February 28, 2017 / best practices, Cost Management, Employee Morale, human capital, industry news, LIT, maintaining talent, operator training, ROI, skills gap
The idea of investing in your employees sounds good in theory. In fact, many would say that this is a trend among manufacturers as they try to find ways to address the widening skills gap.
But as any metals executive knows, theories don’t pay the bills. Resources designated to employees may offer some “soft” benefits like improved morale, but is there any financial benefit to investing in employees?
Research shows that the answer is yes: Investing in employees does offer a good return on investment (ROI). In an article published by Harvard Business Review, Alex Edmans, professor of Finance at London Business School, says that research of stock market data clearly reveals that the benefits of investing in employees outweigh the costs and that employee satisfaction improves firm value.
“I studied 28 years of data and found that firms with high employee satisfaction outperform their peers by 2.3% to 3.8% per year in long-run stock returns—89% to 184% cumulative—even after controlling for other factors that drive returns,” Edmans writes in HBR. “Moreover, the results suggest that it’s employee satisfaction that causes good performance, rather than good performance allowing a firm to invest in employee satisfaction.”
According to Edmans, the findings have major implications. “For managers, they imply that companies that treat their workers better, do better,” he writes. “While seemingly simple, this result contradicts conventional wisdom, which uses cost control as a measure of efficiency.” (You can see all the details of Edmans’ findings here.)
Research conducted among forges and other industrial metal-cutting organizations show similar results. A benchmark study conducted by the LENOX Institute of Technology provides evidence that investing in human capital is critical for improving on-time customer delivery and driving higher revenue. Specifically, the survey of 100 industrial metal-cutting operations found the following:
- 64% of organizations that cite their operator turnover is decreasing year over year also report that on-time job completion is trending upwards—a critical correlation.
- 51% of organizations that reported reduced levels of operator turnover also said their revenue per operator had increased.
With data like this, it is hard to argue against the value of investing in employees. And while most executives think of pay raises when they think of employee investment, the good news is there are several ways forges can invest in employees. The following are just four possible approaches that go beyond pay:
- Listen. Operators that work with equipment every day are a valuable source of information. Be intentional about collecting feedback and implement some of their ideas.
- Equip. Invest in an employee’s future with incentives like continued education or management training. This shows employees that you value their personal success and provides them with new skills that can benefit your operation in the long run.
- Communicate results. Regularly share performance reports with employees by either posting them or discussing them in staff meetings. According to the white paper, Accounting for Operator Inefficiencies in the Metals 2.0 Environment, sharing report results encourages accountability, provides motivation, and reminds operators that they are a critical aspect of the company’s success.
- Reward. Studies continue to show that goal setting and incentives are effective motivational strategies. Empower your operators by letting them set their own goals. This also holds them accountable for their work and promotes long-term “buy-in” and loyalty.
Investments of any kind usually present some risk, but in the case of human capital, it seems unlikely that there are any real threats or disadvantages. As research confirms, pouring resources into the very people that keep your company running is just good business—in theory and in practice.
How is your forging operation investing in employees?
February 20, 2017 / agility, best practices, blade failure, blade life, blade selection, Cost Management, customer delivery, industry news, LIT, maintaining talent, operator training, productivity, quality, resource allocation, skills gap, strategic planning
Thanks to an unstable marketplace, capital spending among machine shops and other metalworking companies has been down for the last several years. However, new reports suggest a rebound in the near future.
According to data from Gardner Business Intelligence (GBI), machine tool consumption peaked at $7.5 billion in 2014, and then contracted 3 percent in 2015 and 7 percent in 2016. Based on GBI’s Capital Spending Survey, projected total machine tool consumption in 2017 will be down an additional 1 percent. However, as reported here by Modern Machine Shop, the survey also shows that demand for core machine tools will increase in 2017 by 9 percent. In addition, GBI’s new econometric model for machine tool unit orders indicates that the rate of contraction in overall machine tool demand bottomed in July 2016 and will improve through the end of 2017.
Steven Cline, Jr., director of Market Intelligence at GBI, says the driving force behind the projected rebound is the need for increased productivity. “Shops need to increase productivity in order to remain competitive in a global manufacturing marketplace and to counteract the much-talked-about skills gap,” Cline writes in Modern Machine Shop. “More and more shops are turning to lights-out and/or unattended machining to achieve this increase in productivity, but new equipment, including machine tools, workholding and automation, is needed to run lights-out.”
As reported in the news brief, “Strategies for Training and Maintaining Talent in Industrial Metal-Cutting Organizations,” industrial metal-cutting companies have spent the last few years investing a lot of time and resources into their workforce. This has helped boost productivity and address some of the skills gaps, but the GBI survey suggests that shops are seeking a balance that requires investments in both human capital and equipment.
For example, Speedy Metals, an online industrial metal supply company and processor, recently upgraded its band saws to improve efficiency. “We had been searching for a reasonably priced, high-production band saw to add to our saw department and boost our production,” Bob Bensen, operations manager, tells Modern Metals. “We needed a reliable band saw that was going to stand up to the rigors of our fast-paced environment.”
Bensen went on to say that the new band saw, which has nesting capabilities and allows his operators to cut a variety of metals, has improved productivity. This, he adds, has given Speedy Metals a competitive edge and allows his company to continuously offer same-day shipping on quality parts and customized saw cuts that meet the closest tolerances.
Similarly, metal-cutting companies like Aerodyne Alloys are investing in new metal-cutting tools to further improve efficiency. Working with hard-to-cut metals like Inconel 718 and Hastelloy X, the metal service center decided to upgrade from bi-metal blades to carbide-tipped blades to get higher performance out of its band saws. After upgrading to a carbide blade, Aerodyne was able to tackle hard, nickel-based alloys, while also improving cutting time on easier to cut materials like stainless steel. According to a case study, this helped improve operational efficiencies at Aerodyne by up to 20 percent.
Of course, not all capital investments offer a good return. If your shop is considering investing in new equipment or tools this year, be sure to measure cost against productivity. According to the white paper, Selecting the Right Cutting Tools for the Job, managers need to weigh the following:
- upfront costs against overall operating and maintenance costs
- long-term productivity of a machine and its intended use
- equipment and blade life, as well as cost per cut
There is no question: Staying competitive in today’s market is tough. Demands for high quality and quick turnaround continue to increase, while cost pressures and issues like the skills gap remain. How will your shop respond? As the GBI survey suggests, it may be time to consider making some capital investments to ensure that your team is fully equipped to meet demands.
February 10, 2017 / best practices, LIT, operator training, quality, strategic planning, supplier relationships, value-added services
For most fabricators, supplier relationships are the building blocks of success. While there are still some companies that base their supply chain on price, as customer expectations for both quality and delivery continue to increase, many industry leaders are taking the time to form strong supplier relationships that are built on a lot more than an affordable product or service. In many cases, suppliers are becoming strategic partners.
Data confirms this trend. As reported in the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization, a survey conducted by Tompkins Supply Chain Consortium found that 80 percent of supply chain professionals believe that the supply chain is an enabler of business strategy. “A majority of companies also felt that the supply chain is a source of business value and competitive advantage,” the eBook states.
How can you form strong supplier relationships that provide real value? The eBook offers three best practices:
1. Schedule on-site visits. Like any relationship, communication is key. Expect your prospective supplier to assume a “partner” role from day one by focusing more on service than on the sale of the product. To facilitate this relationship, start by asking for an on-site needs assessment. This gives you the opportunity to discuss your business goals in person, as well as providing the vendor with a full overview of your operation.
2. Include training in your purchase agreement. Most suppliers should be willing to provide some level of value-add training as part of the purchase agreement. This is especially important when it comes to your equipment and tooling providers. No one knows your production equipment better than the people who designed it, and they should be willing to share that expertise with you.
3. Expect thought leadership and self-service tools. Industry-leading partners should be able to support your business by providing informational and educational materials, as well as practical tools and services. You can and should rely on your supplier to be an industry thought leader that provides a steady stream of valuable industry trends data, operational strategies, and technical product information.
Of course, maintaining strong supplier relationships doesn’t come without its challenges. According to the 2017 Manufacturing Outlook Survey conducted by ASQ, 83 percent of manufacturers experienced problems with suppliers last year. However, only a third felt concern that those issues would spill over into 2017. In addition, 66 percent of those surveyed said they are working with current suppliers to fix previous concerns—an indication that the majority of manufacturers see the value of working closely with existing suppliers to address challenges they face. As an article from Supply Chain Drive notes, “…a consistent cycling of suppliers can harm long-term performance as relationships take time to cement.”
ASQ does warn, however, that manufacturers should be prepared for those moments when suppliers don’t come through. The key is to openly communicate with existing suppliers to determine any potential risks and, more importantly, to have back-up plans—and back-up suppliers—to alleviate supply chain disruptions. Ultimately, the goal for any manufacturer should be to turn vendor relationships into strategic partnerships. By taking the time to build trust and value into the supply chain, suppliers can become an integral part of your business strategy and, more importantly, your shop’s success.
In what ways can your fabrication shop get more out of its supplier relationships?
February 5, 2017 / best practices, continuous improvement, Cost Management, LIT, operator training, quality, ROI, strategic planning, supplier relationships
Keeping costs low and quality high are the top goals of just about every industrial metal-cutting operation. What’s interesting, however, is that many companies treat these two areas as independent variables. A recent series of articles from IndustryWeek (IW) shows why it is important for managers to look at quality and cost together. More specifically, it recommends that companies quantitatively measure the cost and benefits of quality.
“Tracking the financial impact of any support function is necessary in order to illustrate its value and garner continued support and resources from senior management,” the IW article explains. “This struggle is vitally important for quality management departments that continue to struggle with competing for resources. Once organizations get clarity on the financial impact of quality, the next step is to understand what practices and applications help improve the financial value.”
Unfortunately, this seems to be easier said than done. Based on the results of a 2016 survey conducted by the American Society for Quality (ASQ) and the American Productivity & Quality Center (APQC), approximately 60 percent of organizations say they don’t know or don’t measure the financial impact of quality. According to a report on the survey’s findings, “this lack of measurement may be attributed to not having a common method for capturing the financial impact.”
Many companies also do not understand the benefits of measuring quality and, instead, simply use it as a means of “compliance” or to keep customers happy. This is especially true in today’s market. As stated in the white paper, The Top 5 Operating Challenges for Metal Service Centers, customers continue to expect higher quality and tighter tolerances from their metal-cutting suppliers.
However, the IW article states that quality should be about more than “checking a compliance box” or basic due diligence. “Developing a solid foundation of quality assurance for continuous improvement, risk mitigation, and compliance provide immeasurable value,” the article states. “However, once that solid foundation is established, organizations can then leverage quality for the benefit of the customer and enhance brand image, thus serving as a competitive differentiator.”
In fact, based on ASQ and ASQC’s survey findings, “organizations that leverage quality as a strategic asset were more likely to report higher levels of financial gains from their quality program.” In other words, companies are using quality to drive profitability.
For more information on how to start measuring the cost of quality, click here to access IW’s four-part series. The articles look at the relationship between financial benefits and the following areas:
- the role and uses of quality,
- governance and standardization of quality,
- quality training for suppliers, and
- quality incentives and training for staff.
How are you measuring the financial impact quality has in your service center?
Engaging Employees Is Key to Continuous Improvement in Your Ball and Roller Bearing Manufacturing Operation
December 30, 2016 / best practices, continuous improvement, Employee Morale, LIT, maintaining talent, operator training, strategic planning
There is no question continuous improvement is critical to succeeding in today’s market. Case in point: two of the three industrial metal-cutting companies featured here in a case study on top performers listed continuous improvement as an imperative operational strategy and best practice that sets their operations above the rest.
It’s also widely accepted that continuous improvement efforts require “buy-in” from the top-down to truly be successful. This isn’t always an easy task. Articles like this one from IndustryWeek discuss the challenges improvement teams face in getting upper management on board. Perhaps the larger challenge, however, is getting operators and other employees committed to improvement efforts. While upper management support is needed to secure resources, employees are the ones carrying out the efforts, making them absolutely critical to success.
The key, one expert states, is to intentionally engage employees. “For any effort directed towards continuous improvement or innovation to succeed, your employees must feel that their suggestions…are genuinely wanted and in fact encouraged,” Chris Ruisi, leadership expert, writes here in a blog published by the Association for Manufacturing Excellence (AME). “They must willingly take ownership in the future of their organization—continuous improvement is everyone’s responsibility.”
To facilitate this, Ruisi offers the following strategies:
- Review Outcomes. Ruisi suggests that managers adopt his “study your game films” approach. At the end of every important project, regardless of the outcome, teams should meet and ask questions that encourage improvement: If we had to do this again, what would we start doing; stop doing; do more of or do less of? This simple process ensures that you learn something from every event to make you better the next time.
- Explain the Big Picture. Most employees know what they must do, when to do it, and how to do it. Many do not know why they do it, who they do it for, and where it fits in to the total picture. Armed with the “why, who, and where,” they are better able to identify and suggest ways they can improve and contribute to the company’s larger goals.
- Gather Feedback Regularly. Start meeting with small groups of your team members on a regular basis to actively solicit their feedback on how their work is produced. Start with only one question: What’s one thing we can do today to produce a better result tomorrow? Take the same approach with your better customers. They have a lot to offer as long as you ask and show them that you sincerely want their feedback.
- Encourage Ownership. At the end of every staff meeting, ask “what’s one thing we could do better?” Once an idea is identified, ask the person who suggested it to “own” that project. This encourages feedback and empowers your team members to take ownership in the continuous improvement effort.
If your ball and roller bearing operation is dedicated to continuous improvement, it may be worthwhile to consider some of Ruisi’s suggestions. In addition to helping continuous improvement efforts stick, taking the time to engage employees often builds new levels of trust among employees and management—trust that can provide invaluable benefits like improved morale and employee loyalty.
Does your current continuous improvement plan actively engage employees?
December 20, 2016 / best practices, bottlenecks, continuous improvement, lean manufacturing, LIT, operator training, productivity, quality, workflow process
With a slew of improvement strategies, tools, and technologies available, many managers have lost sight of one of the simplest ways they can optimize the performance of their operations—standardized processes.
In fact, according to the Lean Enterprise Institute, standardized work is one of the most powerful, but least used lean manufacturing tools. “By documenting the current best practice, standardized work forms the baseline for kaizen or continuous improvement,” the organization explains here. “As the standard is improved, the new standard becomes the baseline for further improvements and so on. Improving standardized work is a never-ending process.”
As defined by iSixSigma, standardized work is the most efficient method to produce a product (or perform a service) at a balanced flow to achieve a desired output rate. It breaks down the work into elements, which are sequenced, organized, and repeatedly followed.
There are several benefits shops can gain from standardizing processes. The following are just a few:
- Reduced re-work due to errors in the production process or between operators
- Reduced wasted time looking for tools, documents, or required inputs to complete tasks
- Better, more comprehensive, training procedures for new staff and retraining of existing operators
- Improved quality, if implemented throughout the production process and focus on quality at the source
Many shops are experiencing these and other benefits of standardized processes. Hard Milling Solutions (HMS), a shop featured here in Modern Machine Shop, standardized its parameters for specific material and cutting tool combinations to manage a highly varied workload with minimal labor. “Our primary goal with this system is to ensure every programmer cuts the same way, and gets the same results,” Corey Greenwald, owner of HMS, tells Modern Machine Shop. “We want customer needs to dictate what comes out of this company, not the experience and ability of any one individual.”
Quality Industries (QI), a metal fabricator based in La Vergne, TN, have seen the benefits of standardized work processes across several business areas. “For QI, the move to standardized work created positive scenarios and brought both obvious and underlying benefits to the business,” the fabricator says here on its website. Below are just a few of the ways QI has made standardization work in its operations:
- Process Documentation for All Shifts. Historically, many of QI’s productive processes were understood only inside the heads of experienced team members. Creating precise documentation to supplement and replace this “tribal knowledge” helps the fabricator to critically evaluate each manufacturing process to ensure that the most productive sequences and work practices were being documented. In addition, the documentation ensured that a given process could be duplicated on all shifts, and in all work cells and departments.
- Reductions in Variability. Once production processes were standardized, variability in product characteristics and quality was greatly reduced. While slight variations still existed due to different machine types, makes or models or tooling types, QI says most of these variations were eliminated because of the achieved consistency of steps and sequences in both material work and downstream activities. This aspect of Standardized Work also delivered tremendous value to the customer, who could rely on consistent finished goods.
- Easier Training for New Operators. In any manufacturing environment, bringing new personnel up to speed quickly is a challenge. For QI, standardized work and well-crafted documentation simplified the process. The best process documents not only spelled out steps in clear language, but were also highly visual—with images, charts, drawings and any other helpful illustrations. This training resource provided a continuous reference for the operators and enabled a new communication system for the team. In the QI shop floor environment, team leaders and others from outside the department were able to determine the level at which each operator is qualified on machines, work cells, and specific operations.
In today’s fast-paced market, process control is essential for shops that want to stay competitive and maintain the high quality customers demand. As stated in the industry brief, “Strategies for Improving Workflow and Eliminating Bottlenecks in Industrial Metal-Cutting,” today’s industrial metal-cutting companies can’t afford costly mistakes that can slow down or stop production. By implementing standardized work processes, many shops are finding they can not only increase productivity, but reduce variable(s?) variable overhead? and improve several other business areas that contribute to the bottom line.
Are your shop’s metal-cutting work processes standardized?
December 10, 2016 / best practices, customer delivery, maintaining talent, operator training, productivity, quality, ROI, skills gap, strategic planning
With all the buzz around connectivity and “smart” factories, it appears as if the manufacturing industry is on the brink of a major shift. Some experts, as we reported here, are calling this Industry 4.0. Even companies in more mature industries like metal fabrication are starting to realize that the demands of today’s customers are not only changing the scope of their work, but the way in which they actually need to do their work.
“Investments in fabricating technology, information systems, and employees will be necessary to stay on top of the growing complexity in the metal fabricating business,” Dan Davis, editor of The Fabricator, says here in a recent editorial. “There’s no other way around it in this world of massive customization in manufacturing.”
While most industry leaders understand the capital and technology investments that may be necessary in the near future, many fail to realize the growing importance of investing in employees and, more specifically, in their training. In today’s lean manufacturing world, metal fabricators and other industry metal-cutting organizations have been conditioned to think in terms of efficiency. This means that secondary activities like employee training are often neglected because they don’t directly contribute to the bottom line.
However, as stated in the brief, “Strategies for Training and Maintaining Talent in Industrial Metal-Cutting Organizations,” research shows that investing in areas like training can provide a host of benefits, including better quality, faster on-time customer delivery, higher revenue per operator, and lower rework costs. “Put simply, companies can’t afford to neglect one of its greatest assets,” the brief states. “By investing resources into the workforce, industrial metal-cutting leaders can better equip themselves for today, as well as the future.”
For shops that want (or need) to beef up their training programs, an article from Foundry magazine provides some insight on what it takes to create an effective training program. According to the article, training programs should include a strong combination of education, engagement, and use: “Training must educate by teaching skills, transferring knowledge, cultivating attitudes and hitting other specific targets. But training that is purely educational doesn’t get results. That is why training must present information in ways that are engaging, interactive and require the learner to think and use the information learned.”
The article goes on to describe a method often used in training known as VAK Attack. VAK is an acronym describing the three ways people learn, as spelled out below:
- Visual learning happens when people watch materials that can include videos, PowerPoints, charts and other visual elements.
- Auditory learning happens when people learn by listening to people who might be other trainees, compelling trainers, visitors and others.
- Kinesthetic learning happens when people get out of their seats and move around as they take part in work simulations, games, and other meaningful exercises.
According to the Foundry article, effective training should include all three of the VAK principles so that employees can better learn and absorb the information presented. The author also suggests hiring an outside trainer to ensure long, impactful results. (You can read the full article here.)
It would be hard for anyone to ignore the advancements of the manufacturing industry; however, too many companies are ignoring the role employees play in today’s increasingly complex production environments. By investing in employees and their training, today’s metal fabricators can prepare for the future and, more importantly, stay competitive today.
How is your fabrication shop investing in employee training?
December 5, 2016 / best practices, bottlenecks, continuous improvement, industry news, operator training, Output, productivity, Safety, workflow process
Workplace safety is a priority for nearly every manufacturer. However, when industrial metal-cutting organizations need to do more with less to stay competitive, safety priorities can sometimes fall to the wayside—creating severe and costly consequences for workers and businesses alike.
Here’s the good news: According to OSHA’s “Survey of Occupational Injuries and Illnesses,” private industry employers reported 48,000 fewer nonfatal injury and illness cases in 2015 compared to the prior year. Unfortunately, the bad news is that the manufacturing industry had the highest proportion of accidents. As reported by OSHA’s Severe Injury Reporting Program, manufacturing accounted for 57% of all amputations and 26% of all hospitalizations, closely followed by construction, transportation, and warehousing. In addition, of the Top 25 industry groups reporting severe injuries, architectural and structural metal and fabricated metal product manufacturing came in at 17 and 20, respectively.
Of course, workplace injuries come with a cost—not only to employees’ health but to businesses as well. According to the 2016 Liberty Mutual Workplace Safety Index, the most disabling, nonfatal workplace injuries amounted to nearly $62 billion in direct U.S. workers compensation costs. That’s more than a billion dollars a week.
Workplace injuries also create production inefficiencies. As reported in the white paper, Accounting for Operator Inefficiencies in the Metals 2.0 Environment, a cleaner, safer work environment is a more productive, profitable environment. Often times, safety incidents may be rooted in issues such as lack of training, an unorganized shop floor, or poor workflow layout and ergonomics. Neglecting safety issues can lead to reduced output and, ultimately, a lower profit.
One way manufacturers can reduce workplace injuries is to not only make safety a priority, but to create a culture of safety throughout the organization. Tire manufacturer Goodyear, for example, reduced worldwide incident rates by 94% by creating an engaged safety culture in 49 facilities across 22 countries for its 66,000 workers.
In an interview with New Equipment Digest, Michael Porter, Global Environmental Health & Safety Director at Goodyear, said the key to building this type of culture is integration from the top down. “Starting from the highest levels of the company, we tie our EHS strategy down into our company’s overall strategy roadmap,” Porter explained. “Then that cascades down into how we operate on a manufacturing level.” This, he adds, includes everything from workforce organization and equipment care to continuous skills development.
To help create a culture of safety, there are a few strategies metal service centers can consider. Dave Stauffer, director of SBM Management, recently told attendees at the 2016 Safety Leadership Conference the eight building blocks his company has used to create a culture of safety in its 500 operating locations. The following are SBM’s top four strategies (You can read all eight here, as reported by EHS Today.):
- Employee observations. Coach and mentor employees to validate that they are doing their jobs safely. Ensure employees are wearing their personal protective equipment (PPE). Observe employees to make sure they are working effectively.
- Safety engagement. Establish rapport with employees to help reduce unsafe conditions and at-risk behavior in the workplace. Actively involve all employees in the health and safety of the workplace. Verify employees are engaging in the correct safety behavior.
- Employee recognition programs. Reward employees for safe job performance. Reinforce and recognize positive work culture. Celebrate employee successes.
- Interactive audits. Supervisors and managers should complete the observations daily and document them. Engage in conversation about safety and assure each employee has the skills, knowledge and training to perform their job safely.
The Metal Service Center Institute also recognizes the importance of safety and recently partnered with the National Safety Council (NSC) to release new safety resources optimized for the metal industry. The new tools include:
- Access to NSC safety reports
- Local access to the NSC’s Advanced Safety Certificate program
- Resources and approved model programs to help members create their own safety programs
While there is no magic formula for creating a “zero-incident” service center, industry leaders are taking steps to ensure their operations are safe. Creating a culture of safety can help identify and eliminate process bottlenecks, improve production, avoid costly injury implications, and most importantly, keep operators and workers safe.
What safety programs do you have in place at your metal service center? Do you consider your center to have a culture of safety?
November 30, 2016 / best practices, continuous improvement, Cost Management, industry news, LIT, operator training, preventative maintenance, ROI, strategic planning
In today’s challenging market, any edge you can carve out against the competition is beneficial. While traditional improvement strategies such as lean manufacturing, ongoing training, and preventative maintenance can help improve your operational success, top performers are looking beyond long-established methods to differentiate themselves from their competitors.
According to the brief, “Resource Allocation Strategies for Leading Industrial Metal-Cutting Organizations,” industry leaders understand the importance of thinking outside the box. “In the spirit of continuous improvement, best-in-class managers need to explore all of the ways they can save their operation time and money,” the brief states.
Enter sustainability—the latest initiative manufacturers are using to reduce costs and gain a competitive advantage. Whether implementing strategic energy plans or adopting more environmentally friendly processes, today’s industrial manufacturers are finding that “going green” can provide bottom-line savings.
For example, according to The U.S. Green Building Council report, LEED in Motion: Industrial Facilities, more than 1,755 industrial facilities have received a voluntary green building certification system called LEED – Leadership in Energy and Environmental Design. As stated here in a blog from Frost & Sullivan, experts believe that the operational efficiencies gained by following LEED building principles are real and measurable.
Take Fiat Chrysler’s Trenton South Engine plant as an example. The Michigan-based facility was the world’s first engine plant to achieve a Gold LEED rating, which has helped cut the plant’s annual CO2 emissions by 12,000 metric tons, reduced energy consumption by 39%, and saved about $1.6 million a year.
Ball and roller bearing manufacturers are following suit. For the last 17 years, industry leader SKF has been listed as one of the most sustainable companies by the Dow Jones Sustainability World Index (DJSI). “Our long-running inclusion in the DJSI is something that we are all very proud of within SKF,” stated Rob Jenkinson, director of corporate sustainability at SKF. “Sustainability issues for businesses have evolved during this period, with an ever increasing focus on reducing negative environmental impacts and doing more for society as a whole. We maintain our focus on understanding these issues and the role we can play to help address them—now, and in the future.”
New Hampshire Ball Bearings, Inc. (NHBB) is also focused on sustainability as a strategy and has a formal Energy Management Plan in place. “Energy management is at the core of our strategy to achieve sustainability because it is so vital to our long term health,” the company says on its website. “Rapid economic growth, especially in the developing world, is expected to increase global energy consumption 40% by 2035. The expected increase in energy costs and the potential for supply disruptions compels us to identify and implement aggressive energy efficiency improvements.”
Instead of embracing sustainability as something that’s just “good to do,” more and more manufacturers are realizing that there are practical short-term and long-term financial benefits to implementing environmentally conscious improvements, according to a blog from the Manufacturing Extension Partnership (MEP). The industry group lists five key business advantages to adopting sustainable practices. The following are the top three: (You can read the full list here.)
- Reduce Energy-Related Costs. Energy and water costs are a prime concern for manufacturers. Focusing on improvements can reduce these expenses, typically on an annual basis. In addition, switching to energy-efficient lighting and adjusting lighting levels in accordance with your production schedule will reduce your long-term electrical costs. Regular equipment inspections can also prove beneficial.
- Attract New Customers and Increase Sales. Green and sustainable practices can make your company more marketable. Consumers are more conscious of the environment, and making improvements will strengthen your reputation. Whether you’re an OEM or a supplier, highlighting your initiatives to the public will help you attract a whole new base of customers, resulting in increased sales.
- Tax Incentives. There are a variety of tax credits and rebates on both the federal and state level for manufacturers who proactively implement more sustainable improvements. There may be incentives available to your business. Check out the U.S. Department of Energy’s website and the Database of State Incentives for Renewables & Efficiency.
Of course, the bigger picture benefit of sustainability is its positive impact on the environment. However, as Fiat, SKF, NHBB, and many other industrial manufacturers are discovering, developing and integrating a detailed sustainability vision into your long-term strategic plan can have real, measurable business advantages that contribute to the bottom line.
November 1, 2016 / continuous improvement, industry news, maintaining talent, operator training, resource allocation, ROI, skills gap, strategic planning
Although recent reports paint a brighter picture of U.S. industrial manufacturing, many companies are still unsure of what the future will bring—and how to prepare for it.
The first half of 2016 didn’t start off strong for industrial manufacturing. Industrial production was essentially unchanged in the first quarter of 2016 and then fell at a 1% annual rate in the second quarter. However, conditions made a turn in the right direction in third quarter when industrial production rose at an annual rate of 1.8 percent—the first quarterly increase since the third quarter of 2015.
Recent data continue to show good overall conditions. The Institute for Supply Management’s Report On Business, for example, states that activity in the manufacturing sector expanded in October, and the overall economy grew for the 89th consecutive month. Specifically, the October PMI registered 51.9 percent (a reading of 50 or higher indicates growth), an increase from the September reading of 51.5 percent.
Unfortunately, ISM’s report wasn’t all good news, especially for the metals sector. Just like in September, both the Primary Metals and Fabricated Metal Products sectors reported contraction in October, although one survey respondent from the Fabricated Metals Products sector stated, “Business is much better.”
With the year drawing to close, what does all of this mean for industrial metal-cutting companies? As executives evaluate performance and look to strategize for the future, the question of whether or not to invest in information and technology advancements will likely be at the forefront of discussion. With terms like “machine-to-machine communication” and “Internet of Things” flying around, many companies are trying to discern whether or not these ideas are truly worth the investment, or if they are nothing more than “buzz words.”
As stated in the white paper, Tackling the Top 5 Challenges In Today’s Metal-Cutting Industry, today’s uncertain market requires managers to carefully and strategically determine whether or not allocating resources to automation and technology will offer a true return on investment. Based on some recent reports from industry experts, technological investments are not only worth it, but necessary for future success, regardless of economic conditions.
A recent article from PwC put it this way:
“Manufacturing may be facing some headwinds, but it’s undeniably in the midst of a technological renaissance that is transforming the look, systems, and processes of the modern factory. Despite the risks — and despite recent history — industrial manufacturing companies cannot afford to ignore these advances. By embracing them now, they can improve productivity in their own plants, compete against rivals, and maintain an edge with customers who are seeking their own gains from innovation.”
Of course, this type of transition is easier said than done. There is a lot to consider before companies start planning, strategizing, and investing in what many are calling “Manufacturing 4.0.” To help give companies a little perspective, the Manufacturing Leadership Council has identified six critical Issues facing the manufacturing industry as it undertakes the journey toward an information-based future. Described in detail here, these issues include the following:
- Factories of the Future. Large and small manufacturers, in both process and discrete manufacturing, must now understand and embrace the potential of new and evolving production models, materials and technologies along the journey towards Manufacturing 4.0 to help them create more autonomous, flexible, connected, automated, intelligent, reconfigurable, and sustainable factories and production models for the future.
- The Integrated Manufacturing Enterprise. To maximize the potential of Manufacturing 4.0, manufacturers of all sizes need to actively transform traditional, inhibitive functional silos to create more integrated, cross-functional, collaborative enterprise structures, both within and beyond their organizations. These structures must be supported by new digital thread technologies that stretch across the value chain from ideation, to product end of use.
- Innovation in Manufacturing. Manufacturers must now successfully develop and manage rapid, continuous, collaborative, and often disruptive innovation processes across the enterprise to drive growth, new products and services, operational efficiencies, and competitive success in the world of Manufacturing 4.0.
- Transformative Technologies. Manufacturers must learn how to identify, adopt, and scale the most promising M4.0-enabling technologies in order to achieve greater agility and competitiveness and to drive innovative new business models and better customer experiences.
- Next-Generation Manufacturing Leadership & the Changing Workforce. Manufacturing 4.0 requires manufacturing leaders and their teams to become more collaborative, innovative, and responsive and to make decisions based on a greater understanding of manufacturing’s role in company strategy. That means leaders must embrace new behaviors, structures, and strategies. And they must transition the talent within their organizations by identifying, attracting, developing and retaining the next generation of people and skills.
- Cybersecurity. In the face of increasing vulnerability to external cyber threats and potential internal disruption, manufacturing companies must identify the most effective cybersecurity processes and technologies and create a culture that will ensure operational continuity, data security, and IP protection.
While the industry still has a way to go before Manufacturing 4.0 becomes mainstream, there is no question that technology is changing the manufacturing landscape. Today’s economic conditions may be uncertain, but industrial metal-cutting companies need to ask themselves if they’re willing to do what it takes to prepare for whatever the future holds.