shop floor control via a mobile device, and 45% of manufacturers noted that they plan to support this capability in the future
- Tablets have been the mobile device of choice (43%) among manufacturers, followed closely by smartphones (38%)
If mobility is something you want to bring into your forging operation but you aren’t sure where to start, LNS Research, a consultancy based in Cambridge, MA, lists nine key ways companies are using mobile devices in manufacturing environments. Below are the top-three uses (You can read the full list of nine here.):
- Dashboards. Solutions providers have been offering performance dashboarding apps for a few years now, and many are taking it a step further by delivering role-based information that has been analyzed and contextualized for the specific personnel based on their information needs (i.e., a plant manager versus an operator or quality manager).
- Quality Auditing. In the past, quality auditing in remote locations typically involved some form of paper. Today, on-site and off-site auditing is typically done within a smartphone or tablet application, offering better integrity of information and allowing audits to be standardized across multiple locations.
- Corrective Actions. Today, most solutions providers offer some form of mobile app to support interactions with the corrective action process. These apps typically leverage the native capabilities of mobile phones and tablets, such as GPS/location services, voice/visual recording, and more.
If mobility isn’t on your radar yet, you may want to reconsider. Your shop may be missing out on some prime opportunities for cost savings or efficiency gains. As stated in the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization, proactive leaders are focused on making positive changes in their operations so they can quickly respond to changing customer demands. In other words, today’s forges can’t afford to be reactive to trends. According to Mike Roberts of LNS Research: “If you’re not on the path to using mobile apps to better manage your production operations, you’re seriously at risk of being stuck in the past.”
To read more about bringing mobility into your forging operation, check out the article “7 Tips for Taking Your Operation Mobile,” published by American Machinist.
October 10, 2016 / agility, best practices, blade failure, blade life, continuous improvement, customer satisfaction metrics, industry news, lean manufacturing, operations metrics, performance metrics, predictive management, productivity
Thanks to advancements in machine-to-machine (M2M) and communications technology, many believe the manufacturing industry is on the brink of the “fourth industrial revolution,” also known as Industry 4.0. This concept has been widely discussed and promoted in Europe, especially by German manufacturers Siemens and Bosch, but the term is starting to gain traction in the U.S as well.
What is Industry 4.0?
Because it is a newer term, definitions for what comprises Industry 4.0 vary greatly. A report from Deloitte states that there are four characteristics that define Industry 4.0:
- Vertical networking of smart production systems
- Horizontal integration via a new generation of global value chain networks
- Cross-disciplinary “through-engineering” across the entire value chain
- Acceleration through exponential technologies
An article from Forbes defines Industry 4.0 as “a combination of several major technology innovations, all maturing simultaneously, and expected to have a dramatic impact on manufacturing sectors.” More specifically, the article states that technologies such as advanced robotics and artificial intelligence, sophisticated sensors, cloud computing, and the Internet of Things, are joining together to integrate the physical and virtual worlds.
Simply put, Industry 4.0 is the advent of the long-awaited “smart factory,” in which connectivity and advanced technologies are being used to streamline decisions, optimize processes, eliminate waste, and reduce errors.
Industry 4.0 In Practice
According to the Forbes article, Industry 4.0 has the potential to offer manufacturers three major benefits:
- Better transparency and agility
- More responsive to customer needs
- Self-monitoring products and services
What could this look like in your fabrication shop? EVS Metal, a precision metal fabricator headquartered in Riverdale, NJ, says here in a blog post that Industry 4.0 “will eventually impact the way we fabricate and machine both single items and finished products, from start to finish, including warehousing and shipping, whether we’re manufacturing full production runs, or single prototypes.”
On a small scale, fabricators can start by equipping components and machines with necessary Industry 4.0 features, such as sensors, actuators, machine-level software, and network access to measure productivity of metal-cutting equipment. For example, one metal service center, featured here in a white paper, is using an internal software system to automatically track the number of square inches processed by each band saw and each blade. At any point, the operations manager can go to a computer screen, click on a saw, and see how many square inches that saw is currently processing and has processed in the past. This has allowed the service center to easily track trends and quickly detect problem areas.
This, however, is only the beginning. Once a manufacturer starts capturing relevant data from multiple machines, this data can be further analyzed to detect patterns, helping managers forecast and, eventually, automate decision-making processes. In a metal-cutting environment, this might include predicting blade life and equipment maintenance needs, which would essentially turn disruptive, unplanned downtime to more anticipated, planned downtime. This could translate into more jobs completed on time.
The Time is Now
Like any trend, it will take a while for Industry 4.0 to fully take hold. However, many experts are saying that industry leaders are embracing this next generation of manufacturing and, more importantly, are starting to make investments.
A PwC survey encompassing 2000 participants across nine industry sectors has concluded that Industry 4.0 will revolutionize industrial production and that first movers are transforming into digital enterprises. According to the study, 33% of companies say they’ve achieved advanced levels of digitization today, and 72% of companies expect to achieve advanced levels of digitization by 2020.
While no one believes the changeover to Industry 4.0 capabilities will come cheap, more than half of companies in PwC’s survey expect a return on investment within two years. “The payoff will potentially be enormous, as competitive landscapes get redefined,” PwC states. “Industrial companies need to act now to secure a leading position in tomorrow’s complex industrial ecosystems.”
Is your fabrication shop ready to invest in Industry 4.0?