September 20, 2015 / benchmarking, best practices, blade failure, blade selection, continuous improvement, Cost Management, industry news, LIT, operations metrics, operator training, performance metrics, preventative maintenance, productivity, quality, root cause analysis, strategic planning
In any manufacturing operation, a small amount of scrap is inevitable. However, reducing material waste should still be a top goal for machine shops that cut and process metal. Like all other forms of waste, scrap can negatively affect profitability, especially if it is generated as a result of an error.
The truth is that any amount of scrap or rework you’re experiencing in your operations provides an opportunity for improvement. Taking the time to reduce scrap often leads to better productivity and higher quality cuts. As this manufacturing.net article points out, eliminating scrap and waste also contributes to your company’s environmental efforts, which may be important to some customers.
How can you keep your scrap and rework costs low? While there are several ways to accomplish scrap reduction, below are a few simple strategies any machine shop can implement:
- Measure and Compare. As with any continuous improvement activity, you need to start with measurement. If you aren’t measuring your scrap rate, this is your first step. You should also know your scrap and rework costs. Once you have some quantifiable data, you should compare your operation to others in your industry. For example, scrap and rework costs of Industry Week’s Best Plants winners and finalists for the last five years were a median (or middle) 0.5% of sales, while the mean — or average — was 1% of sales. How does your shop compare?
- Evaluate Operators. If you know your scrap and rework rates could be better, identifying the root cause of the issue is the only way to make any real, sustainable improvements. Often times, high inventory levels and scrap rates are indicators of “hidden” inefficiencies such as operator error. Are all of your operators properly trained on how to use equipment? Are they running saws at optimal levels, or are they just focused on getting the job done as fast as possible? Have you recently taken on a new job that may require a different saw setting or saw blade type? Poorly trained operators that misuse equipment often lead to low-quality cuts, higher instances of scrap due to error, and shortened blade life—all of which add up to elevated costs.
- Break in Blades. Proper use and maintenance of metal-cutting equipment and tooling can also play a role in keeping scrap and rework costs low. Based on the results of a benchmark study conducted by the LENOX Institute of Technology, this important, everyday practice can have a direct impact on the bottom line. Survey data showed that 70 percent of organizations that report their scrap and rework costs are less than five percent also say they “always” break in their band saw blades. This provides strong economic validation for the proactive care of saws and blades. By breaking in blades properly, organizations are able to reduce “soft” failure that leads to waste and scrap that eats into their bottom line.
- Pick for Clean. As more and more customers expect deliveries in half the time, many shops are doing whatever they can to speed up turnaround. However, companies need to be sure they are taking the time to reuse material whenever possible. Scrap can quickly get out of control if operators are reaching for a new piece of material every time they start a job. That’s why many shops are moving away from the “pick for speed” method of inventory selection and, instead, are embracing “pick for clean” methods. Picking for clean is the practice of picking high-quality leftover materials from a previous job to use up the inventory. In other words, you reach for remnants first. This keeps inventory and material costs low.
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?
August 20, 2015 / benchmarking, best practices, continuous improvement, Cost Management, LIT, operations metrics, performance metrics, predictive management, preventative maintenance, productivity, resource allocation, strategic planning
With changing customer requirements and an increasingly competitive marketplace, leading manufacturers are finding it pays to be proactive—not reactive—in their strategic approaches. Instead of simply measuring performance, many companies are taking the next step and using measurement to anticipate and prevent future challenges—a concept known as predictive operations management.
This trend has found its way into industrial metal cutting. According the LENOX Institute of Technology’s benchmark study of more than 100 machine shops and other industrial metal-cutting organizations, companies can gain additional productivity and efficiency on the shop floor by “investing in smarter, more predictive and more agile operations management approaches.”
One such approach is predictive maintenance. Not to be confused with preventative maintenance, which uses planned maintenance activities to prevent possible failures, predictive maintenance (also known as condition based maintenance) uses tools to predict failures just before they happen.
Reliable Plant defines predictive maintenance as “the application of condition-based monitoring technologies, statistical process control or equipment performance for the purpose of early detection and elimination of equipment defects that could lead to unplanned downtime or unnecessary expenditures.” By using tools to predict and then correct possible failures, operators can keep machines running while eliminating unnecessary preventative maintenance downtime and reducing reactive maintenance downtime.
Monitoring tools typically include vibration analysis, infrared thermography, motor circuit analysis, sonic and ultrasonic analysis and other technologies that can find defects while the machine is in normal operation. In most cases, condition-based monitoring won’t interfere with production schedules—a huge plus for any manufacturer.
If predictive maintenance is effective, maintenance is only performed on machines before failure is likely to occur. According to www.maintenanceassistant.com, this brings several cost savings, including:
- minimizing the time the equipment is being maintained
- minimizing the production hours lost to maintenance, and
- minimizing the cost of spare parts and supplies.
While this can translate into less maintenance downtime compared to preventative maintenance, predictive maintenance also has some drawbacks, including:
- high upfront investment for condition monitoring equipment and software, and
- high skill level and experience required to accurately interpret condition monitoring data
According to an article from Life Cycle Engineering, creating an effective predictive maintenance program is a bit more complicated than it appears. The magazine poses four questions managers need to address before implementing a predictive maintenance program:
- Can predictive maintenance technologies provide real value to your preventive maintenance program?
- What is the most effective predictive technology for your plant?
- Can you provide the right training?
- Will you actually use the information?
In the end, predictive maintenance may not be an option for every shop or every piece of equipment, but many manufacturers find it worth the investment for machines that have a critical operational function and have failure modes that can be cost-effectively predicted with regular monitoring.
July 5, 2015 / best practices, continuous improvement, Cost Management, industry news, LIT, operations metrics, performance metrics, preventative maintenance
As we reported in our Metal Service Center Outlook for 2015, metal service centers went into the new year optimistic. Unfortunately, shipment data has failed to meet expectations. According to monthly data from the Metal Service Center Institute (MSCI), U.S. service center steel shipments have been down all year compared to the same months in 2014. In May, MSCI reported that steel shipments decreased by a whopping 12.6% compared to May 2014, and shipments of aluminum products also registered the first decrease of the year, down 3.3% compared to May 2014.
In light of current conditions, it’s hard to fathom that any service center would turn down work. One would imagine that sales teams are working hard to ensure a steady stream of contracts, all the while hoping to land that huge, game-changing order. After all, growth is always the goal.
But what happens when that big order finally comes in, and it is clear that taking it on will require capital investment in either equipment or labor? What if you are running at capacity and the money just isn’t there, yet the growth opportunity a new customer represents is undeniable? What then?
As this article from Canadian Metalworking explains, most companies are left with three possible options:
- Delay fulfillment of the order, if at all possible.
- Beg the customer for a 50% down payment, hoping he has the financial wherewithal.
- Turn the customer away—or worse—send him to the competition
Obviously, none of these options are ideal, but this scenario is all too often the case for a large number of service centers that cut and process metal. However, not all hope is lost.
While there will always be instances when a company has to decide whether or not the business risk is worth it, there are ways to proactively prepare for potential growth. Below are three strategies that can help service centers be in a better position to accept new growth opportunities.
Focus on Reducing Operating Costs
In the midst of the day-to-day grind, it’s easy to put the most focus on getting the job done. However, keeping operational costs under control should always be a top priority for managers. According to consultant Lisa Anderson, businesses looking to find ways to grow profitably need to stay focused on maintaining low operational costs. Doing so not only saves money, it “provides pricing flexibility as you are able to reduce your breakeven point for covering costs.” Anderson explains.
In most cases, lowering operating costs won’t require any capital investment, but rather is a matter of taking better care of the investments you’ve already made. For instance, according to the white paper, The Top 5 Operating Challenges for Metal Service Centers, proper management and proactive maintenance of metal-cutting equipment and tools can save companies a lot of money. On a band saw, for example, low coolant levels can lead to premature and uneven wear of band wheels, which typically cost about $1,000 each. By instituting regular coolant checks as part of a PM program or daily operator checks, managers can eliminate this unnecessary maintenance cost, as well as the time needed to replace the band wheel.
Anderson agrees that PM is a key strategy and goes on to list several other strategies here. In the end, reducing operating costs is a good practice for any company, but it is essential for companies looking to expand.
Evaluate Your Position
In addition to cost readiness, managers need to be able to gauge whether or not their operation could logistically handle any growth. This requires measurement. An article from IndustryWeek describes several metrics that can help managers determine factory readiness.
Below are two key metrics that should be evaluated quarterly, according to IW:
- Utilization versus capacity. Chances are you’re already running this test at least weekly. Managers who don’t have a clear sense of the mix are bound to have a tough time winning new business while keeping existing clients happy. This metric can also be used in context. Do complaints rise along with utilization? If so, your factory may need training and support to handle new business and cut down on churn.
- Per-project profitability. How will you know whether your factory has the right mix of projects if you don’t measure per-project profitability? Calculate materials, hours worked, and other incidentals for completing projects and generate a figure. Estimates are fine; the key here is to have an apples-to-apples way to measure projects against each other. Then, dig deeper to look for patterns. Do certain clients always cost more to serve? Are certain industries more profitable?
Get Finances in Order
If that big order does come in, companies should be sure their finances are in order just in case financing is required. According to the Canadian Manufacturing article, the following best practices can help companies of any size can be in a better position to get financing:
- Make sure that your financial statements are up to date. A good accountant should take less than six months after the fiscal year end to prepare financial statements.
- Have financial projections outlining assumptions for every variable ready at all times, even if you have to hire a part-time CFO to get them done.
- Anticipate future orders by staying close to your customers.
- Determine from your banker what ideal financial ratios look like and stick to them whenever possible. While most businesses show the lowest reasonable bottom line to minimize their taxes, it is not the best strategy when seeking bank or equity financing.
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.