June 5, 2015 / bottlenecks, customer delivery, customer service, industry news, lean manufacturing, LIT, value-added services, workflow process
According to data from the Institute for Supply Management, the May PMI increased 1.3 percent to 52.8, indicating growth and economic expansion in the manufacturing sector for the 29th consecutive month. Of course, this is good news for the manufacturing supply chain, and many service centers are taking steps to position themselves as preferred suppliers. These steps include everything from holding inventory and working directly with mills, to preparing material to custom specifications and upgrading to electronic databases.
Service centers are also continuing to work hard to address the increasing demands for faster turnaround. Although efficiency improvements have been the focus of almost every manufacturer the last several years, data shows that it is still a major challenge for most industrial metal-cutting companies. For example, according to an industry benchmark study from the LENOX Institute of Technology, machine downtime, blade failure, and operator error remain the top-three sources of frustration for industrial metal-cutting operations on the shop floor. In other words, there is still room for improvement.
Mapping it Out
To improve efficiency, many leading companies are using a lean manufacturing tool known as value stream mapping. In fact, one company, featured here in IndustryWeek cut its lead time in half—from 10.5 days down to 5 days—by creating a value stream map.
Value stream mapping, as described by iSixSigma, is a paper and pencil tool that helps managers see and understand the flow of material and information as a product or service makes its way through the value stream. The “map” takes into account not only the activity of the product, but the management and information systems that support the basic process as well. This can be especially helpful when working to reduce cycle time because managers gain insight into both the decision making flow in addition to the process flow.
Although it is easy to become overwhelmed by the terminology, an article from Ryder does a good job of outlining the process in five simple steps:
- Identify product. Determine what product or product groups you will follow. Focus on one product at a time and start with the highest volumes.
- Identify Current Flow. Once you’ve defined the scope, the next step is to create a “current state map,” or a visual representation of how the process (or processes) in the warehouse is operating at the present moment. Key data points such as units per month, shipping frequency/schedules, hours of operations (available time), number of shifts worked, or any pertinent information around customer demand should be gathered before beginning the current state.
- Observe. Get on the floor and walk the entire process through step-by-step. Take notes and compile data such as inventory, cycle times, and number of operators.
- Make the map. Literally map out the process you just witnessed by drawing it out on a board. Include the data you collected and place inventory numbers under each step in the process. This will identify your bottlenecks.
- Create (and implement) a plan. Now that you know what and where your process improvements are, choose one or two to focus and improve on in a set amount of time. Once those are complete, you can prioritize the other bottlenecks to improve lead times.
Taking the Time
In an industry driven on speed, taking two days to participate in a class or complete a value steam mapping exercise may seem like a lot. However, managers need to consider the price of not taking the time. Investing in tools like value stream mapping can help your metal service center operate more efficiently, reduce lead time, and, most importantly, allow you to better serve your customers.
May 30, 2015 / ball and roller bearings, best practices, bottlenecks, continuous improvement, customer delivery, lean manufacturing, LIT, productivity, workflow process
For ball and roller bearing manufacturers, the future looks relatively bright. According to Freedonia Group, global demand for bearings is projected to rise 7.3 percent annually through 2018, with ball and roller bearings driving the growth..
However, even with optimistic forecasts, industry leaders can’t afford to rest on their laurels. Market opportunity only intensifies competition, and ball and bearing manufactures are already fighting against imports from lower-cost countries. Staying profitable in a global market requires manufacturers to constantly seek new ways to both differentiate themselves and minimize costs. This means continuous improvement and optimization are critical.
The Workflow Challenge
To remain competitive, today’s industrial manufacturers need to face their greatest operational challenges head on, starting with improving workflow and eliminating bottlenecks. As stated in the latest white paper from the LENOX Institute of Technology, this is one of the top five challenges ball and roller bearing manufacturers face. Workflow bottlenecks can negatively impact productivity, customer delivery, and ultimately, the bottom line.
Identifying and eliminating bottlenecks is a difficult, but important task for any metal-cutting company striving to be successful. For example, in an article from manufacturing.net, Curt Schmidgall, value stream manager at Winegard, describes how the antennae manufacturer struggled to meet market demand. A lean manufacturing exercise revealed the issue: Product testing at the end of Winegard’s manufacturing process was creating a huge bottleneck. By changing when the testing occurred (during the assembly process versus after the product is built), the company more than doubled its output and was able to meet market demand.
Like Winegard, many companies are using lean manufacturing strategies to reduce bottlenecks and improve workflow. This includes applying the well-known Theory of Constraints, as well as a host of other lean tools. However, don’t get bogged down with the terminology; continuous improvement doesn’t have to be complex to have an impact. While you may not have the extra hours or resources to implement an aggressive lean program, there are some basic strategies managers can use to improve workflow.
In Reliable Plant’s article, “6 Ways to Get Lean in 2015,” three of the six strategies listed are geared specifically toward improving your operation’s workflow. These tactics are good examples of how “lean” can be simple, but effective:
- Reduce motion. Follow your employees and note where they go during the production process. Reduce unnecessary movement and focus on making every other movement efficient. This will help save time and boost production.
- Eliminate wait times. Idle equipment and means wasted time and energy. Walk the shop floor and modify processes to eliminate time spent waiting on order information, material, quality checks, or repairs.
- Assess the floor. Maximize the shop floor for movement and organization. Make work areas, forklift lanes, and storage areas easily identifiable and accessible.
In the end, the pressure to meet customer deadlines can easily take priority in any high-volume manufacturing operation, especially as demand increases. However, manufacturing leaders know that constantly improving their processes and attacking challenges like workflow can make all the difference. By implementing even a few simple lean strategies, ball and roller bearing manufacturers can identify and eliminate bottlenecks, improve productivity, and increase profitability.
May 20, 2015 / bottlenecks, continuous improvement, Cost Management, customer delivery, lean manufacturing, LIT, root cause analysis, workflow process
Successfully operating and managing a machine shop is no easy task. Despite a slowly growing economy, the challenges facing today’s machine shops are no less than they were before. In fact, this white paper from the LENOX Institute of Technology describes the top five operating challenges a machine shop faces in its metal-cutting operations—challenges that are universal to every operation, regardless of market conditions.
According to the white paper, the top challenge for most shops is process and workflow bottlenecks. In most cases, lean practices are a huge part of the solution. Successful managers know that in order to achieve overall success, you need to actively identify and solve production issues.
This doesn’t come easy or naturally for every shop manager, however. As Wayne Chaneski says in this Modern Machine Shop article, “It’s surprising to me the number of business owners, division heads, operations managers, and even department supervisors who just don’t know what is going on in their areas of responsibility. To such people, I have a simple suggestion: Find out!”
Put simply: Identifying the problem is the first step. The next step is finding the cause and fixing it—permanently.
One lean manufacturing tool that many shops find helpful is root cause analysis. According to LeanProduction.com, root cause analysis is a problem-solving exercise that focuses on solving the underlying cause, not just the symptoms. There are several techniques that can be used when conducting a root cause analysis, including the following:
- The Five Whys. This strategy suggests that you ask the question “why” five times with the notion that each time you ask the question, you move a step closer to discovering the root of the problem. By repeatedly asking “why,” you discover the cause and effect of the issue.
- Fishbone Diagram. This graphically depicts the results of the Five Whys. Known as a fishbone because of its shape, the diagram shows an arrow with the cause on the left and effect on the right, with various factors stemming from the cause that affect the overall problem.
- Barrier analysis. This exercise controls various factors to identify the barriers related to a particular outcome. The idea is that the barriers either prevent or detect the problem and the barrier that fails is considered the root cause.
For more information on root cause analysis, check out this article from the American Society for Quality (ASQ), which includes an educational video from ASQ Fellow Jim Rooney.
It goes without saying that there are many tools that can be used to attack the common workflow challenges a metal-cutting operation encounters on a daily basis. However, a root cause analysis is one tool that can help shops uncover “hidden” problems before they turn into a full-blown issue that effects your production, your product, your deliveries, and, most importantly, your bottom line.
April 10, 2015 / agility, best practices, Cost Management, cost per cut, customer delivery, customer satisfaction metrics, Employee Morale, human capital, industry news, maintaining talent, Output, productivity, strategic planning
As we reported in our 2015 Industrial Metal Cutting Outlook, most manufacturers are expecting some growth in 2015, although no one expects it to be a banner year. “Modest improvement,” “slight gains,” and “steady” are just a few of the words being used to describe 2015 business prospects.
Based on recent data, those words seem fairly accurate. According to the latest report from Institute for Supply Management (ISM), activity in the manufacturing sector expanded in March for the 27th consecutive month, and the overall economy grew for the 70th consecutive month. However, it is worth noting that ISM’s readings for March were lower than February’s readings. Specifically, March PMI registered 51.5 percent, a decrease of 1.4 percentage points from February’s reading of 52.9 percent and, even more noteworthy, the fifth consecutive monthly decline. The New Orders Index registered 51.8 percent, a decrease of 0.7 percentage point from the reading of 52.5 percent in February. Even so, PMI and the New Orders Index readings were above the set thresholds of 43.1 and 52.1, respectively, which indicate overall growth.
Of the 18 manufacturing industries covered in ISM’s report, 10 reported growth in March, including fabricated metal products. As one respondent from the fabricated metal products segment told ISM, “Our business is still strong and on projection. Dollar strength is challenging for our international business.”
Planning for Growth
According to industry publication The Fabricator, most fabricators went into 2015 expecting steady growth, and many planned on investing in capacity-building equipment to prepare for increasing customer demand. “The fabricating industry is looking to add capacity to gear up for the unexpected,” the magazine said in its 2015 Metal Fabrication Forecast. “Custom fabricators are all too familiar with demand variability, and demand has become even more variable in recent years.”
Quoting findings from FMA’s 2015 Capital Spending Forecast, The Fabricator says most fabricators are planning to build capacity with more equipment. “Projected capital spending growth has slowed from the dramatic rebound seen postrecession—2015 projections are up only 3.5 percent over 2014—but the spending has shifted,” the magazine says. “Specifically, fabricators are expecting to spend much less on consumables and supplies (down almost 30 percent) and more on capacity-building machinery, especially in cutting and forming, where spending has jumped past prerecession levels.”
Ready for Anything
Regardless of whether or not you entered the year bullish or cautious, most industry leaders would agree that being proactive is the only way to approach today’s marketplace. While you may or may not be planning to add capacity this year, there are several other strategies you can use to prepare your operation for whatever 2015 brings.
In fact, a recent article from IndustryWeek suggests that there are five tests every manufacturer should run quarterly to gauge “factory readiness.” These include the following:
- Utilization versus capacity: Are utilization and capacity running even?
- Per-project profitability: Is per-project profitability acceptable?
- Client mix: Could the client mix be improved?
- Workload diversity: Will the current and expected workload allow for learning new skills and expanding the business?
- Sick time and personal time off: Are workers motivated to deliver exceptional work? If not, why not?
As the IW articles notes, forecasting the future with any measure of precision is difficult under the best of conditions, and manufacturing tends to have less visibility than most industries. However, by regularly following and measuring your operation’s performance, fabricators can not only be better prepared for what might happen in the near future, but more importantly, be prepared to handle unexpected changes.
April 5, 2015 / agility, customer delivery, industry news, material costs, strategic planning
Like most sectors of the metal-cutting industry, metal service centers are hoping that experts are right about the growth prospects for 2015. After 2014 fell short of expectations and with recent data showing less than favorable numbers, most companies are trying to stay optimistic about the months ahead.
The latest figures from the American Iron and Steel Institute show that February steel shipments from U.S. steel mills were down 10.8 percent compared to January 2015 and decreased by 9.1 percent compared to February 2014. Shipments year-to-date were down 5.3 percent compared to 2014 shipments.
According to data from the Metal Service Center Institute (MSCI), U.S. service center steel shipments declined in the first three months of 2015 compared to the same months in 2014, although March shipments were only down by a tenth of a percent. Shipments of aluminum products, on the other hand, increased in both February and March after being down in January. Meanwhile, steel and aluminum inventories grew in the first three months of 2015, MSCI reports.
Even with a rough start to the year, analysts remain optimistic that there will be growth in 2015. As we reported in our 2015 Industrial Metal Cutting Outlook, forecasts for steel demand are positive, but growth rates will not be as strong as they were in 2014. According to the Short Range Outlook 2014-2015 from the World Steel Association (worldsteel), U.S. steel demand is expected to increase by 1.9% in 2015—much lower than the 6% growth the U.S. experienced in 2014. Globally, worldsteel forecasts that global apparent steel use will increase by 2.0% this year.
Many industry leaders are also fairly optimistic about this year. In a mid-February statement announcing its 2014 financial results, Reliance Steel & Aluminum Co. said that it expects the U.S. economy to continue to improve throughout 2015. The Los Angeles, CA-based service center believes high levels of metal being imported into the U.S. will continue given the strong U.S. dollar and weaker economies in other parts of the world, which will continue to put downward pressure on steel prices. In addition, due to normal seasonal trends and an improving demand environment, Reliance expects higher tons sold in the first quarter of 2015 versus the fourth quarter of 2014, but lower average selling prices and margins.
Of course, no one really knows how this year is going to shake out. Perhaps the greatest gauge for how metal service centers might fare in 2015 is to look at segment forecasts. Below are outlooks for three OEM categories that will likely play a large role in determining demand in 2015:
- Automotive. In 2014, the automotive industry registered gains it hasn’t seen since 2006, and growth is expected to continue in 2015. According to an April 1 from manufacturing.net, auto sales are on track to reach 17 million this year, their best performance since 2005. Low interest rates, low gas prices, the improving economy, and new models will all drive growth, the report says. In addition, the material war between steel and aluminum will likely continue in 2015 as automotive companies seek ways to meet federal emission standards.
- Non-residential construction. Metal Center News recently reported that non-residential construction—one of the steel industry’s biggest markets—is expected to finally register some growth in 2015. While this market has been slow to respond to the improving economy, the report states that the American Institute of Architects predicts an 8.1% increase in non-residential construction this year, driven by double-digit increases in commercial construction. Healthy gains are also expected in institutional projects such as schools and health care facilities. You can download the full Metal Center News forecast report here.
- Energy. The energy sector will likely receive the most attention in 2015. While steel demand from energy companies has been growing at a fast pace, some experts believe the sector’s steel demand could be subdued in 2015. “Globally, higher crude oil prices drove a lot of energy companies to invest in shale formations,” states one analysis from Market Realist. “However, lower crude oil prices dampened the mood among energy exploration companies.” Low oil prices may also have larger effects on the industry, including decreased steel prices and increased U.S. steel imports. To read more about the impact crude oil pricing may have on the steel industry, check out Modern Metals February cover story, “Brooding Over Crude.”
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 20, 2015 / blade failure, blade selection, circular sawing, continuous improvement, Cost Management, cost per cut, customer delivery, LIT, Output, productivity, quality, resource allocation, ROI, workflow process
When it comes to circular sawing, productivity is always the goal, especially as demand increases. However, industry leaders understand that productivity isn’t about going as fast as possible. In fact, speed can be detrimental to cutting tool life—a fact that not only negatively affects your bottom line, but can also decrease your overall productivity.
The real goal for today’s machine shops should be optimization. This requires operations managers to adopt strategies that allow their shops to achieve the highest possible cutting performance without sacrificing tool life.
As this article from Canadian Metalworking points out, the overall performance of your cutting tool depends on a variety of factors, including speed, feed, depth of cut, and the material being cut. The ability to balance all of these variables is critical for companies that want to be productive and stay competitive in today’s challenging environment.
To help machine shops optimize their precision circular sawing operations, the LENOX Institute of Technology (LIT) created a series of charts that describes some common cutting challenges operators face. For example, here are some tips and tricks operators can use to prolong blade life and keep cutting operations running at peak efficiency levels:
Another critical aspect of optimization is making sure you have the right blade for the job. Advancements in tooth geometries, wear-resistant materials, and blade life can offer significant improvements in productivity and quality that can contribute to the bottom line. In the spirit of continuous improvement, managers should re-evaluate their circular saw blade choices every few years, even if they feel satisfied with current results. Testing new blades and technologies can be a time-consuming endeavor, but if the end result is faster cutting times and lower costs, it can certainly pay off.
The key is for machine shops to run the right tools at the right parameters—an approach that is a lot easier in theory than it is in practice. However, by combining operational tricks and strategic investments, many of today’s shops are finding their “sweet spot” and striking a balancing between cutting speed, quality, and cost. In today’s competitive and growing marketplace, industry leaders understand that optimization can mean the difference between “getting by” and getting ahead.
For more information on optimizing your precision circular sawing operation, including best practices, white papers, and case studies, check out LIT’s resource center here.
February 15, 2015 / agility, blade selection, Cost Management, customer delivery, industry news, material costs, productivity, resource allocation, strategic planning
It’s no secret—the U.S. automotive industry is doing well. In 2014, the industry registered gains it hasn’t seen since 2006, and the momentum doesn’t seem to be slowing. According to a recent report from the New York Times, sales of automobiles rose 14 percent over January of last year, with several major auto makers posting double-digit increases in a month that is traditionally slow for U.S. dealerships. Sales forecasts for the next five years are even better. One analyst has even predicted sales will hit 20 million vehicles by 2020, reports Automotive News.
This is no doubt good news for any supplier serving the automotive space, including industrial metal-cutting companies. However, ramped up demand usually means ramped up customer expectations, and suppliers need to be ready to not only meet the needs of automotive makers, but also stand out from competitors vying for the same business.
To help companies strategically approach this market, below are some of the major trends impacting automotive manufacturing. From materials to robotics, customer needs and processes are evolving, and suppliers looking to win (and perhaps keep) the business may need to adjust accordingly.
- Aluminum vs. Steel. One of the biggest shifts happening within automotive manufacturing has been the growing use of aluminum over steel. To meet new federal emission standards, a growing number of U.S. auto makers (i.e., Ford) are using aluminum to decrease the weight of their vehicles and, therefore, increase the fuel economy. Key aluminum suppliers like Alcoa have been reaping the rewards and expect growth to continue on a global scale. However, Tim Triplett, editor of Metal Center News, says that despite the hype around aluminum, the steel industry isn’t losing any ground in the automotive sector. “Just as many headlines heralded new developments in lightweight, advanced high-strength steels,” Triplett says here in an editorial. He adds, “Steelmakers claim the auto industry can meet the government mileage standards by using the new steel alloys, in combination with power train innovations, and at a lower cost than switching parts to aluminum.”
- Tooling Advancements. Regardless of whether or not the use of aluminum outpaces steel, the fact that more and more aluminum is being used by the automotive industry means that metal-cutting companies need to ensure they have the right tools for the job. As a general rule, thefabricator.com offers the following advice when choosing the right tool for aluminum jobs: “Circular saws generally are suitable for cutting aluminum between 0.5 and 6 in. diameter, for high-volume jobs (up to 5,000 parts per shift), and for the best possible finish on the cut piece. Band saws generally make sense for aluminum stock of 6 in. diameter and larger and for shops that are interested in high-speed cutting of aluminum but also frequently cut other materials.”
- Automation Trends. A recent study by Grand View Research Inc. states that the booming automotive industry, climbing labor costs, and market demands for rapid and efficient manufacturing processes are increasing the need for automation in industrial manufacturing. As a result, the research firm expects the global industrial robotics market to exceed $40 billion by 2020. Many industrial metal-cutting companies are following this trend and are investing in automation and computerized controls to make all aspects of the sawing process more efficient. Simple controllers are allowing companies to assign operators to run more than one machine at a time, and higher level advancements in areas like robotics are also improving productivity. For example, Parsan Steel Forging and Machining Co., a Turkish manufacturer of automotive parts, is using robotics to gain production flexibility and efficiency. According to an article from Forging magazine, better programming features, range of movement, and motion control are creating new efficiencies and cost savings at the forge. You can read the full case study here.
February 10, 2015 / best practices, continuous improvement, customer delivery, LIT, strategic planning, value-added services
By now, most managers have heard that winning business in today’s marketplace requires fabricators to become a “trusted supplier.” This is especially true as competition intensifies and metal-consuming OEMs streamline their supply chain.
A recent report from Modern Metals, for example, states that more and more large manufacturing customers are starting “to winnow” their supplier list. “They want to deal with fewer and fewer suppliers, and work with them to help develop new products, improve and optimize products and improve delivery performance,” Christopher Plummer, managing director of consultancy Metal Strategies, tells Modern Metals. By working with only a select list of suppliers, Plummer states that customers want “closer, more cooperative relationships.”
Of course, the question then becomes, how? How do fabricators build closer, more cooperative relationships with current or perspective customers?
Perhaps the answer lies in some research coming out of the University of Tennessee. As reported by Forbes, university researchers studied some of the world’s most successful business relationships to learn the “secret sauce” for getting the most out of business relationships. The research project, which was funded by the United States Air Force, found that the answer starts with the intent of building a “a win-win relationship,” Forbes reports. The findings also revealed that the most successful organizations followed five rules when developing business relationships. According to Forbes, these five rules include:
- Outcome-Based vs. Transaction-Based Business Model
- Focus on the WHAT not the HOW
- Clearly Define and Measure the Desired Outcomes
- Pricing Model with Incentives that Optimize the Business
- Insight vs. Oversight Governance
(To read more about these higher level strategies, you can check out the full Forbes coverage here.)
On a smaller scale, this could simply mean adding on some additional capabilities to meet the specific needs of your customers. According to this white paper from the LENOX Institute of Technology, in addition to higher quality, tighter tolerances, and zero errors, a growing number of customers are asking fabricators to provide value-added services.
Waukesha Metal Products, a metal fabricator and metal former based in Sussex, WI, is a great example of what this could look like. In a case study published by thefabricator.com, Jeffrey Clark, the company’s president and CEO, describes how Waukesha Metal Products evolved from a simple parts supplier into a provider of “best value solutions.”
“We have provided them the solutions they need in metal forming, and that’s why we went from being just a tool and die shop to a stamping provider then to a metal former to a fabricator of assemblies for our larger OEMs that require those components,” Clark tells thefabricator.com. “We are now graduating into more and more complex assemblies as we go. We’re becoming much more integrated into the supply chain for the customer.”
According to the article, the company accomplished this by some key investments in analysis software and automation, as well as some strategic acquisitions that enhanced their capabilities. You can read more about the company’s journey here.
While there is no sure-fire formula for becoming a value-added supplier, these examples show that it can be done and, more importantly, that many companies are already doing it. By closely evaluating the needs of existing and potential customers—and then finding new, innovative ways to meet those needs—fabricators have a prime opportunity to add value to their customer relationships and their bottom line.
December 30, 2014 / agility, best practices, Cost Management, customer delivery, industry news, Output, productivity, quality, resource allocation, ROI, strategic planning, value-added services
As a critical part of the aerospace supply chain, industrial metal-cutting companies need to be sure they understand both the needs and challenges of their end users. As a supplier, this not only helps you provide better service to existing customers, it allows you to anticipate new growth opportunities.
Overall, the aerospace and defense industry had a decent 2014. According to the Year-End Review and Forecast from the Aerospace Industries Association (AIA), sales were expected to end up at $228.4 billion in 2014, up from $219.4 billion in 2013. The association also reports that aerospace exports maintained an upward trend throughout 2014, and sales of commercial aircraft paced the industry’s sales growth.
Early reports indicate that this year may show similar trends. According to mid-December article from Reuters, Boeing is expected to deliver a record 754 commercial aircraft in 2015, an increase of up to 5.5 percent. Honeywell also expects industry deliveries to be “up modestly again” in 2015 and forecasts a 4-percent average annual industry growth in jet deliveries over the next decade.
However, experts are also anticipating major challenges for aerospace industry, including the continued effects of sequestration and decreasing defense budgets. AIA believes that these obstacles are “adversely stifling innovation, resulting in significant layoffs of the industry’s highly-skilled workforce” and, ultimately, will hinder the aerospace industry’s global competitiveness. In fact, AIA uses the term “uncertainty” to describe its overall outlook for 2015.
So where is the opportunity for the industrial metal-cutting companies serving this industry? As AIA suggests, aerospace manufacturers will need to focus on efficiency and innovation to stay competitive, whether that includes developing new approaches to solving everyday challenges or exploring cutting-edge processes. In other words, they will have to look for additional avenues for saving money and time, which is where a trusted supply partner can help.
The key for metal-cutting companies will be finding ways to offer their aerospace customers value. This could include investing in advanced metal-cutting tools designed to meet the unique demands of the industry or equipping employees with certifications and specialized training.
Below are examples of two metals companies that have intentionally positioned themselves to better serve the aerospace industry:
- TW Metals, a specialty metal distributor and processer recently featured in Modern Metals, has focused its efforts on helping its aerospace customers shorten the supply chain and eliminate any waste. Using machinists approved by the OEMs, TW Metals partners with the entire supply chain to provide the end customer with just in time parts, including full “kits” like wings and tail assemblies, MM reports. The metals supplier also has its employees go through extensive training and certification specific to the aerospace industry’s needs. “The more you add value, the less total cost there is for the customer,” Bob Mraz, TW Metals Sales & Marketing VP, tells Modern Metals.
- Universal Machining Industries Inc. (UMII), a job shop based in Muenster, TX, has invested heavily in aerospace manufacturing technologies to address the unique needs of its customers. According to an article from Canadian Metalworking magazine, the company has transitioned from primarily stand-alone vertical machining centers to horizontal machining centers in automated cells. This helped the shop meet customer requirements for shorter lead-times and reduced part costs, as well as internal benefits such as improved workflow management and a more positive team atmosphere. “Through these investments, UMII has witnessed continual year-over-year growth and a 60 percent increase in total production over just four years,” Canadian Metalworking reports. You can read the details about the technology investments here.
In the end, successful suppliers know that winning customers has to be about both cost and value. Tailoring your company and processes to meet the unique demands of the industries that you serve will not only position you as a valued supply chain partner, but as an agile, industrial metal-cutting leader.