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operations metrics

Using OEE as a Metric in Metal Forging

May 25, 2016 / , , , , ,


Regardless of what is happening in the market, there is one challenge that forges and other industrial metal-cutting organizations are always fighting, and that’s downtime. In fact, despite a trend toward internal process improvements, an industry benchmark study revealed that machine downtime, blade failure, and operator error remain the top-three sources of frustration for industrial metal cutting operations on the shop floor.

To combat this issue, many shops are turning to metrics like overall equipment effectiveness (OEE). Although this type of measurement has traditionally been used in large production facilities, smaller and medium-sized shops are starting to find OEE to be a useful way to track and improve the effectiveness of their production machinery.

What is OEE?
OEE is a best practices metric that measures the percentage of production time that is truly productive. It takes into account all six types of loss, resulting in a measure of productive manufacturing time.

In simple terms, OEE can be described as the ratio of fully productive time to planned production time. According to leanproduction.com, it can be measured in one of two ways:

(Good Pieces x Ideal Cycle Time) / Planned Production Time

or

Availability x Performance x Quality

(You can find a more detailed description of the calculation here, as well as a sample calculation.)

A plant with an OEE score of 100 percent has achieved perfect production—high quality parts as fast as possible, with zero down time. While that’s ideal, it’s not quite possible in the real world. According to oee.com, studies show that the average OEE rate among manufacturing plants is 60 percent, which leaves substantial room for improvement. Most experts agree that an OEE rate of 85 percent or better is considered “world class” and is a good long-term goal for most operations. The good news is that 85 percent is achievable. As this case study from Metalforming magazine describes, Magellan Aerospace in Kitchener, Ontario, Canada was able to improve its OEE from a mere 36 percent to a world-class 85-percent-plus after implementing a new “shop floor to top floor” software program.

Managers can use OEE as both a benchmark and baseline. Specifically, leanproduction.com says it can be used to “compare the performance of a given production asset to industry standards, to similar in-house assets, or to results for different shifts working on the same asset.” It can also be used as a baseline “to track progress over time in eliminating waste from a given production asset.”

How to Use OEE Effectively
So how do you use OEE correctly? Below are a few pointers from an article from IndustryWeek:

Also, just because you aren’t a high-volume producer, don’t assume OEE isn’t for you. Check out this article from thefabricator.com, which describes how automated data collection can help smaller shops better measure OEE in more custom manufacturing applications. Another archived article from Production Machining describes other ways to apply OEE concepts to medium and small-sized shops.

As the IW article states, OEE can be misused and misunderstood, but it is not a “bad metric.” When calculated and applied correctly, OEE can be very useful in helping companies quantify and uncover new improvement opportunities.

For more information on OEE, check out this article, “The ‘Quick & Dirty’ About OEE,” or you can find a more in-depth overview here.

operations metrics

Software Tools Help Fabricators Improve Productivity

May 10, 2016 / , , , , , , , , , ,


As fabricators continue to seek new ways to optimize their operations, many are turning to software. Whether using it to connect the plant floor to the front office, or to measure key performance indicators (KPIs), data shows that more and more fabricators view software as a smart—and necessary—manufacturing tool.

For example, according the “2016 Capital Spending Forecast” from the Fabricators & Manufacturers Association International, more than 94 percent of survey respondents said their software spending this year would either remain the same or increase. This is significant, especially as more and more reports show that many companies are pulling back on spending this year.

A separate benchmarking survey from Modern Machine Shop shows that leading shops are more likely to utilize advanced software programs in their operations. Specifically, the survey found that top-performing machine shops (referred to as “top shops”) are more apt to utilize software solutions like enterprise resource planning (ERP) and toolpath simulation software in comparison to other shops.

Valuable Solutions
While there are many reasons software is becoming a valuable tool for manufacturers, for fabricators, a lot of it has to do with evolving customer demands. “As more custom fabricators are taking on more design work—beyond just design for manufacturability—engineering and estimating functions become more complex, especially as that work focuses on more subassemblies and full assemblies that call for multilevel bills of material and a multitude of sourced parts,” states a report from thefabricator.com. This, the article continues, is causing shops to invest in better methods of communication, as well as software tools like CAD/CAM, nesting systems, and ERP.

The good news is that as more manufacturers embrace software, the more tools are being developed—both by software designers and supply chain partners. Like consumers, industrial manufacturers are finding that where there is a need or challenge, there is indeed “an app for that.”

In metal cutting, specifically, there are several tools fabricators can use to help optimize their operations—many of which are free of charge. Below are two in particular that fabricators may find helpful:

Enhance Your Toolbox
Having the right tool for the job has always been a critical part of any metal-cutting operation, but fabricators are finding that it pays to have more than just hardware in their strategic toolbox. While it will never replace the important work machinery and other hardware tools perform on the shop floor, software tools can further optimize cutting operations by measuring important metrics, analyzing job trends, automating certain functions, and educating operators on proper cutting parameters. Although some software programs can be costly in terms of both money and training time, there are plenty of free tools available that can help even the smallest fabrication shop improve their operations.

What software tools are helping your shop optimize operations?

operations metrics

How to Use Data in Your Industrial Metal-Cutting Organization

May 1, 2016 / , , , , , , , , , ,


As companies look for new ways to stay competitive, more and more manufacturers are utilizing “big data” and analytics in their operations. In fact, according to the results of a survey from Deloitte and the Council on Competitiveness, these types of advanced technologies have the power to put the U.S. back on the map as the most competitive manufacturing nation.

“CEOs say advanced manufacturing technologies are key to unlocking future competitiveness,” the report summary states. “As the digital and physical worlds converge within manufacturing, executives indicate the path to manufacturing competitiveness is through advanced technologies, ranking predictive analytics, Internet-of-Things (IoT), both smart products and smart factories via Industry 4.0, as well as advanced materials as critical to future competitiveness.”

Specifically, the report states that the application of these more advanced and sophisticated product and process technologies will help the U.S. and other traditional manufacturing powerhouses of the 20th century (i.e. Germany, Japan, and the United Kingdom) reclaim their spots as the most competitive nations in 2016. The U.S. in particular is expected to take the number one spot away from China by the end of the decade.

What does this mean for industrial metal-cutting organizations? It means that if you haven’t already considered using data and software analytics in your facility, it may be time to revisit the idea. If data-driven manufacturing has the ability to make nations more competitive, that certainly says something about what it can do for individual companies.

Metrics that Matter
For many industrial manufacturers, the thought of using data may seem a bit daunting; however, it doesn’t have to be as complicated as it sounds. For example, a metal service center featured here in a white paper started by developing an internal software system that automatically tracks the number of square inches processed by its existing sawing equipment. At any point, the manager can go to a computer screen, click on a particular band saw or circular saw, and see how many square inches each saw is currently processing and has processed in the past. Gathering this type of data allows the service center to easily track trends and quickly detect problem areas.

Richards Industries, a Cincinnati, OH, company that manufactures industrial valves, is using data in a similar way, according to a recent article from Modern Machine Shop. Although the company has been practicing lean manufacturing for years, it recently installed a machine-monitoring system that enables shop floor personnel to track activities and record the performance of its machine tools. “Like readings from a Fitbit or Jawbone, the data gathered and analyzed by this system is making the company more aware of how well machine time and manpower count toward productivity,” Modern Machine Shop reports.

Of course, these are just two examples. There are many other ways manufacturers can utilize data and advanced analytics to improve their operations. An article from IndustryWeek calls out a few key metrics industrial metal-cutting companies should consider as they implement data and analytics tools into their factory:

Get Going
Whether you decide use data to gain productivity, monitor machines, or improve quality, the point is that data-driven manufacturing is here, and companies big and small are taking advantage of its many benefits. If you haven’t jumped on the bandwagon yet, don’t get overwhelmed. Just get started.

How are you utilizing data to improve your operations and stay competitive?

operations metrics

Optimizing Your Metal Service Center with Cost per Cut Improvements

March 5, 2016 / , , , , , , , , ,


For any manufacturing company, cost reduction has always been—and will likely always be—a top priority. However, like many other business strategies, managers are starting to look at cost management holistically. Instead of simply looking at price tags and cost reduction, today’s managers are looking at long-term return on investment and optimization.

This type of “holistic” approach to cost management is being adopted by several large manufacturers, including food giant General Mills, but it can also be applied on the shop floor of any industrial metal-cutting operation. One specific way metal service centers can apply this concept is by measuring “cost per cut.”

Instead of simply looking at the cost of a blade or even how many cuts a blade performs,  “cost per cut” measures the total cost it takes for a shop to perform a cut, including raw material, blade, machine and operator costs. This metric gives service centers a better indication of overall production profitability.

A good analysis of cost per cut should include the following:

Of course, the question for many companies is not how to measure cost per cut, but rather, how they can reduce their cost per cut. Tools like the spreadsheet calculator, “ROI Analysis of Making Improvements to Cost Per Cut,” can be helpful in making that determination. The tool takes into consideration all equipment and factors beyond mechanics that can improve cost per cut rates and a shop’s bottom line.

Another optimization tool, SAWCALC, may also be helpful. The free, web-based software program recommends the correct band saw blade and sawing parameters based on material composition, size, shape and machine model, feed speed, as well as blade and tooth specifications that can streamline sawing processes and extend blade life.

One practical way service centers can reduce cost per cut is to consider investing in a coated saw blade. According to an article from Canadian Industrial Machinery, coating can extend blade life by 100 percent or more and slice cutting time in half, depending on the blade material, coating, and the material being cut.

Although coatings can add a premium of 30 to 50 percent to the cost of a blade, there are instances when the upfront cost can pay off. “You need a reason like a challenging material, a need for extra performance, or a machine that is creating a bottleneck and needs to produce more parts,” Daniel Fernandes, brand manager for band saw blades at LENOX, explains in the CIM article. “Upgrade to a coated blade and you can pump more jobs through the same equipment. You’ll get more out of your overhead costs and your labor.”

Another service center, featured here in a case study, was able to improve its cost per cut by re-adjusting its sawing parameters, increasing its operator training, and upgrading some of its blades. In one instance, the service center was able to reduce cut time by 40 percent.

Is a new, upgraded blade always the answer? Of course not, but optimization should always be the goal. This is why metrics like cost per cut are so important. By focusing more on reducing the true cost of each cut—and not just the price tag of a blade—managers can optimize their metal-cutting operations and, hopefully, see the results in the bottom line.

How has your service center improved cost per cut? What tools have helped you optimize your operations?

operations metrics

Should Your Industrial Metal-Cutting Organization Rethink Operations Management?

March 1, 2016 / , , , , , , ,


Today’s industrial metal-cutting executives face enormous challenges. While the goal has always been for manufacturers to do more with less, that expectation has intensified in recent years. Increased pricing pressures, global competition, and customer expectations are just a few of the current issues that are putting a strain on even the most efficient metal-cutting operations.

This has pushed many companies to look for new ways to manage their operations. In fact, a Global Operations Survey from PwC found that industry leaders are “reimagining operations” by aligning it with business strategy.

“These leaders don’t think of operations as mere utilities,” the PwC report states. “Instead, they see new opportunities to drive their company’s destiny like never before. They are cultivating a coordinated set of operational strengths based on what customers want and what fits with company strategy.”

After surveying more than 1,200 operations leaders across various industries, PwC uncovered several trends that are shaping the way companies are running their operations. Below are the report’s four key insights:

One of the studies most important suggestions was that companies need to design their operations around their customer. “Without this understanding, we often see operations stretched too thin,” Mark Strom, PwC’s Principal and Global Operations Leader, told Supply Chain Management Review. “When one team tries to innovate, they come in direct conflict with an operational assignment to cut costs – or they create some new complexity that’s harder to manage.”

Another takeaway from the survey was the importance of collaboration within an organization. Hyper-efficient silos, the report says, should no longer be the goal. In fact, PwC found that 61% of operations leaders believe cross-functional collaboration has the greatest potential for helping the company reach its strategic goals.

While the PwC survey was done across geographies and industries, research specific to industrial metal-cutting confirms that new approaches to operations management can offer tangible benefits. For example, data from a benchmark survey of leading fabricators, metal service centers, and other metal-cutting organizations suggests that companies with high machine uptime can gain efficiency by investing in smarter, more predictive and more agile operations management approaches.

Specifically, the survey found that 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,” states a summary of the survey findings.

Is it time for your organization to rethink or “reimagine” its approach to operations management? Based on the findings of the aforementioned studies, there are a few questions today’ managers should consider:

If the answer to any of these questions is yes, then perhaps it is time for a change.

operations metrics

Selecting Maintenance KPIs for Your Fabrication Shop

February 10, 2016 / , , , , , , , ,


Manufacturing leaders know that measurement is the only way to truly gauge how their operations are performing and, more importantly, identify areas that need improvement. However, many companies fail to realize that metrics can be applied to every area of an organization, not just production.

One area that can greatly benefit from measurement is maintenance. A strong maintenance department keeps equipment up and running, which directly impacts production schedules and costs. As an article from Reliable Plant points out, maintenance should be treated just like any other business area.

“You must make good decisions that add value,” the article states. “This means you need input and lots of it. Making decisions based on gut feelings just doesn’t cut it these days. Key performance indicators (KPIs) can provide the input you need to help meet this lofty objective.”

Where Do You Start?
As we covered in a previously published blog, the challenge for many metal fabricators is knowing which metrics to measure, especially in niche areas like maintenance. Not all KPIs are created equally, and the goal should be quality—not quantity—when it comes to metrics of any kind.

According to Lifetime Reliability Solutions (LRS) Consultants, maintenance KPIs should reflect achievement and progress in meeting an agreed maintenance benchmark. “In measuring maintenance performance we are concerned not only with doing good maintenance work, we are also concerned that the maintenance work we do successfully removes risk of failure from our plant and equipment,” LRS advises on its website.

The consulting firm suggests that maintenance managers use a mix of lagging indicators and leading indicators so they have an understanding of what is happening to the risk and performance of their operational assets through maintenance efforts. “Lagging indicators use historic data to build a performance trend line,” LRS writes, while leading indicators use historic data to monitor if an operation is doing those activities that are known to produce good results. A good example of a lagging indicator related to machine health is Mean Time Between Failures (MTBF), whereas a leading indicator in maintenance might be the percentage of condition inspection work orders performed when they fall due.

In general, LRS suggests maintenance managers consider using KPIs within the following six categories:

Why Do Maintenance KPIs Matter?
Like any other business area, maintenance performance can directly impact the bottom line. For example, if maintenance personnel fail to follow a shop’s preventative maintenance (PM) schedule, a host of problems can arise, ranging from lower quality cuts to unplanned machine downtime. As confirmed by a recent benchmarking study of fabricators and other industrial metal-cutting companies, maintenance tasks like PM can impact job completion rates, blade life, and material costs.

With the right KPIs in place, maintenance managers can make sure that maintenance performance is up to par, as well as play a key role in ensuring that the shop as a whole operates as optimally as possible.

How are you measuring maintenance performance at your fabrication shop?

operations metrics

KPIs Help Metal Service Centers Optimize Operations in Uncertain Times

January 5, 2016 / , , , , , , , , , , , ,


The economic uncertainty from 2015 is unfortunately spilling over into 2016. As reported in a recent IndustryWeek article, the head of the International Monetary Fund Christine Lagarde said “global growth in 2016 will be disappointing and patchy” due to rising interest rates in the U.S. and a slowdown in China, among other reasons.

The most recent metal service center shipments confirm the gloomy forecast. According to data from the Metal Service Center Institute, service center shipments of both steel and aluminum were down—albeit at slower rates—in November compared to both the previous month and year prior.

Given current economic conditions, it’s not surprising that metal service centers are using metrics and data to improve their operations—the only aspects of their businesses they can control. As reported in a white paper from LENOX Institute of Technology, market leaders know that proactive—not reactive—improvement is the key to being successful in today’s market.

When it comes to metrics, more and more companies believe key performance indicators (KPIs) are the best means for gathering quantifiable and traceable measurements because they are tied directly to business strategy. In fact, KPIs are so popular that the University of Tennessee’s Reliability and Maintainability Center (RMC) started an initiative called “Six Metric Areas to Best Practices” to help companies focus on the right metrics and align them to their organization.

As reported by Plant Services, Tennessee’s RMC initiative focuses on three guidelines:

As part of its initiative, RMC has also identified six universal KPIs that all companies, regardless of industry, should consider adopting. These include the following:

  1. Percent Reactive Maintenance, including data on predictive, preventive, and capital projects
  2. Maintenance Cost/Replacement Asset Value, expressed as a percent
  3. Overall Equipment Effectiveness (OEE), including availability, performance, and quality
  4. Inventory Turns for both overall product and maintenance, repairs and operations (MRO) spare parts
  5. Mean Time Between Failure (MTBF)
  6. Suggestions/Employee

If your service center isn’t already using some of the above KPIs, now is the time to consider identifying at least a few, if not all, of them. If the process feels overwhelming, do some research, ask for help, and start measuring. In today’s uncertain economy, manufacturers can’t afford to ignore the operational areas that need improvement. As they say, you can’t improve what you can’t measure.

Are you using KPIs to optimize your operations? What metrics have resulted in the most improvement for your metal service center?

operations metrics

Common Missteps Industrial Metal-Cutting Companies Should Avoid in Lean Manufacturing

October 15, 2015 / , , , , , , , , , ,


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:

  1. Thinking of 5S as something you do to an area
  2. Imposing 5S top-down, with limited involvement bottom-up
  3. Equating waste reduction with cost cutting
  4. Remaining aloof to the larger global end-to-end value stream
  5. Assuming your Future State Value Stream Mapping (VSM) is nothing more than your Current State VSM with the identified improvement opportunities corrected or addressed.
  6. Equating visual workplace with top-down visual communication
  7. Viewing Total Productive Maintenance (TPM) as an improvement initiative that exclusively relates to engineering and maintenance personnel
  8. Using overall equipment effectiveness (OEE) to evaluate operations rather than as an improvement gauge
  9. Equating Standard Work with procedures
  10. Engaging in “industrial tourism” and thinking you are benchmarking
  11. Pursuing a one-size-fits-all solution to production planning and control
  12. Forgetting to reduce supermarket inventories once established
  13. Preconditioning continuous flow to waste elimination
  14. Believing you will achieve a lean transformation applying lean tools
  15. 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?

operations metrics

MTConnect Helps Boost Production for Metal Fabricators

October 10, 2015 / , , , , , , , , ,


With manufacturing rates on the rise and a strengthening economy, many manufacturers and industrial metal-cutting companies are looking for more ways to drive operational efficiency to deliver products faster, improve quality, and remain competitive.

One way metal fabricators are meeting this challenge is by way of technology—specifically the Industrial Internet of Things (IIoT). IIoT combines machine-to-machine communication and data collection to create “smart” machines that help eliminate inefficiencies on the production floor.

For example, as reported in a white paper from the LENOX Institute of Technology, one metal-cutting company developed a software system that eliminated the need for an operator to enter order information into the sawing equipment. By connecting the company’s order-tracking system and sawing equipment, the company no longer has to enter the information twice. This saved time and reduced the chance for error.

Just like CNC communication changed the way many fabricators operate, machine-to-machine communication is expected to do even more. To accomplish integrated communication within their shops, many manufacturers start by adopting a communication standard called MTConnect. This technology enables companies to collect uniform data from various manufacturing and production equipment, including sensors and other hardware, to help increase efficiency, improve processes, and boost productivity. The idea is that with one communication standard in place, manufacturers can monitor all equipment and enable it to communicate and learn from each other. When combined with analytical software that translates raw data into reports and dashboards, MTConnect helps transform a “smart” machine into a “smart” shop.

According to a case study published by Modern Machine Shop, one machine shop’s utilization rate hit 65 percent and above after implementing MTConnect. The shop now has plans to improve to 70 percent with the ultimate goal of 85 percent utilization to be on par with world-class manufacturing.

In addition, Mazak Corp., a machine tool manufacturer, recently used the technology to increase machine tool shipments by 200 per month, reports Canadian Industrial Machinery (CIM). Not only did MTConnect help the Florence, KY-based company achieve its shipment goal, but it also increased productivity by an estimated 20 percent, improved machine utilization 42 percent, reduced operator overtime by 100 hours per month, and decreased outsourced work by 400 hours per month.

While the case for MTConnect may be convincing, Neil Desrosiers, developer of digital solutions for Mazak, admits that integration is a major undertaking. In a recent article from Manufacturing Engineering, Desrosiers offers some tips to shops that are considering adopting MTConnect:

Do you think MTConnect is a valuable standard? What technologies have driven your operational efficiencies, and is MTConnect part of that plan?

operations metrics

Can Your Service Center Be More Environmentally Friendly?

October 5, 2015 / , , , , , , ,


For years, manufacturers were bombarded with the “green movement.” Everything from conference keynotes and annual reports to football commercials centered on sustainability and the many ways manufacturing leaders were “going green.”

And while the trend has died down in recent years—replaced by buzzwords like “big data” and “connectivity”—the issue is still very relevant. In fact, the U.S. Environmental Protection Agency (EPA) just implemented a new ozone rule that will affect the metals and larger manufacturing community. Under the new regulation, “facilities may be required to install costly pollution control equipment, limit production, or forgo expansion,” according to an article from industry publication Edge.

The final ruling, which was just published this month, isn’t as strict as many manufacturers feared it would be; however, organizations like the Metal Service Center Institute (MSCI) and the National Association of Manufacturers (NAM) openly oppose the new directive. “The new ozone standard will inflict pain on companies that build things in America—and destroy job opportunities for American workers,” Jay Timmons, CEO of NAM, said in a press release.

Whether by force or by choice, the point is that sustainability efforts will continue to be important for manufacturers. If you haven’t already started changing the way your metal service center operates, now is the time to make some environmentally conscious changes. Below are just a few ideas to get you started:

What changes have you made to make your service center more environmentally friendly?

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