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performance metrics

2017 Industrial Metal-Cutting Outlook

April 1, 2017 / , , , , , , , , , , , ,


While no one would likely call it a “boom,” recent months have provided good news for industrial manufacturing. Reports have been positive, and business confidence among metal-cutting companies and other industrial manufacturers is up. Experts admit that some challenges and risks remain, but most believe that growth will continue in 2017 and well into 2018.

Seeking Stability

There is no question that uncertainty has plagued the manufacturing sector for the last several years. Hints of recovery followed by sluggish growth have made it hard for many companies to trust that business was fully rebounding. Last year, terms like “cautiously optimistic” were being thrown around, but many were still wondering — “Are we there yet?’”

Reports and forecasts indicate that we are at least heading in the right direction—both globally and within the U.S. The JP Morgan Global Purchasing Managers’ Index (PMI) has remained above the neutral 50.0 mark throughout the past 13 months and registered 53.0 in February and March—its highest level in 69 months. According to the bank, the expansion in March “remained broad-based by product type, with PMI readings for the consumer, intermediate, and investment goods sectors all signaling further solid growth.”

Forecasts from Manufacturers Alliance for Productivity and Innovation (MAPI) also point to growth, although slower than some would like. According to the latest outlook, manufacturing growth is expected to be 1.2% in 2017 but then accelerate to 2.6% in 2018. Average annual manufacturing output growth is expected to be 1.5% between 2017 and 2020.

Recent data show U.S. manufacturing expanded in March, following a very strong February. The Institute for Supply Management Purchasing Managers’ Index (PMI) hit 57.2% in March, a 0.5 percentage point reduction from a record-setting 57.8% in February 2017. Of the 18 manufacturing industries, 17 reported growth in March, including Fabricated Metal Products and the Primary Metals industries. According to one survey respondent from the Fabricated Metals segment: “Regional business is strong. Hiring qualified team members has improved.”

Cliff Waldman of MAPI says that March data adds to mounting evidence that U.S. manufacturing output performance is on track for moderate improvement, relieving the factory sector from the sluggish growth that has plagued it since 2013. “Data on actual manufacturing output from the Federal Reserve are basically in sync with the recent ISM data as they show an acceleration of growth in U.S. manufacturing since the beginning of 2017,” Waldman said in a blog post. “However, the year-over-year improvement thus far is moderate. Nonetheless, the reasonably broad-based nature of factory sector growth in both January and February suggests growth stability.”

Steel Confidence

Business confidence among industrial metal-cutting companies and other manufacturers is also up. The first-quarter Manufacturers’ Outlook Survey from The National Association of Manufacturers (NAM) revealed that manufacturers’ optimism rose to a new all-time high in the survey’s nearly 20-year history.

According to NAM, the rising confidence stems from the hope that the new administration in Washington, D.C. will bring much-needed regulatory relief, as well as tax code reforms and a significant infrastructure package. “Indeed, business leaders are cautiously hopeful that pro-growth policies from Washington will allow the country to emerge from the sluggish expansion seen in the years since the Great Recession,” the association said in the report.

Metal companies are confident as well. According to industry leader ArcelorMittal, global apparent steel consumption is estimated to have expanded by 1% in 2016. Based on the current economic outlook, ArcelorMittal expects global apparent steel consumption to grow further in 2017 by between 0.5% and 1.5%.

In the U.S., Mittal says that apparent steel consumption (ASC) declined in 2016 by approximately 1.0% to 1.5%, driven in large part by a significant destock in the second half of 2016. “However, underlying demand continues to expand and the expected absence of a further destock in 2017 should support ASC growth in the U.S. of approximately 3.0% to 4.0% in 2017,” the company said in its 2016 Annual Report.

Sentiment about customer markets is also positive. Mark Millett, president and CEO of Steel Dynamics Inc., told Modern Metals that he expects growth in the energy sector and continued growth in construction spending, “especially for larger public sector infrastructure projects.”

And although there have been reports that automotive manufacturing peaked in 2016 and will decline in 2017, metals companies don’t seem too worried. AK Steel told MM that a richer product mix, including the premium pricing that can be obtained on newer, more specialized or custom grades, should help offset declines. “Our volumes are going to be fairly stable, and fairly steady compared to what they were last year,” Kirk Reich, AK Steel president and COO, said in the MM article.

Trends to Watch

That’s not to say that companies don’t still have some concerns. In late January, M. Robert Weidner III, president and CEO of the Metals Service Center Institute (MSCI), urged the new Trump administration to take serious and immediate action to restore growth and to help the industrial metals supply chain fully recover from the lingering effects of the Great Recession and government policy.

“The industrial metals sector needs action now,” Weidner said, noting that service center aluminum shipments are registering 20 percent below their pre-Great Recession peak, and carbon steel shipments from service centers are still down 30 percent. “The erosion in the U.S. industrial metals supply chain hurts our communities; erodes local, state, and federal tax revenue; and reduces the pool of well-paying U.S. jobs,” Weidner continued.

The strong dollar and reduced capital spending are also concerns. “Signs of wide, yet modest, improvement in global growth are the key drivers of better performance in U.S. manufacturing,” Waldman of MAPI says. “Unfortunately, the problems of a high dollar, a long-term capital spending malaise, and significant policy uncertainty remain to challenge the magnitude of the U.S. manufacturing improvement, even as the world finally provides much-needed support for U.S factories.”

Many industrial manufacturers also remain risk averse. In a recent PwC survey, only 30 percent of U.S.-based industrial manufacturing senior executives said that their companies were planning to increase spending on information technology in the subsequent 12 months. “There is a remarkable opportunity here,” PwC says in a blog post. “Yet the industrial manufacturing sector remains risk averse, unwilling to spend on new machinery, software, and talent during a period of protracted slow growth and limited proven solution.”

According to PwC, there are six actions industrial manufacturers can take to be more profitable in 2017. You can read the full list here, but the following four strategies are the most applicable to industrial metal-cutting companies:

Of course, a major technology overhaul may not be possible for every shop, but there are always improvements that can be made. As stated in the eBook, Five Performance-Boosting Best Practices for your Industrial Metal-Cutting Organization, thriving in today’s market requires companies to embrace change and focus on continuous improvement in all areas of their business.

“Whether implementing a lean manufacturing tool to improve processes or investing in training to develop people, proactive leaders are focused on making positive changes in their operations so they can quickly respond to today’s changing customer demands,” the eBook states.

Yes, the sentiment among industry players and experts is positive, but that doesn’t mean companies should put improvement activities on the backburner. Industrial metal-cutting organizations that keep a close eye on mega trends while continuing to optimize their internal operations may not only do well in 2017, but exceed expectations.

performance metrics

A Closer Look at the Value of Your Machine Shop’s Equipment

March 20, 2017 / , , , , , , , , , , , , , ,


As we reported in a previous blog, capital spending among machine shops and other metalworking companies has been down for the last several years. This has been largely due to an unstable marketplace and low business confidence among shop owners. The good news is that industry reports suggest a rebound in the near future.

However, this dip in spending has caused many shops to take a closer look at the value of their existing equipment. When new equipment isn’t in the cards—and even if it is—it is important for today’s managers to understand the total cost of running their metal-cutting equipment and, even more so, what their total worth is from an operations standpoint.

Below are just a few ways shops can be sure they are looking at the value—not just the cost—of their existing equipment:

What other factors contribute to the value of your metal-cutting equipment? 

performance metrics

Is Your Forging Operation Ready for Next Generation Lean?

December 25, 2016 / , , , , , , ,


Lean manufacturing is nothing new. Principles based on continuous improvement, streamlining production, and machine efficiency have long changed the way manufacturers operate. Industry leaders like Jorgensen Forge have been using lean manufacturing tools like 5S and Total Productive Maintenance (TPM) for years to lower costs, improve responsiveness, and increase efficiency.

However, as stated in the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization, lean manufacturing is evolving. “Companies that ‘got lean’ years ago are focusing on continuous improvement, and a growing number of high-mix, low-volume operations are tweaking traditional methods to fit their specific situation,” the eBook states.

A recent article series published by IndustryWeek takes this idea further, arguing that lean manufacturing should be evolving. “I am convinced that for Lean to remain relevant as a strategy for improving manufacturing effectiveness it needs to evolve to the point where expert practitioners are NOT needed for most typical Lean transformations,” consultant Paul Ericksen states here in the first article of the series. “Lean shouldn’t be a mystery or black art that is only successfully conducted by an elite group of practitioners. For this to happen, additional Lean concepts, strategies, metrics, processes, and tools need to be developed.”

Specifically, Ericksen argues that the lean evolution needs to go beyond simple “tweaks” and instead, should change its current emphasis on waste elimination to one of total business performance (i.e., revenue). He calls this Next Generation Lean.

You can read through the details of Ericksen’s entire theory here by accessing the full seven-part series, but below is a summary of some of his major points, as detailed in the fourth article:

While Ericksen’s theory may or may not make sense for your shop, one key point is worth noting: Your approach to lean manufacturing should be continuously improving and evolving right alongside your operation. If your forging operation has been using lean manufacturing tools for years, perhaps it’s time to re-evaluate and reconsider how those tools could better serve your company.

performance metrics

A Look at Industry 4.0 in Your Fabrication Shop

October 10, 2016 / , , , , , , , , , , ,


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 traction in the U.S as well.

What is Industry 4.0?
Because it is a newer term, definitions for what comprises Industry 4.0 vary greatly. A report from Deloitte states that there are four characteristics that define Industry 4.0:

  1.   Vertical networking of smart production systems
  2.   Horizontal integration via a new generation of global value chain networks
  3.   Cross-disciplinary “through-engineering” across the entire value chain
  4.   Acceleration through exponential technologies

An article from Forbes defines Industry 4.0 as “a combination of several major technology innovations, all maturing simultaneously, and expected to have a dramatic impact on manufacturing sectors.”  More specifically, the article states that technologies such as advanced robotics and artificial intelligence, sophisticated sensors, cloud computing, and the Internet of Things, are joining together to integrate the physical and virtual worlds.

Simply put, Industry 4.0 is the advent of the long-awaited “smart factory,” in which connectivity and advanced technologies are being used to streamline decisions, optimize processes, eliminate waste, and reduce errors.

Industry 4.0 In Practice
According to the Forbes article, Industry 4.0 has the potential to offer manufacturers three major benefits:

What could this look like in your fabrication shop? EVS Metal, a precision metal fabricator headquartered in Riverdale, NJ, says here in a blog post that Industry 4.0 “will eventually impact the way we fabricate and machine both single items and finished products, from start to finish, including warehousing and shipping, whether we’re manufacturing full production runs, or single prototypes.”

On a small scale, fabricators can start by equipping components and machines with necessary Industry 4.0 features, such as sensors, actuators, machine-level software, and network access to measure productivity of metal-cutting equipment. For example, one metal service center, featured here in a white paper, is using 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.

This, however, is only the beginning. Once a manufacturer starts capturing relevant data from multiple machines, this data can be further analyzed to detect patterns, helping managers forecast and, eventually, automate decision-making processes. In a metal-cutting environment, this might include predicting blade life and equipment maintenance needs, which would essentially turn disruptive, unplanned downtime to more anticipated, planned downtime. This could translate into more jobs completed on time.

The Time is Now
Like any trend, it will take a while for Industry 4.0 to fully take hold. However, many experts are saying that industry leaders are embracing this next generation of manufacturing and, more importantly, are starting to make investments.

A PwC survey encompassing 2000 participants across nine industry sectors has concluded that Industry 4.0 will revolutionize industrial production and that first movers are transforming into digital enterprises. According to the study, 33% of companies say they’ve achieved advanced levels of digitization today, and 72% of companies expect to achieve advanced levels of digitization by 2020.

While no one believes the changeover to Industry 4.0 capabilities will come cheap, more than half of companies in PwC’s survey expect a return on investment within two years. “The payoff will potentially be enormous, as competitive landscapes get redefined,” PwC states. “Industrial companies need to act now to secure a leading position in tomorrow’s complex industrial ecosystems.”

Is your fabrication shop ready to invest in Industry 4.0?

performance metrics

Determining which KPIs to Measure in Your Ball and Roller Bearing Operation

September 30, 2016 / , , , , , , ,


Most companies that have adopted lean manufacturing strategies know the importance of measurement. When a manufacturing operation can quantitatively assess their performance, it can start to make significant improvements and set realistic goals to stay competitive. In fact, according to a series of case studies on high production metal-cutting companies, measurement was noted as a key best practice.

However, metrics are only meaningful if they are tied to strategy. That’s where key performance indicators (KPIs) come into play. Unfortunately, some companies fail to understand the purpose of KPIs and, therefore, are unable to take full advantage of the benefits they can provide. All KPIs are metrics, but not all metrics are KPIs. Understanding the difference is critical.

What are KPIs?
KPIs are the measurements selected by a company to give an overall indication of the health of the business. KPIs are typically dominated by historical, financial measurements, but most experts agree that they are more valuable if they also include operational measurements. Unfortunately, choosing the right KPIs to track isn’t as easy as it sounds and takes careful consideration.

There are hundreds of KPIs that can be measured, but experts suggest that companies focus on a select few. According to the University of Tennessee’s Reliability and Maintainability Center (RMC), manufacturers need to make sure all KPIs are aligned with the company’s business goals and strategy. Tasks should be explicit and all actions should support a larger goal. When it comes to KPIs, it is quality—not quantity—that matters.

Choosing the Right KPI
Because they are tied to strategy, KPIs will vary by organization. However, an article from Red Lion outlines seven of the common production KPIs used on automated plant floors:

  1. Count (Good or Bad). An essential factory floor metric relates to the amount of product produced. The count (good or bad) typically refers to either the amount of product produced since the last machine changeover or the production sum for the entire shift or week.
  2. Reject Ratio. Production processes occasionally produce scrap, which is measured in terms of reject ratio. Minimizing scrap helps organizations meet profitability goals so it is important to track whether or not the amount being produced is within tolerable limits.
  3. Rate. Machines and processes produce goods at variable rates. When speeds differ, slow rates typically result in dropped profits while faster speeds affect quality control. This is why it is important for operating speeds to remain consistent.
  4. Target. Many organizations display target values for output, rate and quality. This KPI helps motivate employees to meet specific performance targets.
  5. Takt Time. Takt time is the amount of time, or cycle time, for the completion of a task. This could be the time it takes to produce a product, but it more likely relates to the cycle time of specific operations. This KPI helps manufacturers quickly determine where the constraints or bottlenecks are within a process.
  6. Overall Equipment Effectiveness (OEE). OEE is a metric that multiplies availability by performance and quality to determine resource utilization. Production managers want OEE values to increase because this indicates more efficient utilization of available personnel and machinery.
  7. Downtime. Whether the result of a breakdown or simply a machine changeover, downtime is considered one of the most important KPI metrics to track. When machines are not operating, money isn’t being made so reducing downtime is an easy way to increase profitability.

Making it Count
For many managers, the above list and the resulting data may feel overwhelming. Others may be so afraid of missing something that they end up measuring more information than necessary. For example, research from the Advanced Performance Institute finds that less than 10% of all the metrics that are collected, analyzed and reported in businesses are ever used to inform decision-making.  That means 90% of the metrics are wasted, or worse, used to drown people in data while they are thirsting for insights.

The question then becomes: How many KPIs are enough? Or, even more so, how much data is too much?

An article from IndustryWeek suggests that companies follow the “Rule of Three,” which involves dividing all KPIs into organizational categories and then focusing on the top three metrics within that category. This is a good way to keep managers focused on improvement without data overload.

If you are still unsure where to place your focus, the University of Wisconsin-Madison recommends that manufacturers in 2016 zero in on KPIs that fall under the following four themes:

As a high production manufacturer, odds are that your ball and roller bearing operation is already tracking some of the above KPIs. However, if that is not the case, now is the time to start identifying a few to measure. If the process feels overwhelming, do some research, ask your supply chain for help, and get started. In the words of quality expert H. James Harrington: “Measurement is the first step that leads to control and, eventually, to improvement.”

performance metrics

How Forges Can Use Cloud-Based Monitoring and other Advanced Technologies to Increase Efficiency

August 25, 2016 / , , , , , , , , , , ,


Any manufacturing executive tracking industry trends will no doubt run across terms like “big data,” “cloud computing,” and the “Internet of Things.” In fact, according to the results of a survey from Deloitte and the Council on Competitiveness, these types of advanced technologies have the power to put the U.S. back on the map as the most competitive manufacturing nation.

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

As a forging executive, however, the question becomes: How does this technology apply to my operation? Or to put it another way: How do these “buzz words” play out on the shop floor?

One technology application, featured here in Forging magazine, gives a good indication of what cloud-computing and connectivity could look like in a metal-cutting operation. Specifically, the article features a cloud-based bandsaw monitoring system that offers three key features:

These are no small benefits. In fact, they fall right in line with two of the strategies listed in the Benchmark Study of Industrial Metal-Cutting Organizations from the LENOX Institute of Technology. According to findings from the study, forges and other industrial metal-cutting organizations can gain additional productivity on the shop floor by investing in smarter, more predictive operations management approaches and by taking a more proactive approach to equipment and blade maintenance. By using cloud-based monitoring to track blade life and machine health status, managers can do just that by anticipating downtime, which, as the study states, “translates into more jobs completed on time.”

Of course, bandsaw monitoring is just one possible application. As we reported here in our annual forging industry forecast, controls and sensors are also being developed and implemented to monitor the forging process in a bid to automatically sense and compensate for any variation in the process. This type of consistency not only boosts efficiency, but could have some major quality benefits as well.

An article from IndustryWeek provides a few more application examples. The article describes how three leading companies are using advanced technologies to connect just about everything and anything—video cameras to monitor workflow process, safety helmets to track employees, and end products to predict reliability—all of which shows that the potential applications are only as limited as a manufacturer’s creativity.

What possible applications could cloud-based monitoring and other advanced technologies have in your forging operation?

performance metrics

How to Effectively Utilize OEE in Your Industrial Metal-Cutting Organization

August 15, 2016 / , , , , , , , , , , ,


As part of the push toward continuous improvement, more and more industrial metal-cutting companies are measuring overall equipment effectiveness (OEE). This is definitely a good trend, as measurement is the first step in making quantifiable change. However, some companies have jumped on the OEE bandwagon without being fully informed, which can cause a lot of misunderstanding and misuse of this important metric.

Knowing what OEE is—and what it isn’t—is the only way to make sure you are using it effectively. The following is a quick primer.

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

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

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

or

Availability x Performance x Quality

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

A plant with an OEE score of 100 percent has achieved perfect production—high quality parts as fast as possible, with zero down time. While that’s ideal, it’s not quite possible in the real world. According to oee.com, studies show that the average OEE rate among manufacturing plants is 60 percent, which leaves substantial room for improvement. Most experts agree that an OEE rate of 85 percent or better is considered “world class,” and many companies use that number as a long-term goal for their operations.

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

How to Use—and not Use—OEE
It’s important to note that OEE is not necessarily a useful metric for every manufacturing operation. “Measuring OEE only makes sense if you are trying to meet a certain demand on a daily basis,” explains Paul Bryant, senior OPEX manager, LENOX Tools. “If you have a problem with yield, then I would definitely suggest OEE.

“If you have a problem with inconsistent production output and/or downtime on a piece of manufacturing equipment, OEE is a great way to measure and identify how to where to improve your operations,” Bryant continues. However, for smaller metal-cutting operations that are more custom and low volume, Bryant says OEE probably isn’t worth measuring.

Bryant also says that a lot of shops use OEE incorrectly. Specifically, he says there are two common ways metal-cutting operations misuse the metric:

  1. Too Focused on the Benchmark. “Everyone knows that world-class OEE is 85%, but too many people get hung up on that number and how their shop compares to it. When I look at OEE, the number doesn’t mean much to me. I look at three components—availability, performance, and quality—and then break them apart and look for opportunities. That is the true essence of OEE: To find opportunities that help keep your machine and production system optimal.”
  2. Too Focused on the Operator. “Another misuse is that people use OEE to measure the operator. OEE is used to measure equipment. If you run into an issue with the metric, look at the machine first. There are so many variables, don’t always assume it is the operator. Once you’ve evaluated the machine, look at the material and then the operator last.”

An article from IndustryWeek (IW) adds that OEE should be used as an improvement measure, not a Key Performance Indicator (KPI). It also states that it is best used on a single piece of equipment or synchronized line.

Finally, if your shop is ready to start measuring OEE but doesn’t know where to start, enlist the help of some key suppliers. As stated in the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Company, many companies don’t possess all of the knowledge, resources, or infrastructure necessary to do in-depth measurement. This is where a willing supply partner can help. In today’s competitive market, there are plenty of equipment and tooling suppliers that are willing to share their knowledge and experience as a free, value-added service.

A Helpful Tool
There is no question that OEE can be misused and misunderstood, but as the IW article reiterates, it is not a “bad metric.” When calculated and applied correctly, OEE can be a very useful tool to help industrial metal-cutting companies quantify and uncover new improvement opportunities.

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

performance metrics

Big Picture Trends Affecting Machine Shops

June 20, 2016 / , , , , , , , , ,


In today’s lean manufacturing world, managers and executives are encouraged to “stay grounded” and find out first-hand what is happening in their operations. As we stated in a previously published blog, improvement decisions can’t be made in an ivory tower. Instead, lean experts advise manufacturing executives to make the time to visit the shop floor—also known as taking a “gemba walk”—so they can see their operation from the front lines.

At the same time, however, today’s competitive market requires leaders to keep a pulse on “megatrends” so they can create innovative, strategic solutions that balance internal efficiency with external demands. In other words, even small shop managers need to be tracking larger scale trends so they can stay competitive and respond to changing customer expectations and an evolving manufacturing industry.

According to Modern Machine Shop, the recent MFG Meeting in Palm Springs, CA highlighted some bigger picture trends that are shaping manufacturing. Below is a summary of three key trends, as reported by Editor Mark Albert:

A contributed article appearing in IndustryWeek echoed similar trends, but zeroed in on the effect “Big Data” will have on manufacturing. “The ability to collect and analyze large volumes of data in economic transactions has revolutionized customer care in the retail and finance sectors,” the article states. “In manufacturing, Big Data will accelerate the integration of IT, manufacturing, and operational systems on the shop floor and lead to better forecasting and understanding of plant performance.”

The IW article also noted the changing demographics of the workforce—a trend of which most machine shops and industrial metal-cutting companies are well aware. According to the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal Cutting Organization, by the year 2020, most companies will have five generations in the workplace. This may certainly create some challenges, but as the eBook explains, managers can also use this demographic mix to their benefit by leveraging the different strengths found within their multigenerational workforce.

“While younger, less experienced workers may lack industry knowledge, they are typically more technology savvy and more willing to embrace new techniques,” the eBook explains. “Seasoned workers, on the other hand, may be resistant to both change and technological improvements; however, they typically have a vast amount of experience and loyalty, and may be able to mentor new employees.”

Of course, these are just some of the big-picture trends affecting machine shops, and many are already responding. As reported in our “Machine Shop Outlook for 2016,” a benchmarking study from Modern Machine Shop revealed that leading U.S. machine shops this year are focusing on workforce training and talent to close the skills gap, improving shop floor practices to optimize processes, and investing in future technology to stay competitive.

How is your shop responding to these megatrends?

performance metrics

Predictive Maintenance Helps Metal Service Centers Reduce Downtime

June 5, 2016 / , , , , , , , , , , , , , , ,


Manufacturers know that downtime results in lost productivity and profits. However, thanks to technological advancements in predictive maintenance, service centers and other industrial metal-cutting companies can nearly eliminate downtime altogether.

Unlike preventative maintenance, which uses anticipated and planned downtime to prevent unplanned breakdowns and minimize cost impacts, predictive maintenance aims to predict breakdowns before they even occur. Software and sensors collect data, and algorithms identify not only the anticipated failure, but also calculate the probable time that failure will occur. This enables companies to repair or replace parts before failure and helps eliminate both planned and unplanned downtime.

Several industries are adopting predictive maintenance as part of their operations. An article from the Harvard Business Review provides a few examples:

The manufacturing industry is also adopting predictive maintenance, but research shows it is doing so at a slower rate compared to others. For example, a recent survey by the Manufacturing Enterprise Solutions Association and LNS Research concluded that manufacturers have some work to do to catch up to current capabilities—only 14 percent of survey respondents said they used manufacturing data in their analytic program.

Of course, building a predictive maintenance program requires both time and money, but many manufacturers are finding that the benefits outweigh the cost. An article from American Metals Market lists just a few of the many potential benefits of using predictive maintenance:

According to the AMM article, several metals leaders are reaping the rewards of predictive maintenance, including:

The trend is also starting to gain traction in industrial metal cutting. The LENOX Institute of Technology’s benchmark study of more than 100 metal service centers and other industrial metal-cutting organizations found that companies are gaining additional productivity and efficiency on the shop floor by “investing in smarter, more predictive and more agile operations management approaches.”

While there is no question that predictive maintenance is proving beneficial in the metals industry and beyond, some companies may be hesitant to adopt the technology due to the investment and the training required for implementation. However, if your goal is to reduce downtime and increase the chances of future success, this may be one technology worth considering.

For more information on predictive maintenance, check out this overview article, which lists common tools and techniques, as well as a video.

performance metrics

Using OEE as a Metric in Metal Forging

May 25, 2016 / , , , , ,


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

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

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

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

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

or

Availability x Performance x Quality

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

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

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

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

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

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

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

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