customer satisfaction metrics
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.
customer satisfaction metrics
October 5, 2014 / agility, Cost Management, customer delivery, customer satisfaction metrics, LIT, Output, productivity, resource allocation, strategic planning, value-added services
In today’s competitive landscape, many industries are finding that enhanced customer service is becoming more important than ever. Companies like Amazon are raising 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 the manufacturing world. 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. Sound familiar?
In this blog post, Anderson suggests several ways manufacturers can provide Amazon-type service in their own operations. From same-day delivery to collaborative programs, she challenges manufacturers to think outside their service “comfort zone” and consider new ways they can add value to their customer relationships.
This trend has already started to take root among leading service centers. As stated in this white paper from the LENOX Institute of Technology, more and more service centers are relying on value-added processing services like sawing, laser cutting, and parts fabrication for a more predictable stream of revenue. These additional services offerings are also helping these companies gain an edge over the competition.
What could this mean for your service center? What services could you add? The answer to those questions will vary based on the needs of your customers, your budget, and simply put, your willingness to change.
To help get your wheels turning, below are examples of three metal service centers that decided to enhance their current services in some way. While each company took a different approach, all three have found that value-added service has been beneficial to both their customers and their business.
- Klein Steel, a service center recently featured in MetalMiner, decided to pursue a national nuclear quality assurance standard called NQA-1. According to the MetalMiner article, this not only helped the company better serve its existing customers, but expanded its geographic footprint. In addition, because the NQA-1 standard goes beyond ISO standards, it has opened doors for the service center to serve the wind, oil, and gas industries as well. You can read the full article here.
- Recently named the 2014 Service Center of the Year by American Metals Market, Berlin Metals LLC literally turned its attention to its customers as a means for differentiation. The company conducts a formal customer satisfaction survey every year and then uses the results to set its improvement objectives and strategies. It also engages in a continuous feedback loop where all customer concerns and accolades are constantly communicated to management and employees. To enhance communication, the company has developed a multidimensional website that serves as an educational resource for its customers, as well as for its employees and suppliers. Berlin’s efforts have more than paid off — the service center’s 2013 survey showed that 98% of respondents would strongly recommend the company and 95% said the service center had earned their support. You can read more about the company and other AMM winners here.
- Churchill Steel Plate Ltd., a service center startup featured here in Modern Metals magazine, is focusing on the strengths it offers as a smaller firm. Jim Stevenson, the company’s president, believes that consolidation within the service center industry has compromised customer service, and his goal is to change that. “We are small, customer oriented, flexible, nimble and able to do things most customers don’t get from larger competitors: Fast delivery and quick response times,” he says in the MM article. “I want to provide a response to customer inquiries in hours, not days.” So far, the strategy has been working. Stevenson tells MM that he is “burning plate in two to three days after receiving an order” and that he is “picking up new customers from all over the country.”
customer satisfaction metrics
September 20, 2014 / best practices, bottlenecks, continuous improvement, Cost Management, customer delivery, customer satisfaction metrics, customer service, productivity, strategic planning, value-added services
In today’s world, most manufacturing executives wouldn’t exactly consider metal cutting to be the most innovative industry. Important? Yes. Evolving? Yes. But innovative? Probably not.
However, experts are saying that too many people underestimate the value that innovation can bring to any industry—or to any company for that matter. A recent article from Jeffrey Chidester, director of Policy Programs at University of Virginia, believes that innovation is the key to saving American manufacturing. And he’s not just talking about efforts from big names like Google and Apple.
“For over a century, America has produced individuals and ideas that have transformed how we interact with the world around us, and it remains the global leader today,” Chidester says in the article published by IndustryWeek. “Yet, while America continues to lead the way in disruptive innovations, its insatiable drive to open new frontiers sometimes overlooks the importance of innovating within current industries.”
Chidester goes on to argue that it would serve our country (and its industries) better to stop thinking “outside the box” and start thinking “inside the box” so that we can enlarge what we already have. This concept, widely used throughout Germany, focuses less on radical innovation and more on incremental improvement.
And while Chidester’s argument is focused more on smaller firms creating technology for the manufacturing industry—not necessarily the manufacturers themselves being innovators—the case for innovation holds. If innovation is the key to leadership, the question becomes: How can your machine shop innovate? If given the opportunity, what new ideas could your staff come up with to improve productivity, save costs, or expand your business? How can you “enlarge your box” to become an industry leader?
If we use Germany’s theory of incremental improvement as a basis for innovation, the concept seems less daunting. Instead of trying to revolutionize your operation, start with trying to find a new approach within the ordinary processes you follow every day. Not sure where to start? The Harvard Business Review offers four steps for “finding something original in the ordinary:”
- Question. Don’t just ask the obvious questions. Look deeper and don’t be afraid to rethink basic fundamentals about your business and products.
- Care. Caring doesn’t just mean giving great customer service. Get to know your customers as intimately as possible.
- Connect. Find ways to bring together concepts, people, and products. Many great breakthroughs are “mash-ups” of existing ideas.
- Commit. Give form to your idea as quickly as possible. This is the only way to know if you’ve touched on something truly promising.
What could this look like in a machine shop? D&J Technologies, a machine shop featured this white paper from the LENOX Institute of Technology, was able to expand its “box” by simply re-evaluating its outsourced services. After taking a close look at its operation, the shop discovered that sending out parts for nickel-plating was causing a bottleneck and making it difficult to guarantee on-time delivery of finished parts. By bringing plating in-house, D&J was able to provide its customers with an additional service, remove a production bottleneck, and speed up the delivery process.
A recent article from Modern Machine Shop goes even further by suggesting that shops should consider forming their own insurance companies to save money on taxes. “Section 831(b) of the Internal Revenue Code specifically creates a tax incentive for businesses to form their own small insurance companies that can provide them with a broad range of risk management capabilities,” the article states. “Basically, the captive insures those risks that a typical property and casualty insurance company does not, such as the loss of a large customer or a key employee.” (You can read the full article here.)
The point is that innovation doesn’t have to be about iPhones and analytical software, and it shouldn’t only be expected from tech firms. In fact, many people consider Disney to be an innovative company because of how it runs its business, not because of what it makes. Can your customers say the same thing about you?
customer satisfaction metrics
August 15, 2014 / best practices, bottlenecks, continuous improvement, Cost Management, customer satisfaction metrics, KPIs, LIT, operations metrics, Output, performance metrics, productivity, quality, strategic planning, value-added services
If the words the “Internet of Things” and “real-time data” mean nothing to you or your metal-cutting operation, you may want to lean in. A growing number of industry experts believe these buzzwords may just transform the manufacturing industry.
“Today’s more powerful sensors and devices, connected to back-end systems, analytics software, and the cloud, are transforming industries, right now,” says Sanjay Ravi, Worldwide Managing Director, Discrete Manufacturing Industry at Microsoft in this blog post. “With the rise of these connected operations, manufacturing executives are not only finding new ways to automate and create efficiency, they are also focusing on a big new opportunity for revenue growth—services.”
In other words, forward-thinking manufacturers are finding that connecting their production equipment to the Internet and/or to other devices is providing insight into their internal operations they may not have been able to get otherwise. By gathering production data and then using software to make it understandable, they are improving efficiency and uncovering new service opportunities.
And according to Ravi, this is no passing trend. Quoting research from IDC (commissioned by Microsoft), Ravi says “manufacturers stand to gain $371 billion in value from data over the next four years.”
A recent article from Forbes echoes this sentiment, stating that factories that are connected to the Internet are more efficient, productive, and smarter than their non-connected counterparts. However, the article also says that only 10 percent of industrial operations are currently using the connected enterprise, which means 90 percent are missing out.
The way in which manufacturers can use connectivity will vary by industry and application, but as this article from O’Reilly Radar describes, the Internet of Things (IoT) and connectivity are revolutionizing manufacturing policies and procedures in two key ways:
- For the first time, managers can actually know what’s happening on the assembly line to both products and machinery in real time.
- That information can be shared, also in real time, with anyone inside or outside the enterprise who could improve their operating efficiency and decision-making with that real-time data.
As the Forbes article describes, companies like manufacturing giant GE, bread maker King’s Hawaiian, and Sine-Wave, a provider of technology solutions, are already taking full advantage of what many are calling the “information revolution.” At GE’s Durathon battery factory in Schenectady, NY, for example, 10,000 sensors on the assembly line, along with sensors located in every single battery it produces, allow managers to instantly find out the status of production.
This is happening in the metal-cutting world as well. According to this white paper from the LENOX Institute of Technology (LIT), one metal service center developed 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.
Tim Heston, senior editor at The Fabricator, also sees the opportunities sensors, data, and connectivity offer the metal fabrication industry and its supply chain. “Imagine a future in which you have trillions of sensors able to predict customer demand throughout the supply chain, monitor machine conditions to prevent unplanned downtime; and a future with machine tool technology and manufacturing methodologies allowing shops to change over between jobs within seconds (some of this technology is already here), all synced with customer demands,” he says in a recent editorial. “In short, imagine a future in which the majority of activities in the supply chain add value.”
Does connectivity have a place in your metal-cutting operation? Could it? At the very least, these are the questions leading companies should be asking. Unless, of course, they are part of the 10 percent that is already connected.
customer satisfaction metrics
June 28, 2014 / agility, best practices, continuous improvement, customer delivery, customer satisfaction metrics, lean manufacturing, LIT, predictive management, preventative maintenance, productivity, root cause analysis, strategic planning, value-added services
As customers continue to redefine delivery expectations, manufacturers need to have strategies in place to not only meet those changing requirements but, even more so, anticipate them. Getting ahead of customer needs is the key to both retaining and gaining customers in today’s metals industry. As many leading manufacturers are discovering, agility is what sets you apart.
What does it mean to be an agile manufacturer? According to this overview from leanproduction.com, agile manufacturing “places an extremely strong focus on rapid response to the customer—turning speed and agility into a key competitive advantage.” An agile company is able to take advantage of short windows of opportunity and adapt to fast changes in customer demand. This tactic can be especially attractive for industrial metal-cutting companies that are trying to gain an advantage over offshore competitors.
Whether you are a high-production machine shop or a low-mix metal service center, below are a few best practices we gathered to help your industrial metal-cutting organization move from an “on-time” service provider to an agile, customer-focused partner:
- Invest in Smarter, More Predictive Operations Management. Manufacturing agility starts with adopting more predictive operations management approaches. For example, don’t just focus on avoiding downtime; find ways to plan for it. According to a recent benchmark study from the LENOX Institute of Technology, 67% of industrial metal-cutting operations that follow all scheduled and planned maintenance on their machines also report that their job completion rate is trending upward year over year—a meaningful correlation. The implication is that less disruptive, unplanned downtime and more anticipated, planned downtime translates into more jobs being completed on time. By implementing a strategy as simple as adhering to a preventative maintenance schedule, managers can actually anticipate maintenance bottlenecks and turn “interruptive downtime” into “predictive downtime.” This not only makes it easier to schedule and meet time demands, but it can also help with other operational aspects such as improving cutting performance and extending equipment life—all of which add up to happy customers and lower costs.
- Think (and Plan) Like Your Customers. Being agile goes beyond completing a job on time. It also means taking the extra step to anticipate customer needs and then plan accordingly. Karay Metals, a metal service centered featured here in Modern Metals (MM) magazine, has taken this approach with its mandrel tubing customers. Typically, drawn over mandrel tubing comes in certain standard lengths, usually anywhere from 17 feet to 24 feet, the MM article states. However, Karay discovered that such a wide variance creates guesswork for its customers and as a result, can hamper their productivity. In response, Karay now offers tubing in 20- to 24-in bundles so its customers know exactly what they are getting, adding a convenience that its customers have come to expect and appreciate. As the MM article reports, the service center takes the same approach with inventory, stocking items its customers may need quickly. These strategies may veer away from traditional “lean” approaches, but they also build customer trust and loyalty—benefits that may not be measurable, but could prove to be valuable. This also a great example of how being “lean” isn’t necessarily the same thing as being “agile.”
- Above all else, communicate. Put simply, agile manufacturing requires fast turnaround. However, as this article from thefabricator.com confirms, on-time delivery continues to be a struggle for most industrial metal-cutting companies. Why? According to thefabricator.com article, most manufacturers would blame overproduction, subcontracting, customer mix, and scheduling. And while those issues certainly contribute to late deliveries, the article suggests that they are not the root causes. The real culprit, it states, is often poor communication and documentation. For example, improper labeling may cause an operator to cut the wrong material, or a sales person may fail to explain certain job specifics. Neither of these issues has anything to do with the actual cutting of the part. “Often a part spends more time in the virtual world, being discussed in e-mail after e-mail, than it does on the shop floor,” the article states. As senior editor Tim Heston suggests, this means that today’s managers should be focused on breaking down departmental barriers with strategies like cross-training and procedural documentation, to name a few. This type of communication is especially critical for manufacturers looking to achieve speed and agility. There is simply no time for mistakes.
customer satisfaction metrics
May 20, 2014 / benchmarking, best practices, continuous improvement, customer satisfaction metrics, lean manufacturing, LIT, productivity, quality, ROI, strategic planning, value-added services
As the industrial metal-cutting industry becomes more competitive, a growing number of machine shops are looking for ways to differentiate their operations, whether that means offering value-added services or implementing the latest lean techniques.
One best practice that many of today’s leading shops tout is ISO 9001 certification. The standard, described in detail here, 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 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.
Metal Cutting Service, a specialty shop based in City of Industry, CA, has reaped the rewards of ISO certification, including improved productivity and quality. The company, featured in a series of LIT case studies, estimates that quality has improved 20 to 30% since it became ISO certified more than 12 years ago.
However, ISO certification isn’t a quick fix nor should it be taken lightly. Like any company-wide initiative, it requires time, money, and strategic planning. Here are a few points to consider before undergoing ISO certification:
- Understand the purpose. If you haven’t done so already, do your own research on the standard. You can download a basic brochure here. As this Quality Digest article states, many companies go into ISO 9001 certification under the incorrect assumption that the standard itself is supposed to be implemented to ensure quality. However, as the QD author states, this just isn’t true. “ISO 9001 was never intended to be used to design or implement quality management for any organization, but merely to assess quality management,” he says. “Sure, management might glean some details about QMS [quality management system] development from analyzing ISO 9001 requirements, but the requirements are not supposed to establish any QMS. A company must first establish real-time standard operating procedures (SOPs), and then look at how they compare to ISO 9001 requirements.” In other words, as the author quips, make sure you don’t put the cart before the horse.
- Reach out to other shops. Finding out why and how other machine shops approached ISO certification can help you determine if certification is worth the time and financial investment, as well as what you should (and shouldn’t) do in the process. As this Modern Machine Shop article suggests, contact some certified shops—particularly ones about the same size as yours—to get a feel for whether ISO certification is right for your operation. If you find a shop that hasn’t found value in certification, try to find two shops that have had a good ROI and then compare their approaches. However, managers need to realize that no two certification processes are going to be the same. The cost and time of ISO 9001 registration and implementation will vary depending on the size and complexity of your organization and on whether you already have some elements of a quality management system in place.
- Consider getting some support. If you decide to follow through with certification, there are several services and consultants that can help. Although third-party support may initially seem cost-prohibitive, don’t completely write it off. You may find it is worth the investment, especially if you are short-staffed. You can find a list of training and other service providers here on ThomasNet.com, and there are also several software programs available that can help you streamline the process. This is also an area where external insight from other shops can be helpful. Did they utilize any support services? If so, what was the most helpful? If not, do they wish they would have in hindsight?