November 5, 2015 / continuous improvement, Employee Morale, industry news, KPIs, lean manufacturing, performance metrics, root cause analysis, strategic planning
In today’s lean manufacturing world, you don’t have to be an expert to know some of the lingo. Most manufacturing executives could easily rattle off terms like continuous improvement, kanban, just-in-time, and root cause analysis without even fully understanding what each entails, and many could probably provide a basic definition.
However, one lean manufacturing term that is not as well known—and even harder to say—is Hoshin Kanri. Although not as popular as some of the other lean strategies, Hoshin Kanri (also called Policy Deployment) can be a valuable planning tool for manufacturers. In fact, according to an article from IndustryWeek, the methodology is starting to gain traction among industry leaders.
“Hoshin Kanri is fast becoming an integral part of the strategic planning process at many organizations,” William Waldo, COO of consulting firm BMGI, writes in IndustryWeek. “From decades of refinement, this methodology has emerged as extremely effective in creating strategic alignment and galvanizing an organization toward achieving its vision.”
What is Hoshin Kanri?
Although difficult to pronounce, Hoshin Kanri is fairly simple in concept. The Japanese strategic planning process is designed to ensure that a company’s mission, vision, goals, and annual objectives are communicated and implemented throughout the entire organization, from top management to the shop floor level. According to leanproduction.com, this alignment eliminates the waste that comes from inconsistent direction and poor communication. In essence, it aims to “get every employee pulling in the same direction at the same time,” the website explains.
Although experts often vary on the specific steps involved in Hoshin Kanri planning, Waldo of BMGI believes there are seven key steps to successful implementation. Below is a brief summary of each step:
- Step 1. Establish Organizational Vision: This requires you to evaluate the current state of your organization with respect to your vision, business planning processes, and execution engine.
- Step 2. Develop Breakthrough Objectives: Breakthrough objectives are significant improvements that require your organization to stretch itself and will take three to five years to achieve.
- Step 3. Develop Annual Objectives: What will you need to achieve this year in order to reach those three to five-year breakthrough objectives?
- Step 4. Deploy Annual Objectives: The goal here is to turn those breakthrough objectives into workable targets and objectives at the departmental level using tools such as the Hoshin Planning Matrix, detailed action plans, summary reports, and value stream maps.
- Step 5. Implement Annual Objectives: This is where improvements are executed, using the most appropriate problem-solving approach.
- Step 6. Monthly Review: A monthly review fosters a culture of accountability and action by reviewing progress toward achieving annual improvement objectives.
- Step 7. Annual Review: This is a thorough review of the year’s objectives that shows where the organization stands against the stated objectives and what adjustments must be made to the next cycle.
Like any lean manufacturing initiative, Hoshin Kanri can seem a bit daunting. However, many manufacturing leaders have had success with the methodology, including Bridgestone, Boeing, Motorola and Toyota, to name a few. Accuride, a manufacturer of forged aluminum wheels and other commercial vehicle components, was recently honored by The Association for Manufacturing Excellence (AME) for its continuous improvement efforts, including implementation of Hoshin Kanri at its Rockford corporate facility and factory, reports The Fabricator.
There are two main reasons why your service center should consider joining many others in adopting Hoshin Kanri strategic planning. First, it creates a shared vision across the entire organization, which fosters good communication and can be good for employee morale. In addition, it can have a positive impact on performance. “Implementing Hoshin allows an organization to build a high performance culture and measure the progress of culture change toward a high performance,” according to an article from iSixSigma. “Following this process on a set schedule for each of the fundamental plans and annual plans throughout the organization ensures achievement of the business mission and progress towards the business vision.”
Even if Hoshin Kanri is not for your service center, adopting some form of strategic planning is critical if you want to be successful in today’s market. As Confucius once said, “A man who does not plan long ahead will find trouble at his door.”
October 15, 2015 / benchmarking, best practices, Cost Management, KPIs, lean manufacturing, LIT, operations metrics, performance metrics, preventative maintenance, strategic planning, workflow process
If there is one “go-to” answer for solving a company’s productivity issues, most experts point to lean manufacturing. The lean movement is, as one author put it here, “our current silver bullet.”
At this point, most manufacturers have jumped on the bandwagon and have incorporated at least some lean principles into their operation. Some companies like A.M. Castle, a metal service center featured in a recent case study, have undergone complete lean transformations, while others have adopted basic lean tools like 5S.
However, even with the growing popularity of lean manufacturing and its countless success stories, the reality is that not every lean journey is smooth. In fact, according to research from management consulting firm Quality for Business Success, Inc. (QBS), many are actually quite bumpy. After conducting 200 interviews with managers and lean champions from 71 different companies engaged in lean implementations, QBS found that many managers experienced “false starts” and felt overwhelmed by the learning curve. “Many managers we spoke with find themselves ‘drowning in a sea of half-understood tools and techniques,’” the firm states in a white paper. “Others, unaware of their narrow interpretation of lean, boast successful implementations when they’ve actually barely scratched the surface.”
To help companies achieve successful lean implementations, QBS outlined the most common missteps companies make in the process in a white paper. Below are the top 15 pitfalls managers should avoid:
- Thinking of 5S as something you do to an area
- Imposing 5S top-down, with limited involvement bottom-up
- Equating waste reduction with cost cutting
- Remaining aloof to the larger global end-to-end value stream
- Assuming your Future State Value Stream Mapping (VSM) is nothing more than your Current State VSM with the identified improvement opportunities corrected or addressed.
- Equating visual workplace with top-down visual communication
- Viewing Total Productive Maintenance (TPM) as an improvement initiative that exclusively relates to engineering and maintenance personnel
- Using overall equipment effectiveness (OEE) to evaluate operations rather than as an improvement gauge
- Equating Standard Work with procedures
- Engaging in “industrial tourism” and thinking you are benchmarking
- Pursuing a one-size-fits-all solution to production planning and control
- Forgetting to reduce supermarket inventories once established
- Preconditioning continuous flow to waste elimination
- Believing you will achieve a lean transformation applying lean tools
- Betting your strategy on lean
To read more about these common missteps, you can download the full QBS white paper, The 15 Most Common Mistakes in Lean Implementations, here.
What has been your experience with lean manufacturing? Have you made one or more of these missteps?
September 15, 2015 / continuous improvement, industry news, KPIs, LIT, operations metrics, performance metrics, predictive management, production planning, productivity, strategic planning
A brief look around at any public establishment quickly reveals just how much connectivity has changed the world. Whether checking an email on the train, texting a family member outside a restaurant, or posting photos on social media during a concert, almost every adult—and teen—rely on some type of connected device to function. It has, at this point, become a social norm in first-world culture.
However, could the same be said when looking around your shop floor? In some cases, the answer would be yes. Some industry leaders grabbed onto connectivity years ago, making the strategic decision to connect their production equipment to the Internet and/or back office functions to streamline processes or to gain access to valuable data.
Others haven’t quite caught on. As one article from Forbes reported, some industry leaders are saying that as little as 10 percent of industrial operations are currently using the connected enterprise. That number, which may or may not be accurate, seems surprisingly low when publications like the Harvard Business Review are saying that the use of smart, connected products “is perhaps the most substantial change in the manufacturing firm since the Second Industrial Revolution.”
In fact, thanks to advancements in machine-to-machine (M2M) and communications technology, many believe the manufacturing industry is on the brink of the “fourth industrial revolution,” also known as Industry 4.0. This concept has been widely discussed and promoted in Europe, especially by German manufacturers Siemens and Bosch, but the term is starting to gain a little traction in the U.S as well.
What is Industry 4.0?
Because this is a newer term, the definitions for what comprises Industry 4.0 vary greatly. An article from ZDNet outlines the four major shifts in industrial manufacturing as follows:
- Industry 1.0: Water/steam power
- Industry 2.0: Electric power
- Industry 3.0: Computing power
- Industry 4:0: Internet of Things (IoT) power
In general, many use Industry 4.0 as a collective term that refers to all of the technologies that will help foster the next-generation “smart factory”—a place where machines communicate with each other and their users in real-time, and factory processes become visible and controllable in virtual space. This typically includes technological concepts like embedded systems, automation and robotics, and the Internet of Things (IoT) and the Internet of Services (IoS).
According a report from Deloitte, there are four characteristics that define Industry 4.0:
- Vertical networking of smart production systems
- Horizontal integration via a new generation of global value chain networks
- Cross-disciplinary “through-engineering” across the entire value chain
- Acceleration through exponential technologies
For a great primer on Industry 4.0, including its distinction from terms like “Industrial Internet,” read this article from Industry Week.
How Can You Prepare?
Regardless of how you define or categorize the evolution of manufacturing, the point is that most experts agree that connectivity has the power to change manufacturing as we know it. Research also shows that many manufacturers are not prepared or equipped to be part of this next industrial revolution. A 2014 Smart Manufacturing Technologies Survey, for example, found that 40 percent of the survey participants have no visibility into the real-time status of their company’s manufacturing process. Adrian Jennings, Chief Technology Officer (CTO) of software provider Ubisense, which conducted the survey, says this reveals a major blind spot among today’s manufacturers.
“The manufacturing world is talking about Industry 4.0, but this survey confirmed that most manufacturers are far from embracing cyber-physical systems which define the next Industrial Revolution,” Jennings said.
How can your shop transition to what is likely the future of manufacturing? A contributed article appearing manufacturing.net provides some helpful tips and provides the value story for moving your operation from Industry 3.0 to Industry 4.0. Specifically, the article suggests the following:
“Start small and start local — trying to create large scale cyber-physical systems as a single effort presents too many challenges to be successful. Pick a problem or pain point and tackle it to prove that these solutions work and provide value. As benefits surface, roll this out to other processes keeping the ultimate goal of end-to-end visibility in mind. Be sure to invest in the right infrastructure at the outset and create islands of cyber-physical systems throughout the operation.”
Another article from Modern Machine Shop simplifies it further:
- Take heed. The Industrial IoT is real and taking shape here and now.
- Keep your eye on the prize. Better decision-making is the main benefit of creating a connected factory in which machines and people are smarter.
- Start small, but plan big. Whether it is machine monitoring or cloud-based CAM programming, the initial steps have to be manageable, transparent and respectful of the individual.
And if you think this transition isn’t already happening in the metal-cutting world, think again. According to a white paper from the LENOX Institute of Technology, one metal service center has 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.
In what ways has your metal-cutting organization prepared for this next phase of industrial manufacturing? Are you ready to usher in “smarter,” more connected operational strategies?
July 1, 2015 / agility, best practices, KPIs, lean manufacturing, LIT, productivity, strategic planning
In today’s information age, there is certainly no shortage of industry buzzwords floating around. Most recently, terms like “KPI,” “smart manufacturing,” and “agility” are making the rounds, while older terms like “lean” and “best practices” continue to circulate.
Unfortunately, the more terms like these are thrown around, the more they run the risk of either being lost in translation or watered down to the point that no one really knows what they mean anymore.
One term that has suffered from this fate is “strategy.” For the last several years, manufacturing experts and consultants have encouraged manufacturers to approach their business strategically, yet most managers aren’t clear on what that actually looks like in practice.
Perhaps part of the problem is that many managers just aren’t clear what the word means. At the most basic level, strategy is defined as “a careful plan or method for achieving a particular goal usually over a long period of time.” However, as a recent article from Harvard Business Review explores, when applied in a business environment, strategists and other experts have differing opinions on what strategy is—and what it isn’t.
For example, quoting the thoughts of strategist Michael Porter, the HBR article suggests that strategy should NOT be defined as the following:
- Seeking a single ideal competitive position in an industry
- Benchmarking and adopting best practices
- Aggressively outsourcing and partnering to improve efficiencies
- Focusing on a few key success factors, critical resources, and core competencies
- Rapidly responding to ever-evolving competitive and market changes
After listing several different theories, the HBR author comes to the following conclusion:
“…strategy boils down to a discouraging choice between ‘do something so dauntingly original that no one can copy you’ and ‘fight to the death with your rivals over the pie.’”
Regardless of whether or not this falls in line with your personal definition of strategy, it is worth doing a little research to make sure you are on the right track. A clearly defined business strategy is imperative for any company that wants to effectively apply it and achieve business growth.
Putting Strategy to Work
In most cases, applying strategy to your industrial metal-cutting organization begins with developing a strategic plan. This is definitely not a simple endeavor, but there are plenty of resources available that provide guidance. This archived article from Forbes, for example, provides a great 13-point strategic plan template.
For information catered specifically to the industrial metal-cutting industry, check out the educational course, “Five Modules for Success,” offered by the Metal Service Center Institute. The five-week course of study is conducted over 18 months and covers topics ranging from strategy and operational excellence to leadership and investments.
If creating a strategic plan overwhelms you—or if you just don’t have the time or resources available—it is possible to still make strategic decisions. An article from Fast Company even argues that small businesses should “scrap” strategic planning in place of strategic thinking. The article, found here, lists three ways companies can “develop an adaptive, opportunistic approach to strategy.” (For examples of companies that have successfully adopted strategic thinking, check out these articles from Chron and thefabricator.com.)
A Plan for Success
“Agility” and “adaptability” may be the current buzzwords, but successful companies understand the importance of having a focused plan with clear goals, or at the very least, a focused method for making critical decisions.
How are you applying strategic thinking and planning in your industrial metal-cutting organization?
June 1, 2015 / bottlenecks, Cost Management, KPIs, LIT, operations metrics, performance metrics, productivity, quality, resource allocation, root cause analysis
With market demand finally on the rise, industrial metal cutting companies need to keep up. However, there is only so much managers can optimize through traditional lean practices and proven technology. While automation has helped create new efficiencies across many industries, including metal cutting, most experts believe the factory of the future lies in “smart” manufacturing.
As reported in this blog post from LENOX Institute of Technology (LIT), “smart” manufacturing technologies such as the Internet of Things (IoT) and real-time data are poised to transform the way manufacturers improve operational efficiency and productivity. In fact, according to an IDC Manufacturing Insights survey, manufacturers expect IoT to lower operational costs, increase the potential to retain and attract customers, improve service and support, and further differentiate themselves from the competition. [LINK].
Traditionally, monitoring shop floor operations in real-time has been cost prohibitive. However, with the prevalent availability of new technology, a growing number of manufacturers are investing in hardware adapters and software upgrades, with hopes of a big return.
As this Fabricating & Metalworking article points out, the potential return on investment is huge. For example, only 5 percent of the estimated 64-million computer numerically controlled (CNC) machines around the world are currently connected to the industrial Internet. However, if the remaining machines were connected and started reporting data, they could contribute a staggering $15 trillion to the global GDP by 2030, according to research by GE.
But can “smart” and connected manufacturing facilities really drive performance—and, —ultimately, drive profits—for industrial metal cutting companies? In the Fabricating & Metalworking article, author David McPahil says, “yes.” According to McPahil, “smart” manufacturers have seen positive results in key performance indicators like overall equipment effectiveness (OEE). Below are several ways connectivity can positively affect the three ratios used to calculate OEE:
- Ratio 1: Availability. With an integrated manufacturing execution system (MES) and machine-to-machine (M2M) communications, McPahil claims shops can see the largest and quickest improvement in availability. Run times increase as the connected machines measure idle time and categorize it per machine. With real-time data, workers can find and eliminate root causes almost immediately with improved accuracy.
- Ratio 2: Quality. A connected shop also helps increase quality by measuring outputs and, for example, keeping track of the number of cuts a certain blade has made. As each machine communicates with the rest of the factory, consistency improves across the entire operation, McPahil notes.
- Ratio 3: Performance. A typical manufacturer believes its overall OEE score is approximately 65 percent; however, McPahil says “smart” operational benchmarks reveal they are actually between 30 to 40 percent. If MES is used to optimize the floor, OEE scores often soar within a few months—some even reaching world-class status of 85 percent.
It’s important to note that getting “smart” doesn’t always require brand new, high-tech equipment. As described in a recent white paper from LIT, one metal service center developed an internal software system to automatically track the number of square inches processed by its existing sawing equipment. At any point, the manager can go to a computer screen, click on particular band saw or circular saw, and see how many square inches each saw is currently processing and has processed in the past. This allows the service center to easily track trends and quickly detect problem areas.
Of course, upgrading to a “smart” manufacturing operation does require some investment, but it often has a high return. If you haven’t already made the jump to add connectivity to your industrial metal-cutting operation, it may be worth looking into—and soon. As many “smart” companies have discovered, the results are both measurable and promising.
May 25, 2015 / benchmarking, best practices, continuous improvement, customer satisfaction metrics, KPIs, LIT, operations metrics, performance metrics, predictive management, preventative maintenance, productivity, root cause analysis
Benchmarking, peer reviews, and ongoing analyses are considered universal best practices among leading organizations, regardless of industry or industry segment. However, in today’s competitive marketplace, companies need to know more than where they stand among their peers; they need to know where their company is headed.
In other words, today’s leading manufacturers must be proactive in their strategic approaches, not reactive. That’s why a growing number of forges are now transitioning to using predictive operations management strategies, allowing them to not only measure performance, but to also predict and prevent future challenges. Based on research, this approach is paying off for many companies.
For example, the LENOX Institute of Technology’s Benchmark Survey of Industry Metal-Cutting Organizations found that investing in smarter, more predictive operations management could result in additional productivity and efficiency on the floor. The study, which surveyed more than 100 industrial metal-cutting companies, found that 67 percent of industrial metal-cutting operations that follow all scheduled and planned maintenance on their machines also report an upward trending job completion rate that their job completion rate is trending upward year over year—a meaningful correlation. The implication is that less disruptive, unplanned downtime and more anticipated, planned downtime translates into more jobs being completed on time.
Manufacturers are also benefiting from more advanced, data-based predictive management strategies. As reported here, research from Aberdeen Group shows that 86 percent of top performing manufacturers are using predictive analytics to reduce risk and improve operations, compared to 38 percent of those companies with an average performance and 26 percent of those with less then stellar results. The research firm also notes that companies that use analytics to measure their data can more easily obtain a “big picture” of their operations, identify risks, and figure out where to focus their efforts.
According to Aberdeen, these best performing companies also report 18 percent higher overall equipment effectiveness and 13 percent less unscheduled asset downtime compared to the lowest performing organizations. The following are a few other traits the top performers have in common, according to the research:
- Invest in technology. Top performers automate the collection and sharing of data to support predictive decision-making.
- Identify risks. Top performers pinpoint high-risk plant assets and production processes, establish a threshold value to monitor the risk, and notify employees if the value deviates.
- Plan ahead. Top performers develop company strategies to ensure that predetermined thresholds remain accurate.
- Prioritize. Top performers identify and fix problem areas.
- Constant measurement. Top performers continuously track improvements in risk management by comparing current performance against baseline measures.
So how does your forging operation measure up to these “top performers?” Are you simply responding to operational challenges, or are you equipped to identify risks before they negatively impact your bottom line?
By following a strict preventative maintenance schedule or using advanced tools like data analytics, today’s forges can easily identify hidden problem areas or looming operation failures. As research shows, these types of predictive operations management practices can help you reduce risk, improve productivity, and maybe even make you a top performer among your forging peers.
May 5, 2015 / best practices, human capital, industry news, KPIs, LIT, maintaining talent, operations metrics, operator training, productivity, quality
According to data from the Metal Service Center Institute, service center shipments of steel were essentially flat in March 2015 compared to the prior-year period while aluminum increased slightly by 4.6 percent from the same month in 2014. With less than stellar shipments, metal service centers are focusing on business conditions they can control.
As this white paper from the LENOX Institute of Technology points out, one area that many companies are focusing their time and efforts on is training and maintaining talent. According to a recent article from Forward, Chicago-based service center Ryerson Inc., for example, has created a formal training initiative called The Ryerson Academy, which is a six-month program that trains up to 40 employees per year with a dedicated curriculum covering operations, supply chain, and more. Attendees also visit one of the company’s facilities to receive hands-on training with products and equipment.
Smaller service centers are also taking note. Westfield Steel, a service center also featured in the Forward article, has created on-the-job training to improve retention and skill rates. Based on each person’s existing knowledge, the training program lasts from four weeks up to four months. Workers observe best practices and also learn with hands-on work under the observation of their trainers.
With many skilled workers preparing for retirement, it’s no surprise that companies like Ryerson and Westfield are investing in training to improve operator capabilities and ensure their technology and equipment investments are used properly. In fact, the trend seems to be stretching across every industry. Citing data from Deloitte’s 2014 Corporate Learning Factbook, Forbes reports that U.S. spending on corporate training grew 15 percent in 2013—the highest growth rate in seven years.
How does your training program stack up? Is it time for some investment in this critical area? Using experiences from Ryerson, Westfield, and others, Forward offers four best practices service centers should use when implementing or enhancing their training programs:
- Test Before Implementing. Pilot the program with leadership or a pilot group of employees. This allows time to solicit feedback, make incorporate changes and fine-tune subject matters.
- Link Training to Business Goals. Training is an ideal way to ensure every employee knows and understands the company’s goals. This helps expose workers to areas outside of their expertise and helps retain new hires.
- Find the Right Method. Once you determine the training subject matter, decide how to implement and deliver the training. Some companies prefer e-learning courses to minimize travel expenses while others prefer in-person workshops or classroom training to help build team relationships. Determine what works best for you whether it is a webinar, video recording, or in-person sessions.
- Measure Impact. Treat training as any investment and measure results. While the impact of training may not be immediately evident, ask for feedback on the overall effectiveness of the training courses and presenter performance. Then after a few months, compare quantitative metrics such as quality, production rates, and efficiency to gain insights.
As the industry adopts advanced technologies and sees a shift in its talent pool, the need for skilled operators is increasingly important. Have you invested in your people lately? Doing so may just have big pay offs.
April 30, 2015 / best practices, bottlenecks, continuous improvement, industry news, KPIs, lean manufacturing, LIT, operations metrics, Output, performance metrics, productivity, resource allocation, root cause analysis, strategic planning, workflow process
As reported in the 2015 Industrial Metal Cutting Outlook from the LENOX Institute of Technology (LIT), many manufacturing executives expect 2015 to be a solid year. A survey of executives conducted by Prime Advantage, for example, shows that the vast majority of small and midsized industrial manufacturers anticipate revenues to increase or match 2014. For metals companies, industries such as automotive, commercial construction, and energy are expected to drive growth.
It comes as no surprise, then, that analysts expect growth in the ball and roller bearing segment as well. With the economy poised for recovery, research firm IBISWorld says that demand for downstream markets like automotive will rebound, which will bolster demand for ball bearings. A separate study from Grand View Research echoes these sentiments, forecasting that the global bearings market will reach $117.27 billion by 2020 at a compound annual growth rate (CAGR) of 7.5% from 2014 to 2020.
Industry leaders, however, seem to have some concerns. In late January, The Timken Company, a bearing manufacturer based in North Canton, OH, said it was viewing its markets “slightly more cautiously than 2014.” Specifically, the company said that “new business wins combined with modest market growth are expected to result in approximately 4% organic growth, but that will largely be offset by the impact of currency.”
Earlier this month, SKF, a global bearing maker based in Sweden, forecast flat second quarter demand for its business. SKF CEO Alrik Danielson said that while there are some positive signs for growth in Europe, they were “not robust enough to merit a more positive outlook,” Reuters reports. He also said there was still a lot of uncertainty about what the market would do in the next quarter.
Using Connectivity to Stay Competitive
The fact is that the last several years have made it difficult for any company to be anything but cautious. However, regardless of where the market lands, the goal for manufacturers should still be continuous improvement. To be competitive, especially on a global scale, companies need to stay focused on efficiency so that they can be agile enough to respond to whatever 2015 brings.
Of course, there are several ways to attack continuous improvement. Traditional lean tools are always effective; however, more and more manufacturers are literally working smarter by using technology. According to the Prime Advantage survey, many industrial manufacturers are leveraging digital tools, additive manufacturing, and other technological advancements to operate more efficiently.
A separate report from manufacturing.net agrees, adding that manufacturers that want to stay competitive in an ever-changing global market cannot underestimate the value of connectivity. According to the article, leading manufacturers started in 2014 to put buzz words like the industrial Internet of things (IIoT), machine to machine (M2M), and “big data” into practice. To be successful in 2015, the manufacturing.net author suggests that the trend needs to continue.
How? The article states that manufacturers need to start by creating a fully connected framework for top asset performance and strategic data analysis. This framework should include three important processes:
- Measure. “The first step, measurement, is critical to asset strategies because every asset in industrial organizations is essential for successful operations,” the article states. “Regular audits and automated measuring allow manufacturers to detect problems early before they become more severe and costly.”
- Monitor. “While measurement is the first step for asset performance management, machines must be continuously monitored for valuable insights,” the article states. “Software tools today identify root cause failure through data analysis and initiate proactive maintenance to protect assets and reduce downtime.”
- Manage. “Asset performance management provides structured processes and analytics to identify critical assets and failure modes, calculate equipment reliability, and determine downtime impacts,” the article states. “Executives and operators need the end-to-end picture of operations to drive impactful change.”
(For a more in-depth explanation of these steps, you can view the full manufacturing.net article here.)
A Year of Improvement?
In the end, the forecast for 2015 is no more certain than any annual forecast. Even the most educated analyst knows that there is no crystal ball to accurately gauge how the market will fare. There are just too many factors at play. However, by regularly measuring, monitoring, and managing your operation’s performance, ball and roller bearing manufacturers can more accurately gauge how their operations will fare.
Will 2015 be the year your operation improved? That is perhaps the only factor today’s manufacturing executives can control.
April 25, 2015 / agility, best practices, Cost Management, industry news, KPIs, LIT, operations metrics, Output, performance metrics, productivity, strategic planning
Most metalworking companies started off 2015 with positive expectations. As the LENOX Institute of Technology reported in the 2015 Industrial Metal Cutting Outlook, early forecasts painted a positive picture, with manufacturing production projected to grow by 3.7% in 2015 and 3.6% in 2016.
However, recent reports have clouded expectations a bit. A mid-April outlook from the Manufacturers Alliance for Productivity and Innovation (MAPI), for example, stated that short-term outlook for industrial manufacturing is “murky” and “fairly bleak.” According to the report, manufacturing production fell by 1.2 percent during the first quarter of 2015, the first quarterly contraction in factory sector output since the second quarter of 2009. And even though there was a modest gain in factory output growth in March (0.1%), MAPI points out that production in key industry sectors such as primary metals, aerospace, and furniture contracted.
Even with this sobering data, many manufacturers remain optimistic that 2015 will be a year of growth, even if it is only slightly better than last year. Two articles from Forge magazine give some specific reasons why forges can remain hopeful now and in the years ahead.
In its “Aerospace Industry Outlook,” Forge states that based on the 20-year projections from Boeing and Airbus, the long-term outlook for the aerospace industry (one of the forging industry’s biggest markets) is positive. While the demand projections between these two top companies differ slightly, both expect growth, which is good news for the forging industry.
“Whichever forecast you want to believe, many planes will be ordered during the next two decades,” the article states. “The world’s leading forgers, many of which are located in North America, will be asked to supply a wide assortment of forged products made of high-performance and lightweight materials.”
In a separate article, “North American Forging is Advanced Manufacturing,” the industry publication argues that the forging industry has several reasons to be confident in its future position in the metals industry. According to the article, forging is not only an enduring industry, but “is vibrant, technologically challenging and critical to the country’s economic health and defense.” The reason forging endures, the articles adds, is because it provides the parts for critical applications that cannot be produced by any other manufacturing process.
“If the application is important, it depends on a forging,” the article states. “Why would any designer choose any metalworking process not capable of providing the optimum combination of strength, toughness and fatigue resistance required of the application?”
Have a Plan
The point is that regardless of what current data shows, the long-term prospect for the forging industry is bright, which means that managers need to stay focused on growth. However, that means you need a plan. As any leading metals executive knows, success in today’s market requires a strategic plan focused on continuous improvement while also accounting for external challenges.
What does that look like? Below is a brief outline from Canadian Metalworking that will help forging executives create a simple but workable planning process for their business:
- Analyze the current state of the company, including annual sales and estimated market share and whether these variables are growing or sinking.
- Determine your goals and objectives over the next 12 months to five years.
- Take an inventory of the financial and non-financial resources the company currently has and what additional resources are needed to achieve these goals and objectives.
- Identify activities and courses of action that the company needs to embark on to accomplish these objectives.
- Establish key performance indicators (KPI) to quantifiably measure the company’s performance against specific activities that management has identified or against key success factors in the industry.
- Review performance and accomplishments against the plan on an on-going basis and do not hesitate to pivot if necessary.
(For a more in-depth explanation of these steps, you can view the full article here.)
Are you ready for whatever 2015 brings? If you remain focused on growth and have a strategic plan in place, odds are you are more ready than you think.
April 1, 2015 / agility, best practices, blade failure, Cost Management, human capital, industry news, KPIs, LIT, operations metrics, performance metrics, predictive management, preventative maintenance, productivity, skills gap, strategic planning, value-added services
Like most manufacturers, industrial metal-cutting companies went into 2015 with both optimism and caution. While all signs seem to be pointing to a full economic recovery, concerns surrounding an unstable political landscape, foreign markets, and pricing continue to keep many metals companies on their toes.
Some Growth Ahead
As we enter the second quarter of 2015, most experts anticipate growth in the metals industry. Early predictions painted a positive picture for the year, and recent reports are confirming that the industry will, at the very least, see slight improvements over 2014.
According to the Manufacturers Alliance for Productivity and Innovation (MAPI), industrial production increased at a 3.8% annual rate in the fourth quarter of 2014 and posted 3.6% growth for the year as whole—over a percentage point higher than the 2.4% gain in the overall economy. The manufacturing outlook for 2015 and 2016 calls for a minor acceleration from the 2014 growth rate. According to the MAPI Foundation’s most recent U.S. Industrial Outlook, manufacturing production is forecast to grow by 3.7% in 2015 and 3.6% in 2016.
MAPI’s outlook also predicts that 21 out of 23 industries will show gains in 2015. This includes growth in metals industries such as iron and steel products (5%), alumina and aluminum production and processing (7%), and fabricated metal products (3%). The top industry performer will be housing starts, which is expected to increase by 16%.
Forecasts for steel demand are also 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. This is a downward revision from previous forecasts, due to a slowdown in emerging economies like China.
“Recoveries in the EU, United States and Japan are expected to be stronger than previously thought, but not strong enough to offset the slowdown in the emerging economies,” stated Hans Jürgen Kerkhof, chairman of worldsteel’s Economics Committee. “In 2015, we expect steel demand growth in developed economies to moderate, while we project growth in the emerging and developing economies to pick up.”
Concerns and Challenges
Buying into the positive forecasts, most metals manufacturers expect business to improve this year. According to an annual survey of metals executives by American Metal Market (AMM), 42% of respondents expect the economy to turn around in 2015 and 67% expected business to improve overall, mostly due to growth in the auto and energy sectors.
However, AMM reports that respondents did have some reservations. Political events, cheap imports, and foreign markets were all causes for concern, as well as uncertainty about “where important industry segments like construction might be headed,” AMM states in its survey report.
In his State of the Industry address earlier this year, Robert Weidner, president and CEO of the Metals Service Center Institute (MSCI), listed several trends that will affect the metals industry in 2015 and beyond. Below are the five challenges he outlined, as reported by thefabricator.com (You can read the full coverage here.):
- Market Intelligence – Volatile markets and increasing competition have heightened the need for trustworthy data and analysis tools, as well as the need for cybersecurity resources and training to secure market intelligence.
- Business Disruption – World events have an even bigger impact on local economies than before, creating a need for topic- and area-specific experts and information and enhanced vehicles and technology to provide information.
- Congressional Gridlock – U.S. partisan politics have stalled action in the legislative branch, often resulting in extreme actions through regulators that have impeded manufacturing growth.
- Safety and Risk Management – Slow market growth has left companies cautious to invest.
- Skilled Labor and Changing Demographics – Attracting a skilled workforce remains a challenge for the industry.
With both forecasts and anticipated challenges in mind, industrial metal-cutting companies can strategically approach the market from both a business and operational standpoint. In fact, as we reported here, it is critical for today’s managers to develop operational short-term plans that are effective in achieving the overall strategy set forth in the business plan. For instance, if the goal is continuous improvement, then make sure your metrics, your daily practices, and communication with your team all point to that overall strategy.
As a global company serving the industrial metal-cutting industry, we at LENOX Tools have a unique vantage point of what is happening in the marketplace. We have watched some metal companies barely survive, while others have found ways to thrive. The difference, in most instances, seems to be the company’s commitment to making improvements. Whether investing in new equipment to improve cutting time and quality or investing in training to improve and empower their human capital, industry leaders are continuing to focus on making positive changes on the shop floor so they can be ready to respond to changing customer demands. In other words, the only way to offset external uncertainties is to focus on making internal improvements.
Based on industry trends and our own experience, LENOX sees the following as key strategies for industrial metal-cutting companies that want to be successful in today’s marketplace:
- Invest in Operators and Training. In light of the manufacturing industry’s ongoing skills gap, experts like MSCI’s Weidner are stressing the importance of employee safety and ongoing training as a means of attracting and maintaining workers. In addition, LIT’s benchmark survey of industrial metal-cutting companies provides evidence that investing in areas like training can provide additional benefits, including better quality, faster on-time customer delivery, higher revenue per operator, and lower rework costs.
- Embrace Proactive Care and Maintenance. No matter how efficient an operation, some machine downtime is inevitable. The key is to be proactive and minimize it as much as possible. This includes practices such as breaking in blades and regular coolant checks. By adhering to a preventative maintenance schedule, managers can actually anticipate maintenance bottlenecks and turn “interruptive downtime” into “predictive downtime.”
- Form Strategic Supplier Relationships. Whether you need help with training, gathering metrics, or de-costing, help is likely no further than your closest supplier. And if that’s not the case, you may want to rethink your supply chain. By utilizing value-added services from trusted suppliers and making them more of a partner than simply a supplier, metal-cutting companies can improve quality and productivity—both of which impact the bottom line.
- Seek New Opportunities. Market trends such on re-shoring and an automotive boom could translate into new opportunities for your metal-cutting company. Are there value-added processes you can add to your operation to stay competitive? Are there previous customers that could now benefit from the convenience and cost benefits of your U.S. manufacturing base? Is there new equipment or tooling that could help you better serve a certain customer base? Asking critical questions such as these may reveal new prospects for growth. Start brainstorming.