August 20, 2015 / benchmarking, best practices, continuous improvement, Cost Management, LIT, operations metrics, performance metrics, predictive management, preventative maintenance, productivity, resource allocation, strategic planning
With changing customer requirements and an increasingly competitive marketplace, leading manufacturers are finding it pays to be proactive—not reactive—in their strategic approaches. Instead of simply measuring performance, many companies are taking the next step and using measurement to anticipate and prevent future challenges—a concept known as predictive operations management.
This trend has found its way into industrial metal cutting. According the LENOX Institute of Technology’s benchmark study of more than 100 machine shops and other industrial metal-cutting organizations, companies can gain additional productivity and efficiency on the shop floor by “investing in smarter, more predictive and more agile operations management approaches.”
One such approach is predictive maintenance. Not to be confused with preventative maintenance, which uses planned maintenance activities to prevent possible failures, predictive maintenance (also known as condition based maintenance) uses tools to predict failures just before they happen.
Reliable Plant defines predictive maintenance as “the application of condition-based monitoring technologies, statistical process control or equipment performance for the purpose of early detection and elimination of equipment defects that could lead to unplanned downtime or unnecessary expenditures.” By using tools to predict and then correct possible failures, operators can keep machines running while eliminating unnecessary preventative maintenance downtime and reducing reactive maintenance downtime.
Monitoring tools typically include vibration analysis, infrared thermography, motor circuit analysis, sonic and ultrasonic analysis and other technologies that can find defects while the machine is in normal operation. In most cases, condition-based monitoring won’t interfere with production schedules—a huge plus for any manufacturer.
If predictive maintenance is effective, maintenance is only performed on machines before failure is likely to occur. According to www.maintenanceassistant.com, this brings several cost savings, including:
- minimizing the time the equipment is being maintained
- minimizing the production hours lost to maintenance, and
- minimizing the cost of spare parts and supplies.
While this can translate into less maintenance downtime compared to preventative maintenance, predictive maintenance also has some drawbacks, including:
- high upfront investment for condition monitoring equipment and software, and
- high skill level and experience required to accurately interpret condition monitoring data
According to an article from Life Cycle Engineering, creating an effective predictive maintenance program is a bit more complicated than it appears. The magazine poses four questions managers need to address before implementing a predictive maintenance program:
- Can predictive maintenance technologies provide real value to your preventive maintenance program?
- What is the most effective predictive technology for your plant?
- Can you provide the right training?
- Will you actually use the information?
In the end, predictive maintenance may not be an option for every shop or every piece of equipment, but many manufacturers find it worth the investment for machines that have a critical operational function and have failure modes that can be cost-effectively predicted with regular monitoring.
May 25, 2015 / benchmarking, best practices, continuous improvement, customer satisfaction metrics, KPIs, LIT, operations metrics, performance metrics, predictive management, preventative maintenance, productivity, root cause analysis
Benchmarking, peer reviews, and ongoing analyses are considered universal best practices among leading organizations, regardless of industry or industry segment. However, in today’s competitive marketplace, companies need to know more than where they stand among their peers; they need to know where their company is headed.
In other words, today’s leading manufacturers must be proactive in their strategic approaches, not reactive. That’s why a growing number of forges are now transitioning to using predictive operations management strategies, allowing them to not only measure performance, but to also predict and prevent future challenges. Based on research, this approach is paying off for many companies.
For example, the LENOX Institute of Technology’s Benchmark Survey of Industry Metal-Cutting Organizations found that investing in smarter, more predictive operations management could result in additional productivity and efficiency on the floor. The study, which surveyed more than 100 industrial metal-cutting companies, found that 67 percent of industrial metal-cutting operations that follow all scheduled and planned maintenance on their machines also report an upward trending job completion rate 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.
Manufacturers are also benefiting from more advanced, data-based predictive management strategies. As reported here, research from Aberdeen Group shows that 86 percent of top performing manufacturers are 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 then stellar results. The research firm also notes that companies that use analytics to measure their data can more easily obtain a “big picture” of their operations, identify risks, and figure out where to focus their efforts.
According to Aberdeen, these best performing companies also report 18 percent higher overall equipment effectiveness and 13 percent less unscheduled asset downtime compared to the lowest performing organizations. The following are a few other traits the top performers have in common, according to the research:
- Invest in technology. Top performers automate the collection and sharing of data to support predictive decision-making.
- Identify risks. Top performers pinpoint high-risk plant assets and production processes, establish a threshold value to monitor the risk, and notify employees if the value deviates.
- Plan ahead. Top performers develop company strategies to ensure that predetermined thresholds remain accurate.
- Prioritize. Top performers identify and fix problem areas.
- Constant measurement. Top performers continuously track improvements in risk management by comparing current performance against baseline measures.
So how does your forging operation measure up to these “top performers?” Are you simply responding to operational challenges, or are you equipped to identify risks before they negatively impact your bottom line?
By following a strict preventative maintenance schedule or using advanced tools like data analytics, today’s forges can easily identify hidden problem areas or looming operation failures. As research shows, these types of predictive operations management practices can help you reduce risk, improve productivity, and maybe even make you a top performer among your forging peers.
March 20, 2015 / benchmarking, best practices, continuous improvement, human capital, KPIs, lean manufacturing, LIT, operator training, Output, predictive management, preventative maintenance, productivity, quality, skills gap, strategic planning, workflow process
In an age of information overload, most managers know how their shops should run. They’ve read case studies about successful lean initiatives, benchmarking studies confirming the benefits of preventative maintenance, and forward-thinking editorials endorsing the “smart” factory. Yet, in the midst of in the day-to-day grind, it is often difficult to find the time and resources to make any real improvements, let alone put a plan in place to make them happen. As a recent article from Canadian Metalworking quips, many shops are too busy working on their business to work on their business.
However, taking the time to make strategic decisions for your shop is critical to its success. Maintaining status quo is no longer enough in today’s market. Modern machine shops need to have both short- and long-term plans, and they need to make the time to see them through.
But where do you start? At this year’s The MFG Meeting, Laurie Harbour, president of manufacturing consulting firm Harbour Results, Inc. (HRI), shared five best practices for leaders who want to start making real changes in their operations:
- Strategic Planning. Do you have a strategic plan? It’s not a mission or a value Your company needs a strategy that outlines what its focus is and why that focus is important. Additionally you need a plan with actionable one-year objectives that are communicated at all levels of your organization. And, of course, metrics need to be in place to drive each employee’s role and responsibility in meeting the plan.
- Market Intelligence. To be successful you must be informed. Companies can no longer afford to guess or rely on “luck.” It is critical that you gather and review both internal and external data. Triangulation of customer information, industry knowledge/historical performance/experience and external market intelligence are critical to a successful demand plan.
- Demand Planning. Although difficult, demand planning can lead to driving significant efficiency gains within your business. Utilize market intelligence; talk with your customer and implement demand planning in your facility. Those that are doing so improve throughput by 20 to 30 percent, making profitability soar.
- Manufacturing Efficiency. Rather than just improving the efficiency of one or more machines, you need to look at the entire system for optimization. Rather than scheduling each and every piece of equipment that supports making the product separately, it is critical to schedule the system and how all the pieces interact. Analyzing the entire manufacturing operation as a whole helps identify opportunities for efficiency gain and process improvements.
- Labor. The manufacturing industry is facing a skilled-labor shortage and it is only predicted to get worse. To be competitive and maintain a productive workforce, you need to have a plan and be prepared to attract, train and retain a younger generation.
To help leaders take a deeper look at their operation, HRI also offers a Strategic Planning Worksheet, which lists some questions leaders can use to identify opportunities for improvement in each of these five areas. You can download the worksheet here.
Are you addressing these five major areas in your machine shop? In what areas could you use some improvement? Taking the time to ask critical questions like these—and those listed in the HRI worksheet—is the first step in optimization and, even more so, putting you on the right path to becoming one of those shops you always read about.
March 15, 2015 / agility, benchmarking, best practices, blade selection, circular sawing, continuous improvement, Cost Management, cost per cut, LIT, operations metrics, operator training, preventative maintenance, quality, resource allocation, ROI, strategic planning
In a mature manufacturing operation like circular sawing, it is easy for managers and lead operators to rely on trusted and proven techniques. Unfortunately, today’s competitive market has upped the ante, which is why so many operations have stopped depending solely on tribal knowledge and are now embracing continuous improvement and the changes that come along with it.
Today’s leading operations managers know that being successful requires both innovation and re-evaluation. In other words, they understand that their way may not always be the best way, and that, instead, their aim should be to stay open to a better way. As a recent leadership article from Forbes notes, “Top performers are top performers because they consistently search for ways to make their best even better.”
In a circular sawing operation, this may mean testing a new blade on the shop floor, while other times, it may mean adopting a new management technique. Or, as this article from manufacturing.net suggests, it may mean basing your decisions on “real-time data versus institutional memory.”
The point is that bar is always moving, and it would serve most operations well to be open to new ideas and, more importantly, to learn from others. What are other circular sawing operations doing to stay competitive? The LENOX Institute of Technology (LIT) interviewed two high production metal-cutting companies and asked them for some of the best practices they are using to stay competitive. Read below to discover a few of the strategies they are using to become industry leaders.
Jet Cutting Service, Inc.
Based out of a 69,000-sq-ft facility in Bedford Park, IL, the metal processor currently runs 10 circular cold saws and eight band saws and primarily serves steel service centers, machine shops, and some producing mills. When it comes to strategy, vice president Mike Baron focuses on three key strategies:
- Technology. According to Baron, his team is always testing new advancements to ensure the shop is using the most advanced cutting tools. Last year, for example, Baron had eight different circular saw blade manufacturers come into his factory to see which blades performed the best. While the project was time-consuming, Baron said it was a huge learning experience for his team and it ended up giving him a 20-percent cost savings.
- Ongoing training. Like most shops, new operators are “put through the rigors,” Baron says, and seasoned employees are retrained every time new equipment or software is purchased.
- ISO Certification. Baron says maintaining ISO certification helps his shop keep quality high and plays a critical role in achieving continuous improvement. “If you don’t track it, you can’t measure it, and then you can’t improve upon that,” Baron says.
A.M. Castle & Co.
In addition to distributing a wide range of metal and plastic materials, the leading metal service center also performs simple sawing operations at several of its locations, including its main distribution center in Franklin Park, IL. Glen Sliwa, who is responsible for keeping saw operations up and running, describes three ways the shop stays productive:
- Continuous Improvement. Sliwa says the company’s focus is on continuous improvement and is “always doing something to upgrade.” About 7 years ago, the operation underwent a lean transformation, which included major changes in workflow and equipment placement as well as simple improvements like color-coding material. The facility also constantly uses the lean tool known as 5S, which eliminates waste by keeping work areas clean and organized.
- Preventative Maintenance. According to Sliwa, preventative maintenance is critical to keeping production moving. Operators perform daily maintenance on machines by following a check list that they have to verify and sign at the end of every job. Sliwa and his team also perform more in-depth PM checks on quarterly basis.
- Strong Supplier Relationships. Sliwa works closely with his suppliers and relies on their expertise any time his team has a cutting issue or is looking to improve performance. In one instance, operators were having a hard time reaching productivity goals when cutting several grades of stainless steel. A technical representative from Sliwa’s blade supplier came out to evaluate the problem and suggested a new blade type. Not only did the new blade cut Sliwa’s cutting time half and double the blade life, the supplier also trained his team and tuned up his saws.
To download the full case study, Best Practices of High Production Metal-Cutting Companies, visit LIT’s circular saw resource page.
February 25, 2015 / benchmarking, best practices, continuous improvement, customer delivery, industry news, KPIs, LIT, operations metrics, performance metrics, predictive management, productivity, quality, strategic planning
In today’s market, knowing what your peers are doing is critical to staying competitive. One way to do this is by benchmarking. According to management consultancy McGladery, the use of benchmarking is on the rise as companies look to offset the effects of the uncertain economy by reducing costs and improving effectiveness. “Benchmarking provides an objective analysis of existing business processes and insight into improving those practices, identifying gaps or inefficiencies,” the consultant firm says in a white paper. “It presents a measurement to make informed business decisions against, as well as develop strategies and create initiatives to provide a road map for growth, if not survival.”
However, as this article from iSixSigma explains, benchmarking is not a quick or simple process tool. In fact, the article lists 18 “vital steps” companies should follow when benchmarking. Unfortunately, many forging operations don’t have the resources to take on their own benchmarking initiatives. The good news is that there are several industry sources that offer companies the opportunity to participate in benchmarking surveys. While it may be tempting to keep your company’s information close, leaders know that no amount of competitor research can replace the value that true comparison can provide.
For forges, there are several external benchmarking resources out there that offer both competitive and strategic data, as well as the opportunity for participation. Whether your goal is to find out how you stack up among your forging peers or if you simply want to gain best practice insight from some manufacturing leaders, here are a few resources that may be useful:
- Forges that want to see how they measure up to their direct competitors may want to sign up to receive one of the many benchmarking reports from the Forging Industry Association. The association’s Marketing Benchmarking Report, for example, provides information on rejection rates, inventory turns, on-time delivery, receivable turns, and quoting success rates among other forging companies.
- Managers interested in zeroing in on a specific process area can check out the LENOX Institute of Technology’s Benchmark Survey of Industrial Metal Cutting Organizations. The study, which surveyed more than 100 companies, identifies key trends happening in industrial metal-cutting among forges, fabricators, machine shops, and metal service centers. Data on productivity, scrap rates, training programs, safety, and other operational issues are covered in the report.
- For a broader picture of what other leading manufacturers are doing outside of the forging and metalworking industry, IndustryWeek’s benchmarking reports provide a wealth of information. In addition to its annual Best Plants and Best Manufacturing Companies reports, the online business publication collects financial, salary, and other key data about manufacturing leaders throughout North America.
February 5, 2015 / benchmarking, industry news, LIT, operator training, quality, Safety, skills gap, strategic planning
Based on recent data, the metal service center industry entered 2015 on the right foot. According the latest Metals Activity Report from the Metals Service Center Institute (MSCI), U.S. service center shipments of both steel and aluminum were higher in December 2014 than in the prior year. In addition, year-to-date U.S. steel shipments were higher than 2013 by 4.2% while year-to-date U.S. aluminum shipments were up 8.1% year over year. Canadian results for December 2014 and for the year were similar.
All of that good news falls in line with most industry forecasts. As we reported here, industry trade publication Modern Metals says the outlook for 2015 is mostly positive. However, the magazine also warns that “competition, domestic and foreign, is always the overriding force that determines whether volume, price and demand forecasts are in balance.”
Indeed, even with positive expectations, service centers need to be aware of some of the potential challenges they will face and, even more so, start finding ways to be prepared. Earlier this month, MSCI President and CEO M. Robert Weidner III discussed the top trends challenging the metals industry in his State of the Industry address. Below are the three of the five challenges that he outlined, as reported by thefabricator.com (you can read the full coverage here.):
- Market Intelligence – Volatile markets and increasing competition have heightened the need for trustworthy data and analysis tools, as well as the need for cybersecurity resources and training to secure market intelligence.
- Business Disruption – World events have an even bigger impact on local economies than before, creating a need for topic- and area-specific experts and information and enhanced vehicles and technology to provide information.
- Congressional Gridlock – U.S. partisan politics have stalled action in the legislative branch, often resulting in extreme actions through regulators that have impeded manufacturing growth. It’s imperative to continue to advocate on behalf of the metals industry in the U.S. and Canada for pro-business agenda.
In his last two points, Weidner stressed the importance of employee safety and ongoing training as a means of attracting and maintaining workers. Investing in areas like safety and education shows employees that you value them, which only encourages them to invest right back into the company. In addition, LENOX Institute of Technology’s benchmark survey of industrial metal-cutting companies provides evidence that investing in areas like training can provide additional benefits, including better quality, faster on-time customer delivery, higher revenue per operator, and lower rework costs. In other words, it’s a win-win for everyone.
Only time will tell if industry performance plays out the way everyone expects. After all, forecasts are really only educated guesses. However, managers need to be sure they remain aware of trends like those outlined by Weidner so they can make informed decisions and be as prepared as possible for whatever 2015 brings.
January 20, 2015 / benchmarking, best practices, bottlenecks, continuous improvement, lean manufacturing, LIT, Output, preventative maintenance, productivity, strategic planning, workflow process
The idea of eliminating waste to increase profitability is nothing new. It is the cornerstone of the lean manufacturing movement, and even if you don’t consider your shop a “lean” operation, odds are you have spent the last decade or so trying to find ways to reduce downtime and other wastes from your operation.
However, just because you have made attempts to reduce waste doesn’t mean you are doing it effectively. In fact, despite a trend toward internal process improvements, machine downtime remains the top source of frustration for industrial metal-cutting operations on the shop floor, according to a recent benchmark study.
The reality is that many machine shops aren’t successfully tackling waste because either they don’t know where to start or they are looking in the wrong places. A recent editorial appearing in IndustryWeek confirms this theory, stating that the hardest part of gaining efficiency is correctly identifying the waste. As the article states, waste often “hides in plain site.” Using examples from light brick laying and fast food to light bulbs, the IndustryWeek author argues that the greatest stumbling block for eliminating waste is “not the absence of an off the shelf technical solution, but rather failure to recognize the waste in the first place.”
To successfully reduce waste, you need to identify and quantify the different types of waste that exist within your operation. According to leanproduction.com, there are six types of loss every manufacturing operation faces, and each fall under three main categories—downtime loss, speed loss, and quality loss.
The following is a brief description of each of the Six Big Losses:
- Breakdowns. These are considered a downtime loss and could include tooling failure, unplanned maintenance, and motor failure.
- Setup and Adjustments. This is also a downtime loss and could include changeover, material shortage, operator shortage, and warm-up time.
- Small Stops. This is considered a speed loss, and it only includes stops that are less than 5 minutes and don’t require maintenance. This might include a blocked sensor or minor cleaning.
- Slow Running. This is another speed loss, and it covers anything that prohibits equipment from running at its optimal speed. Incorrect setting of parameters and equipment wear are prime examples.
- Startup Defects. This quality loss covers any scarp or rework that occurs during setup or very early in the production phase.
- Production Defects. This is the second form of quality loss. This refers to any scrap or rework that happens during the steady-state production process.
Once you have identified the Six Big Losses and the events that contribute to them, you can then begin to record and monitor what you find within your operation. This article from oee.com gives several tips for addressing each loss category and includes helpful links to help you accurately measure your losses.
As a machine shop that cuts and processes metal, the reality is that some waste and loss are inevitable. However, the only way to keep those losses from hurting your business is to identify, monitor, and attack them, one by one.
January 10, 2015 / benchmarking, best practices, continuous improvement, Cost Management, customer satisfaction metrics, KPIs, LIT, operations metrics, performance metrics, predictive management, quality, strategic planning
As most manufacturing experts will attest, measurement is the only way fabricators can truly optimize their operations. By choosing the right metrics, today’s managers are able to quantify their successes, identify areas for improvement, and anticipate possible failures.
Unfortunately, knowing what to measure is the hardest part. When it comes to metrics, more is not always better. In fact, the goal should always be quality, not quantity. As this blog post from MESA International says, if you find your shop measuring things like parking space vacancy and food trucks, it’s probably time to re-evaluate.
Choosing the right metrics for your shop needs to be a strategic decision, which means there isn’t a sure-fire formula. However, there are some basic guidelines that can help you gauge if you are at least headed in the right direction. Below are a few tips that may help:
- Know the key categories. While metrics will vary depending on the size and type of manufacturing operation, there are few key categories that are a good starting point. According to a research project conducted by LNS Research and MESA International, there are four key operational metrics most manufacturers should consider. Based on results from a survey, the project found that Inventory, Efficiency, Quality and Responsiveness have biggest impact on average annual improvements in financial/business performance. The project also found that successful new product introductions (NPIs) and overall equipment effectiveness (OEE) were among the top individual metrics that contributed to positive financial/business performance. The detailed numbers behind all of these can be found in the eBook report, which can be downloaded here. A summary report of the project findings can be downloaded here.
- Size doesn’t matter. Don’t think that metrics are only for high-volume, low-mix shops. Jett Cutting Service, Inc., a metal-cutting service center featured in a white paper from the LENOX Institute of Technology, knows this is certainly not the case. Orders are constantly changing at the Bedford Park, IL-based company, which runs 10 precision circular saws and 8 band saws and averages about 700,000 cuts a month. Because of this, Mike Baron, vice president, says he can’t rely on accurate forecasting to provide a buffer when bottlenecks occur. To combat this, Baron relies on daily measurement to not only monitor production, but to keep tabs on his operators and costs. Operators are required to track how many pieces they cut on their shifts, and if their totals are lower or higher than the goal set by Baron, it is addressed immediately.
- Don’t fool yourself. The old adage that “numbers don’t lie” is typically true, but as this article from Forging magazine points out, people can manipulate them. Decision makers need to be sure they are not allowing themselves to be persuaded by selective use of data. “I often wonder if we have arrived at a moment in time when there is so much information available, and available so easily, and so cheaply, that we succumb to the temptation to select the most congenial facts, and ignore the rest that might make our immediate task more difficult,” the author asks. Optimization requires managers to closely choose and analyze their metrics, even if it means opening up a can of worms. Be selective, be fair, and when in doubt, re-check those numbers.
- Benchmark. Knowing what your peers are doing is critical to staying competitive. One way to do this is to benchmark. According to management consultancy McGladery, the use of benchmarking is on the rise as companies look to offset the effects of the uncertain economy by reducing costs and improving effectiveness. “Benchmarking provides an objective analysis of existing business processes and insight into improving those practices, identifying gaps or inefficiencies,” the consultant firm says in a white paper. “It presents a measurement to make informed business decisions against, as well as develop strategies and create initiatives to provide a road map for growth, if not survival.” Interested to know how you measure up to your peers? Check out our exclusive study, Benchmark Survey of Industrial Metal Cutting Organizations, or the Financial Ratios and Operational Benchmarking Survey from Fabricators & Manufacturers Association, Intl.
December 15, 2014 / benchmarking, best practices, blade failure, bottlenecks, continuous improvement, Cost Management, lean manufacturing, LIT, performance metrics, preventative maintenance, productivity, quality, resource allocation, strategic planning, workflow process
While process and workflow bottlenecks are a common challenge for any manufacturing operation, it can be especially challenging for high production metal-cutting companies. The fast pace and constant volume can tempt operators and managers to focus on speed before quality, which often leads to failures in equipment and blades, costly mistakes, and a decrease in overall productivity.
This is why process control is critical. When production requirements increase, it is imperative that systems are in place to keep quality consistent and, even more so, make it easy to identify and correct any mistakes or maintenance issues that create bottlenecks.
There are several strategies high production metal-cutting organizations can implement to keep processes under control and production moving. The following are a few best practices used by high production metal-cutting leaders:
- Measure. While smart planning can be a helpful strategy for smaller, low-mix manufacturers, this isn’t always a feasible option for high-production metal cutting operations. However, managers still need to have processes in place to ensure that deadlines are met. Jett Cutting Service, Inc., a metal-cutting service center featured in a white paper from the LENOX Institute of Technology, knows this first hand. Orders are constantly changing at the Bedford Park, IL-based company, which runs 10 precision circular saws and 8 band saws and averages about 700,000 cuts a month. Because of this, Mike Baron, vice president, says he can’t rely on accurate forecasting to provide a buffer when bottlenecks occur. To combat this, Baron relies on daily measurement to not only monitor production, but to keep tabs on his operators and costs. Operators are required to track how many pieces they cut on their shifts, and if their totals are lower or higher than the goal set by Baron, it is addressed immediately.“Supervisors are responsible for approving their operators’ job tickets daily so they can tell immediately if someone is struggling,” Baron says. If operators, for example, are cutting more than the expected goal, Baron knows they are pushing the machine too hard, which can lead to blade failure and increased tooling costs. On the other hand, if operators are falling behind production goals, Baron says he may need to make sure that the forecasted rates are achievable. “We do the math and just keep a running total to see that things are in check,” he explains.
- Prevent. Maintenance downtime is perhaps one of the biggest bottlenecks managers face. Equipment and tooling failures immediately slow production and can be a huge added cost. One strategy for controlling maintenance costs and equipment downtime is to implement a preventative maintenance (PM) program. In fact, a recent benchmark study confirmed that preventative maintenance is a best practice among many of today’s leading industrial metal-cutting companies. By adhering to a preventative maintenance schedule, managers can actually anticipate maintenance bottlenecks and turn “interruptive downtime” into “predictive downtime.”As stated in an article by consultant William Worsham, the key to executing a successful PM program is scheduling. According to Worsham, scheduling should be automated to the maximum extent possible. He suggests that managers implement “a very aggressive program to monitor the schedule and ensure that the work is completed according to schedule.” This means both documentation and accountability are critical.
- Organize. Managers also need to realize that some bottlenecks aren’t immediately obvious and can be hidden in issues such as a poor workflow on the shop floor. Strategic equipment placement and organized workspaces are key elements of high productivity and optimized workflow. Many companies rely heavily on the lean manufacturing tool referred to as “5S,” which not only helps get your shop floor organized but also ensures it stays that way. As described here, the five pillars of 5S are to Sort, Set in order, Shine, Standardize, and Sustain the cycle. This methodology results in continuous improvement and helps keep workflow efficient.If a complete reorganization like 5S is too overwhelming, managers can focus on organizing just one area of their operation. For example, Cd’A Metals, a metal service center featured recently in Modern Metals magazine, decided that workers were wasting too much time digging for inventory, and, therefore decided to upgrade and customize its storage and retrieval system. However, instead of making a huge capital investment, the metals company is reconfiguring a SpaceSaver rack system purchased in 1992. You can read the entire MM article here.
November 15, 2014 / benchmarking, best practices, continuous improvement, human capital, KPIs, LIT, operations metrics, operator training, predictive management, root cause analysis, strategic planning
Industrial metalworking companies, like other segments of the manufacturing industry, are constantly looking for ways to achieve operational excellence. Case studies, market research, and benchmarking surveys are critical tools for today’s managers as they search for new ideas to improve efficiency, lower costs, and increase profitability. This type of research is especially important for midsize metals companies, which may not have the resources to hire a consultant or take on a large-scale improvement initiative.
However, good ideas won’t actually do any good if they aren’t executed correctly and maintained. The key to truly achieving operational excellence is to sustain it. Otherwise, continuous improvement will start to feel like nothing more than a continuous hamster wheel.
According to a recent report from the National Center for the Middle Market at Ohio State University, sustaining operational improvement is a challenge for most midsize businesses. “In observing dozens of companies over the years, we had been struck by the regularity with which gains are made, then fade,” the authors write in the report, The Operations Playbook: A Systematic Approach for Achieving and Maintaining Operations Excellence. “Even when improvements are significant, it isn’t unusual for a company to end up closer to where it started than at the stepped-up level it enjoyed at the conclusion of a change program.”
To help demystify the issue, the organization conducted a survey of 400 C-suite executives—250 of them from middle-market firms, 150 from larger firms. The authors focused their research efforts on the middle market (i.e., companies with annual revenues between $10 million and $1 billion) because they feel this segment drives U.S. growth and competitiveness.
“When it comes to operations, middle-market companies are the perfect size because they are large enough to institute formal processes but small enough that their leadership is still closely involved in the day-to-day functions,” Dr. Peter T. Ward, Director for the Center for Operational Excellence at The Ohio State University Fisher College of Business, said in a press release. “Leaders can be closer to the work of the business, which helps them to communicate strategic goals, be more involved in developing the skills of employees, and recognize and solve problems as they arise.”
Based on the study findings, the authors concluded that operational improvements tend to last longer when they are comprehensive and systematic. Specifically, the authors suggest that operations should be managed as a four-part system. Each system, along with a set of the report’s suggested strategies, is summarized below.
Problem Solving Subsystem. This system includes the actions taken by the operations team when addressing a problem. Recommended best practices include:
- Institute an open reporting system to raise problems
- Train supervisors and employees to use problem solving tools that focus on identifying root causes
- Use cross-functional, team-based approaches to solve problems
- Share lessons learned
Daily Management Subsystem. This includes the practices leaders use every day to identify possible issues and manage critical activities. Recommended best practices include:
- Implement visual controls (i.e., white boards) that report on production goals, defect rates, and safety measures
- Develop a list of tasks that operations leaders should perform every day
- Hold short, stand-up meetings on the shop floor at least once per day
Strategic Subsystem. The focus of this system is to ensure that workers understand the higher level strategy and how it should guide their actions and their priorities. Recommended best practices include:
- Executives and supervisors need to communicate and interpret the organization’s strategy down to the shop floor
- Check for understanding by soliciting production ideas from employees and encouraging them to challenge the status quo
- Projects should be prioritized and aligned with the organization’s strategy
People Development Subsystem. This system is devoted to equipping staff with the necessary skills and capabilities to fill critical gaps in operations. Recommended best practices include:
- Identify key functional experts and post contact information or make it readily available when there is a problem
- Provide training on how to coach for new supervisors and frequent refresher courses for existing managers
By following these operational strategies, the authors state that mid-market companies are on the right path to both achieve and maintain higher levels of effectiveness in their operations. You can read more about the study findings and download the entire report here.