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Trends Affecting Forges in 2016 and Beyond

April 25, 2016 / , , , , , ,

As we reported in our 2016 Industrial Metal-Cutting Outlook, forging shops and other industrial metal-cutting companies entered the year fairly optimistic. Unfortunately, expansion in the industrial manufacturing sector has been slow moving. While current conditions have left many companies cautious, long-term forecasts point to better times ahead.

Positive Thinking
While not everyone anticipated huge growth in 2016, very few expected it to be worse. According to an annual industry survey from Forging Magazine, almost half (49.2%) of forgers entered the year with a positive outlook, while 41.5 percent expected 2016 to be “about the same.” Based on the survey results, aluminum forgers (61.1%) and impression-die forgers (62.5%) were the most optimistic about rising shipments in 2016.

Confidence was also seen in forgers’ spending plans for 2016. According to Forging, 53% of all survey respondents have plans in place to add new manufacturing equipment at their operations; for nearly 14% of these respondents, the investment will encompass new building construction, either an addition to a plant or a separate, new plant. However, for those forgers affirming capital spending plans, 47.6% indicate the value of their investments will be about equal to their 2015 totals—an indication that many companies may still be a little hesitant to make huge investments.

Confident but Cautious
Based on current data, that hesitation is founded. Monthly data on manufacturing activity has been up and down this year, leveling out to little or  no growth. According to the Manufacturers Alliance for Productivity and Innovation (MAPI), manufacturing industrial production will likely register zero growth in the first half of 2016, with 1% to 2% growth in the third and fourth quarters. For the entire year, the research firm forecasts only 1.1 % growth.

Still, forges have reason to keep their positive attitude. Short-term forecasts for the manufacturing industry may be grim, but the forging industry has historically shown an ability to outperform the broader trends. In addition, a recent uptick in manufacturing activity in March provides some hope. The monthly Purchasing Manufacturers’ Index (PMI) from the Institute for Supply Management (ISM) increased by 2.3 percentage points in March, putting the index above the 50-percent growth threshold for the first time in 2016.

Long-term prospects for forgers are also hopeful. According to a report from Zion Research, North America’s demand for the forging industry is expected to reach $15.4 billion in 2020, growing at a compound annual growth rate (CAGR) of 4.76% between 2015 and 2020. Global forecasts are even brighter. A report from TechNavio predicts that the global forging market will exhibit a healthy CAGR of around 8% between 2016 and 2020.

Tracking Trends
That’s not to say, however, that the industry doesn’t have some concerns. Based on Forging Magazine’s survey, forging producers expect to face the following challenges in 2016:

Like other industrial manufacturers, forges will have to approach the current market strategically by balancing internal improvements with external influences. According to the TechNavio report, there are four key trends forges should keep an eye on in 2016:

  1. Movements in Automotive. As the biggest end-user of forged parts, the automotive industry will continue to play a crucial role in boosting demand for forged products. However, the automotive segment is reaching a mature stage in the forging market, and the global economic slowdown has adversely affected its growth. As a result, sales of forged parts in this industry fell in 2015, compelling many vendors of the forging market to reduce their shares and investments in the automotive industry. Even so, the automotive sector is expected to grow at a CAGR of around 7% during the forecast period of 2016-2020.
  2. Expanding Business Opportunities. Recent trends suggest that major vendors are investing in R&D to explore avenues in the non-automotive sector to increase the market revenue. In fact, according to the report, “other non-automotive sectors will mostly contribute to the growth of the global forging market until 2020.” This includes sectors such as aerospace and defense, agriculture, construction, mining, general industrial equipment, and material handling. Some companies are also looking at fresh ways to approach the automotive market, including addressing the trend toward lightweight design.
  3. Technology Improvements. Following larger manufacturing trends, forges are looking to new technology to improve operations. “Vendors are developing new and improved die material interfaces and increasingly using new die designs and modeling software,” an analyst from the report’s research team said. “The market is also implementing controls and sensors to monitor the forging process in a bid to automatically sense and compensate for any variation in the process.”
  4. Growth in Asia-Pacific. The Asian and Pacific Coasts (APAC) region accounts for the largest share of the forging industry, contributing about 61% of the total revenue generated. The report expects the region to grow at a CAGR of around 9% between 2016 and 2020. “Increasing outsourcing of forging activities to low-cost countries in the region is expected to drive this regional market,” the report states. “Demand for infrastructural development in developing countries and the emergence of India as the manufacturing hub for the automotive industry will propel the growth of the market in this region.”

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Machine Shop Outlook for 2016

April 20, 2016 / , , , , , , , , , ,

Like the rest of the metal-cutting industry, machine shops were eager to see the end of 2015 due to weak demand. Unfortunately, experts are anticipating that market conditions in 2016 will, at best, be a mixed bag.

Changing Conditions
Taking a look back, 2015 started off strong. According to Gardner’s metalworking business index (MBI), industry conditions expanded in March 2015 for the 15th consecutive month. The streak stopped in April when the market contracted for the first time since December 2013, with the largest month-to-month decline since April 2013. Production also slowed while new orders declined. That contraction continued until the industry bottomed out in October and November and then ended the year with a slight uptick in December.

While growth did return at the start of 2016, it was often short-lived and fragile. For example, industrial production decreased 0.5 percent in February after increasing 0.8 percent in January, according to the Federal Reserve. On the other hand, according to Gardner’s most recent MBI index results, as reported by Modern Machine Shop, the metalworking industry has started showing signs of life. Despite the industry contracting as a whole, the trade publication says the market has improved significantly since December.

Spending trends are also a bit mixed. According to the Modern Machine Shop report, while future capital spending plans are still below the historical average, those rates are on the rise and have increased to their highest level since last March. “Compared with one year earlier, planned spending was down just 1.2 percent in March, the slowest rate of contraction since September 2014,” the trade publication reported. “This trend indicates that capital spending could begin improving later this year.”

Preparing for Returned Growth
While the start to 2016 hasn’t been the best the industry has seen, it also isn’t the worst and creates an opportunity for machine shops to invest in their operations, especially if they can afford the time to do so.

Like in 2015, most shops will continue to work on process optimization to increase productivity. However, this year, industry leaders will also need to focus on the next generation of machine shop operators to fill any skills gaps and prepare for an eventual market rebound. Based on the “Top Shops” benchmarking survey from Modern Machine Shop, leading U.S. machine shops are doing that and more.

Findings from the publication’s fifth annual survey revealed that leading U.S. shops are  focusing on the following four key areas in 2016:

Operation Optimization
As the past few years have taught us, no one can truly predict what the rest of 2016 will bring for machine shops and other industrial metal-cutting organizations. However, leaders remain focused on optimizing operations. By investing in workforce training and talent, improving shop floor practices, and investing in future technology, machine shops can survive current market conditions and, more importantly, prepare for growth in the future.

How are you preparing for growth? What is your shop focusing on in 2016?

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Automation Options for Low-Volume Machine Shops

February 20, 2016 / , , , , , , ,

The question of whether or not to automate is a difficult decision for any operations manager. As we covered here a previously published blog, the challenge is not only ensuring a good return on investment, but also figuring out how to effectively balance the allocation of technology and process automation with shop floor personnel.

In most cases, deciding whether or not to automate is neither a simple nor straight forward process and requires strategy, careful consideration, and a little bit of risk. This is especially true for low-volume/high-mix machine shops. While research has shown that many small manufacturers still believe that automation is reserved for mass production operations, more and more low-volume shops are finding that automation can work for them as well.

According to an article from Canadian Industrial Machinery, just-in-time manufacturing has made automation in low-volume/high-mix a growing trend. “Automation is suitable even for job shops, where the shop owner often doesn’t know what jobs will be running from week to week until an order request arrives,” CIM reports. The key, the article states, is investing in a flexible automation system that can be set up and changed over quickly.

As listed in the white paper, The Top 5 Operating Challenges Facing Today’s Machine Shop Metal Cutting Operations, today’s shops have at their disposal a number of automated metal-cutting options, including:

Another more advanced automation trend that is starting to show up in low-volume shops is collaborative robotics. In fact, ABI Research estimates that the collaborative robotics sector will increase roughly tenfold between 2015 and 2020. The robotic systems, which are designed to work safely in close proximity and cooperatively with human coworkers, are said to save space and money, as well as permit more flexible manufacturing practices.

High-mix/low-volume electronics manufacturer Scott Fetzer Electrical Group (SFEG), for example, has benefited from collaborative robotics. According to a recent article from Fabricating & Metalworking, the robots helped the manufacturer optimize production by 20 percent. SFEG used the robots to take over monotonous and potentially hazardous tasks from employees, who were then reallocated to more rewarding jobs.

“One of our biggest challenges is that we’re a high mix-low volume producer, most of our lines don’t run all the time, so trying to find a way to put robots on the line in the traditional sense was a very big challenge,” Matthew Bush, SFEG’s director of operations, tells Fabricating & Metalworking. “We wanted to build a mobile, flexible robot force. The only way we would accomplish this was with a collaborative robot.” (You can read the full article here.)

Of course, shops don’t have to invest in high-tech robotics to automate their metal-cutting operations. Thanks to software advancements, there are plenty of other tasks that can be automated as well.

As described in another white paper from the LENOX Institute of Technology, one metal-cutting company developed a software system that connects the sawing equipment to  its order-tracking system. Historically, employees would input order information into the company’s system, print out a report, and deliver it to the operator. The operator would then have to reenter the data into the sawing equipment. By creating a communication bridge between the saw and the computer system, the company no longer needs to enter the same data twice. This has not only reduced the chance of human error, it has also eliminated an unnecessary production step.

Is automation a good option for your machine shop? That is a question only you can answer, but the good news is there is a growing number of options available for low-volume operations. In the end, the deciding factor should really boil down to one key question: Will it help you better serve your customers?

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Fabricators Stay Competitive By Proactively Addressing Downtime

January 10, 2016 / , , , , , , , , , , , ,

It’s no secret that downtime is the enemy of any fabrication shop and, really, any manufacturer. Huge volumes, continuous sawing, and extremely tight tolerances are characteristic of many fabrication environments, so any process or workflow bottlenecks that slow production can cause quality issues, slow delivery schedules, increased maintenance costs, and hurt overall business performance.

In the white paper, The Top 5 Operating Challenges Facing Fabricators’ Metal-Cutting Operations, Jim Davis, corporate operations services manager at O’Neal Steel, explains why today’s shops can’t afford any unplanned downtime. “Downtime affects us heavily,” Davis states. “When you’re cutting five- to six-thousand pieces for a customer or you’re doing ‘just-in-time’ production where you’re taking orders on the previous day and guaranteeing delivery the next day, downtime will affect us heavily.”

However, instead of finding new ways to react to unplanned downtime events, several leading manufacturers are attacking the issue head on by using proactive strategies. In fact, according to a recent blog published by ARC Advisory Group, Inc., four industrial manufacturing leaders are aiming for “zero downtime”—a goal that may seem a bit lofty and unrealistic. However, with the help of technology, these big name companies seem to believe it is within reach.

For example, late last year, Cisco and Fanuc America announced a 12-month Zero Downtime (ZDT) pilot project with a major automotive manufacturer. The goal was to achieve zero downtime by proactively detecting equipment issues that could cause downtime.

According to a press release, the pilot was a success. Using cloud-based technology, Fanuc and Cisco’s solution detected and informed the automotive manufacturer of potential equipment or process problems before unexpected downtime occurred, allowing the maintenance issue to be addressed in a planned outage window. The end result was a significant decrease in related production downtime and increased overall equipment effectiveness. (To learn more about Fanuc’s technology solution, check out this video).

There are other types of proactive strategies metal-cutting leaders are using to turn “interruptive downtime,” which can hurt performance and impact on-time customer delivery, into “predictive downtime,” which can actually improve cutting performance and extend equipment life. Research shows that simple strategies such as breaking in band saw blades and other preventative maintenance are helping fabricators and other metal-cutting companies predict blade failure and, as a result, better plan for downtime.

In a benchmark survey of industrial metal-cutting organizations, 67 percent of operations that claimed to follow all scheduled and planned maintenance on their machines also reported 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,” the study states. “Slightly more than half (51 percent) of organizations that ‘always’ follow scheduled and preventative maintenance plans say that blade failure is predicted ‘always’ or ‘mostly.’”

What could be the business impact of near-zero unplanned downtime? According to the ARC blog, there are at least four key benefits, including:

Even if the concept of zero downtime still seems impossible, the above examples show that proactive—not reactive—strategies can help eliminate unplanned downtime. Whether using high-tech solutions like Cisco and Fanuc’s cloud-based application or simple preventative strategies like breaking in blades, today’s fabrication shops have the opportunity to reduce unplanned downtime and achieve real, bottom-line benefits.

What strategies does your fabrication shop use to reduce or predict downtime?

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Why Ball and Roller Bearing Manufacturers Should Consider ISO 9001 Certification

December 30, 2015 / , , , , , ,

With the New Year upon us, everyone is starting to think about goals. For manufacturers focused on continuous improvement and customer service, higher quality is likely at the top of the list. While speed may help you gain new customers, industry leaders know that quality will help you keep them.

As we reported in a previously published blog, many industrial manufacturers are improving their quality by becoming ISO 9001 certified. In fact, the LENOX Institute of Technology (LIT) found it to be a best practice for several leading industrial metal-cutting organizations.

There are several reasons to consider undergoing ISO 9001 certification. The standard, which was just updated in September 2015, is designed to help companies provide customers with consistent, good quality products and services, which, in turn, often brings business benefits like improved financial performance. According to ISO’s quality management principles, there are seven strong reasons to consider adopting the standard:

Perhaps the biggest benefit, however, is that ISO 9001 certification helps companies make quality a formal, measureable process. As reiterated in an article from Quality Digest, registration to ISO 9001 helps establish “a coherent standard by which managers can measure their procedures and streamline processes.”

Mike Baron, vice president of high production metal processor Jet Cutting Service, Inc., has found this to be true. In a case study published by LIT, Baron says that maintaining ISO certification has improved quality in his shop and helped them stay focused on continuous improvement. “If you don’t track it, you can’t measure it, and then you can’t improve upon that,” Baron says.

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. The eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization, offers three key considerations ball and roller bearing manufacturers should take into account before undergoing ISO certification:

Is it time for your shop to up its game? Could improved quality be part of the answer? If that’s the case, ISO 9001:2015 is worth consideration. As Baron of Jet Cutting Service has found, formal processes like ISO 9001 certification can help your operation achieve some real, measureable, bottom-line improvements.

For more information on ISO 9001:2015, visit the ISO website here.

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Key Considerations for Tackling Large-Part Metal Fabrication

November 10, 2015 / , , , , , , ,

As the market gets more and more competitive, a growing number of fabricators and other industrial metal-cutting companies are diversifying their services to gain an edge over the competition. For some, this might mean adding a value-added service to benefit existing customers, while for others, it might mean investing in equipment and training to serve new customers.

One specialty that could open up new opportunities is large-part fabrication. For shops that have been focused on smaller segments like home appliances and automotive, large-part fabrication could expand the customer base into areas such as agriculture, commercial construction, and aerospace.

Greiner Industries, for example, has spent the last few years investing in new technology to differentiate itself and has now earned a reputation for taking on extremely large and complex fabrication projects. According to an article from The Fabricator, the Mount Joy, Pa.-based Greiner now has the cutting, drilling, and welding capabilities to take on large railroad girder jobs.

“You have to keep looking for opportunities or areas to explore,” Frank Greiner, founder, told The Fabricator back in 2014. “That will never stop. That’s just part of growing.”

Quality Iron Fabricators, another fabrication shop based in Memphis, TN, is currently working on providing structural steel sections that will be used to build a 161-ft rocket test stand that will be used by NASA, reports Modern Metals. Like Greiner, Quality Iron Fabricators has made investments to better serve large-part customers. Specifically, the fabricator has invested in an integrated fabrication system that includes an automated material handling system and software to connect machines to each other. President Brian Eason tells MM that his company is also looking to revamp its production line to make it even more efficient.

“We always strive to get better at everything we do, and this has been a key part to improving our process,” Eason says in MM.

As both examples demonstrate, moving into large-part fabrication offers great opportunity, but it also requires careful consideration and, usually, some investment. If your fabrication shop is considering large-part fabrication, we have gathered the following considerations based on an article from Canadian Metalworking:

Even if large-part fabrication isn’t a good fit for your shop logistically or economically, perhaps it is time to consider taking on some new capabilities to better serve your customers. According to a white paper from the LENOX Institute of Technology, in addition to higher quality and tighter tolerances, a growing number of customers are asking fabricators to provide value-added services. This provides shops with a prime opportunity to differentiate from the competition.

What new services or capabilities could add value to your existing customer relationships and, more importantly, open the door to new relationships?

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Total Quality Management in Industrial Metal Cutting

September 1, 2015 / , , , , , , , ,

For most industrial metal-cutting organizations, continuous improvement is a top priority. Case in point: two of the three organizations in our case study of top performers listed continuous improvement as an imperative operational strategy and best practice, and three other companies interviewed by the LENOX Institute of Technology (LIT) confirmed it as a key goal.

“Continual improvement is critical to our business,” Barry Grider, operations manager at Standard Locknut, tells LIT. “We must improve in everything we do to keep a leg up on our competition and to generate new business opportunities.”

Although there are many tools companies can use to achieve continuous improvement, lean manufacturing and Six Sigma typically get the most lip service. One approach that has strong roots but hasn’t received as much attention in recent years is total quality management (TQM).

According to the American Society of Quality (ASQ), TQM is the name for the philosophy of a broad and systemic approach to managing organizational quality.  defines it as “the culture, attitude and organization of a company that strives to provide customers with products and services that satisfy their needs.” The goal of TQM is to get every department—from manufacturing and marketing to the supply chain—to value quality and continually strive to perform processes right the first time (i.e., zero defects).

Some say TQM’s origins date back to the 1940s and 1950s; however, the management approach gained the most attention in the 1980s and early 1990s. Over the years, TQM principles and processes have evolved, helping to create quality standards such as the ISO 9000 series and quality award programs such as the Malcolm Baldrige National Quality Award. Although many believe that the philosophy will continue to evolve with each generation, below is a basic overview of the key principles of TQM and the benefits it can offer companies today.

Key Principles
The key principles of TQM, as defined by ASQ, are as follows:

Like Six Sigma, TQM is a quality improvement system aimed at meeting customer needs. However, the two approaches differ in focus, scope, and application. An article from Chron describes three key differences between TQM and Six Sigma:

  1. TQM concentrates on individual departments and more specific quantitative goals, but its ultimate focus is customer satisfaction. The path that takes the business toward that final goal is secondary. Six Sigma, however, aims at continuous improvements and is self-propelled.
  2. TQM is run by the quality control department and professionals who specialize on quality improvements, usually, for their entire career. Six Sigma projects, on the other hand, are managed by “black belts” who have gone through formal training and typically return to their previous jobs after a few years.
  3. TQM pursues “soft” objectives such as customer satisfaction and long-term strategic excellence that are harder to boil down to a single figure, whereas Six Sigma is often driven by a focus on cutting costs and tends to work best if it has specific financial goals.

For an interesting debate on the virtues of total quality management (TQM) vs. Six Sigma, check out this archived article from Quality Digest.

Implementation and Benefits
Like any improvement strategy, TQM implementation will vary based on an organization’s culture, goals, and management philosophy. In fact, ASQ says there is “no one solution to every situation” and describes five different implementation strategies here.

Regardless of the specifics of a company’s TQM strategy, an article from Inc. suggests that all successful TQM implementations require the following three elements:

When implemented successfully, the benefits of TQM range from higher profitability and productivity to increased customer satisfaction and loyalty. (You can read a few case studies of successful implementations here and here.)

Quality First
In the end, TQM is about putting quality and customers first to achieve long-term success. If quality and customer satisfaction are the top focuses at your company, odds are you are already applying some of the founding principles of TQM. To read more about how to make TQM a formal strategy, check out ASQ’s resource page.

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Use Value Stream Mapping to Reduce Lead Time in Your Metal Service Center

June 5, 2015 / , , , , , , ,

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:




If you want to learn more about value stream mapping, iSixSigma provides a wealth of information available here, and the Lean Manufacturing institute offers educational classes and webinars.

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.

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Strategies for Ensuring Metal Cutting Quality in Ball and Roller Bearing Manufacturing

January 30, 2015 / , , , , , , , , , , , , ,

The key to customer satisfaction has always been finding a balance between fast turnaround and high quality. Growing demand has made this even more of a challenge for many of today’s ball and roller bearing manufacturers. With the economy poised for recovery thanks to stronger demand from the transportation and industrial manufacturing industries, industry analysts are anticipating increased demand for ball bearings. According to a report from Freedonia Group, global demand for bearings is projected to rise 7.3 percent annually through 2018, with ball and roller bearings registering the fastest gains.

This increase in demand is certainly good news for manufacturers, but it also means that companies need to make sure they remain focused on quality. Speed and agility will always be key attributes of any leading high-production operation, but they cannot come at the expense of accuracy.

To help ball and roller bearing manufacturers ensure quality in their metal-cutting operations, below are a few highlights from the paper, The Top Five Operating Challenges Ball and Roller Bearing Manufacturers Face in Industrial Metal Cutting, written by the LENOX Institute of Technology:

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How to Bring Innovation into Your Machine Shop

September 20, 2014 / , , , , , , , , ,

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:”

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?

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