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predictive management

Benchmarking Resources for Your Forging Operation

February 25, 2015 / , , , , , , , , , , , ,


In today’s market, knowing what your peers are doing is critical to staying competitive. One way to do this is by benchmarking. According to management consultancy McGladery, the use of benchmarking is on the rise as companies look to offset the effects of the uncertain economy by reducing costs and improving effectiveness. “Benchmarking provides an objective analysis of existing business processes and insight into improving those practices, identifying gaps or inefficiencies,” the consultant firm says in a white paper. “It presents a measurement to make informed business decisions against, as well as develop strategies and create initiatives to provide a road map for growth, if not survival.”

However, as this article from iSixSigma explains, benchmarking is not a quick or simple process tool. In fact, the article  lists 18 “vital steps” companies should follow when benchmarking. Unfortunately, many forging operations don’t have the resources to take on their own benchmarking initiatives. The good news is that there are several industry sources that offer companies the opportunity to participate in benchmarking surveys. While it may be tempting to keep your company’s information close, leaders know that no amount of competitor research can replace the value that true comparison can provide.

For forges, there are several external benchmarking resources out there that offer both competitive and strategic data, as well as the opportunity for participation. Whether your goal is to find out how you stack up among your forging peers or if you simply want to gain best practice insight from some manufacturing leaders, here are a few resources that may be useful:

predictive management

Choosing Metrics that Matter for Your Fabrication Shop

January 10, 2015 / , , , , , , , , , , ,


As most manufacturing experts will attest, measurement is the only way fabricators can truly optimize their operations. By choosing the right metrics, today’s managers are able to quantify their successes, identify areas for improvement, and anticipate possible failures.

Unfortunately, knowing what to measure is the hardest part. When it comes to metrics, more is not always better. In fact, the goal should always be quality, not quantity. As this blog post from MESA International says, if you find your shop measuring things like parking space vacancy and food trucks, it’s probably time to re-evaluate.

Choosing the right metrics for your shop needs to be a strategic decision, which means there isn’t a sure-fire formula. However, there are some basic guidelines that can help you gauge if you are at least headed in the right direction. Below are a few tips that may help:

predictive management

How Midsize Metals Companies Can Sustain Operational Excellence

November 15, 2014 / , , , , , , , , , ,


Industrial metalworking companies, like other segments of the manufacturing industry, are constantly looking for ways to achieve operational excellence. Case studies, market research, and benchmarking surveys are critical tools for today’s managers as they search for new ideas to improve efficiency, lower costs, and increase profitability. This type of research is especially important for midsize metals companies, which may not have the resources to hire a consultant or take on a large-scale improvement initiative.

However, good ideas won’t actually do any good if they aren’t executed correctly and maintained. The key to truly achieving operational excellence is to sustain it. Otherwise, continuous improvement will start to feel like nothing more than a continuous hamster wheel.

According to a recent report from the National Center for the Middle Market at Ohio State University, sustaining operational improvement is a challenge for most midsize businesses. “In observing dozens of companies over the years, we had been struck by the regularity with which gains are made, then fade,” the authors write in the report, The Operations Playbook: A Systematic Approach for Achieving and Maintaining Operations Excellence. “Even when improvements are significant, it isn’t unusual for a company to end up closer to where it started than at the stepped-up level it enjoyed at the conclusion of a change program.”

To help demystify the issue, the organization conducted a survey of 400 C-suite executives—250 of them from middle-market firms, 150 from larger firms. The authors focused their research efforts on the middle market (i.e., companies with annual revenues between $10 million and $1 billion) because they feel this segment drives U.S. growth and competitiveness.

“When it comes to operations, middle-market companies are the perfect size because they are large enough to institute formal processes but small enough that their leadership is still closely involved in the day-to-day functions,” Dr. Peter T. Ward, Director for the Center for Operational Excellence at The Ohio State University Fisher College of Business, said in a press release. “Leaders can be closer to the work of the business, which helps them to communicate strategic goals, be more involved in developing the skills of employees, and recognize and solve problems as they arise.”

Based on the study findings, the authors concluded that operational improvements tend to last longer when they are comprehensive and systematic. Specifically, the authors suggest that operations should be managed as a four-part system. Each system, along with a set of the report’s suggested strategies, is summarized below.

Problem Solving Subsystem. This system includes the actions taken by the operations team when addressing a problem. Recommended best practices include:

Daily Management Subsystem. This includes the practices leaders use every day to identify possible issues and manage critical activities. Recommended best practices include:

Strategic Subsystem. The focus of this system is to ensure that workers understand the higher level strategy and how it should guide their actions and their priorities. Recommended best practices include:

People Development Subsystem. This system is devoted to equipping staff with the necessary skills and capabilities to fill critical gaps in operations. Recommended best practices include:

By following these operational strategies, the authors state that mid-market companies are on the right path to both achieve and maintain higher levels of effectiveness in their operations. You can read more about the study findings and download the entire report here.

predictive management

Three Low Cost Ways Fabricators Can Improve Output

October 15, 2014 / , , , , , , , , , , , , , , , , ,


Reports continue to show that U.S. manufacturing is on the upswing. According to the latest data from the Institute for Supply Management (ISM), manufacturing continued to expand in October, and new orders posted growth for the 17th consecutive month. The Fabricated Metal Products sector in particular reported growth in October, with one ISM survey respondent stating that “weakness in commodity prices has been very positive”  for business.

All of this good news means that fabricators have a prime opportunity for growth and increased profitability. However, because many companies are already running lean, managers will need to get creative with how they meet increased demand, especially if they can’t afford huge capital expenditures.

Looking for ways to do more with less? Below are three key ways fabricators can increase manufacturing output without breaking the bank:

  1. Identify Trouble Spots. Take an assessment of the factory floor to find machinery that’s either close to failure or not producing as expected.
  2. Estimate your savings. Once you fully understand the impact of the old equipment on your floor, run some calculations.
  3. Find your MacGyvers. Seek out specialists who’ve been handling specific types of equipment for years and see what creative ideas they have to boost efficiency.
  4. Set bounties for difficult challenges. Track each efficiency experiment to get a sense of what may be possible. Then, set bigger targets and attach a bounty to encourage friendly competition among experts.
  5. Raise the stakes. Engage everyone by creating factory-wide incentives for when targets are met.

predictive management

Scheduling Strategies for Fabricators

September 10, 2014 / , , , , , , , , ,


As customer demands for faster delivery increase, one of the biggest challenges fabricators face is scheduling. No matter how big or small an order, it is not uncommon for today’s customer to expect next-day or two-day turnaround. And, of course, there is almost always an expedited request thrown into the mix.

When it comes to scheduling, today’s managers need to be able to adapt on the fly, keep production moving, and still get everything out the door on time. As any manager will attest, this is no small feat. While 99 percent on-time delivery is always the goal, the reality is that a host of variables makes it almost impossible to achieve.

This is especially challenging for high-mix fabrication operations, where there are even more variables to consider. According to the annual Financial Ratios & Operational Benchmarking Survey  from the Fabricators & Manufacturers Association International, many custom fabricators are achieving on-time delivery (OTD) rates between 85 and 88 percent. In other words, there is room for improvement.

As this white paper from the LENOX Institute of Technology (LIT) states, meeting delivery demands starts with having the right equipment and efficient production processes. However, it also means making sure your scheduling processes are helping—not hindering—your operation. Below are a few strategies to help today’s fabricators tackle their scheduling challenges and, hopefully, improve their OTD rates:

predictive management

Tackling the Six Big Losses in Your Metal Service Center

August 5, 2014 / , , , , , , , , , , , , ,


Whether or not you consider yourself a “lean” operation, there are some lean manufacturing principles that are universal to almost every manufacturer. One of those is waste. As a metal service center, your ultimate goal is to turn material into profit as efficiently possible, which means you want to avoid waste and downtime at all costs. And while this isn’t groundbreaking information, many service centers aren’t effectively tackling waste because they don’t know where to start.

Identification of the Six Big Losses is one tool manufacturers can use to understand the most common forms of waste or “loss” within their operations. According to leanproduction.com, the Six Big Losses are key because ”they are nearly universal in application for discrete manufacturing, and they provide a great starting framework for thinking about, identifying, and attacking waste.”

The first step to reducing waste in your organization is to identify your losses. There are six types of loss every manufacturing operation faces, and each fall under three main categories—downtime loss, speed loss, and quality loss.

The following is a brief description of each of the Six Big Losses:

  1. Breakdowns. These are considered a downtime loss and could include tooling failure, unplanned maintenance, and motor failure.
  2. Setup and Adjustments. This is also a downtime loss and could include changeover, material shortage, operator shortage, and warm-up time.
  3. Small Stops. This is considered a speed loss, and it only includes stops that are less than 5 minutes and don’t require maintenance. This might include a blocked sensor or minor cleaning.
  4. Slow Running. This is another speed loss, and it covers anything that prohibits equipment from running at its optimal speed. Incorrect setting of parameters and equipment wear are prime examples.
  5. Startup Defects. This quality loss covers any scarp or rework that occurs during setup or very early in the production phase.
  6. Production Defects. This is the second form of quality loss. This refers to any scrap or rework that happens during the steady-state production process.

Once you have identified the Six Big Losses and the events that contribute to them, the next step is to record and monitor what you find within your operation. The only way to do this effectively is through measurement and documentation. This article from oee.com gives several tips for addressing each loss category and includes helpful links to help you accurately measure your losses.

The final step is attacking your losses and preventing them from happening again. This is where strategy comes into play. In a recent benchmark study of industrial metal-cutting organizations, the LENOX Institute of Technology (LIT) identified three key areas where organizations can gain additional productivity and efficiency on the shop floor. These include the following:

  1. invest in smarter, more predictive operations management;
  2. embrace proactive care and maintenance of saws and saw blades; and
  3. invest in human capital.

To read more about these recommendations, you can download the full report here.

As a service center that cuts and processes metal, some waste and loss are inevitable. However, the only way to keep those losses from hurting your business is to identify, monitor, and attack them, one by one. Add in a little strategy, and you might just be able to turn those losses into opportunities for improvement and growth.

predictive management

Benchmark Survey Helps Industrial Metal Cutting Companies Hit the Mark

July 15, 2014 / , , , , , , , ,


In today’s challenging operating environment, it is critical that managers stay on top of industry trends. Benchmarking what your peers are doing, the latest strategies they are using, and even the pain points they are facing can help you gauge your company’s competitive edge. In fact, management consultancy McGladery, which has strong experience in the manufacturing and industrial arena, says the use of benchmarking is on the rise as companies look to offset the effects of the uncertain economy by reducing costs and improving effectiveness.

In Fall 2013, the LENOX Institute of Technology (LIT) conducted a Benchmark Survey of Industrial Metal-Cutting Organizations to identify key trends happening in industrial metal-cutting – especially among Fabricators, Forges, Machine Shops, and Metal Service Centers. The study surveyed more than 100 companies within this group and collected information on productivity, scrap rates, training programs, safety, and other operational issues.

The survey revealed that there are three pain points today’s industrial metal-cutting companies continue to face, despite industry efforts to improve operational effectiveness. These challenges included machine downtime (35%), blade failure (27%), and operator errors (15%).

The key findings, however, identified how leading industrial metal-cutting companies are addressing these challenges. Based on LIT’s survey results, there are three strategies industry leaders are using to not only tackle their top pain points but, even more so, to optimize their operations. These include the following:

For more information about the results found in LIT’s Benchmark Survey and to download a complete copy of the report, visit the LENOX Industrial Metal Cutting Resource Center.

predictive management

Taking Your Industrial Metal Cutting Organization from On Time to Agile

June 28, 2014 / , , , , , , , , , , , ,


As customers continue to redefine delivery expectations, manufacturers need to have strategies in place to not only meet those changing requirements but, even more so, anticipate them. Getting ahead of customer needs is the key to both retaining and gaining customers in today’s metals industry. As many leading manufacturers are discovering, agility is what sets you apart.

What does it mean to be an agile manufacturer? According to this overview from leanproduction.com, agile manufacturing “places an extremely strong focus on rapid response to the customer—turning speed and agility into a key competitive advantage.” An agile company is able to take advantage of short windows of opportunity and adapt to fast changes in customer demand. This tactic can be especially attractive for industrial metal-cutting companies that are trying to gain an advantage over offshore competitors.

Whether you are a high-production machine shop or a low-mix metal service center, below are a few best practices we gathered to help your industrial metal-cutting organization move from an “on-time” service provider to an agile, customer-focused partner:

 

predictive management

The Importance of Predictive Strategies in Industrial Metal Cutting

April 30, 2014 / , , , , , , , , , , , , ,


A recent report from Gartner continues to build the case that metrics and smarter, more predictive management strategies are critical for industrial metal-cutting companies that want to succeed in today’s competitive landscape. In fact, according to the consulting firm, organizations that use predictive business performance metrics will increase their profitability by 20 percent by 2017.

“Using historical measures to gauge business and process performance is a thing of the past,” Samantha Searle, research analyst, said in a Gartner press release. “To prevail in challenging market conditions, businesses need predictive metrics—also known as ‘leading indicators’—rather than just historical metrics (aka ‘lagging indicators’).”

Gartner said that predictive risk metrics are particularly important for mitigating and even preventing the impact of disruptive events on profitability. The key is for companies to have predictive metrics that contribute to strategic key performance indicators (KPIs); however, Gartner discovered that many companies are failing to do just that.

Metrics vs. Strategic KPIs

After conducting a survey of 498 business and IT leaders in the fourth quarter of 2013, Gartner analysts found that while 71% of business and IT leaders understood which KPIs are critical to supporting the business strategy, only 48% said they can access metrics that help them understand how their work contributes to strategic KPIs. In addition, only 31% had a dashboard to provide visibility into KPIs.

However, according to Searle, even visible metrics won’t help drive strategic business outcomes if business leaders don’t have the right metrics in place. The problem, she says, is that managers often misinterpret the goal of a KPI.

The first thing companies need to realize is that KPIs are metrics, but not all metrics are KPIs. A KPI is a measure that should indicate what you need to do to significantly improve performance—or that indicates where performance is trending—which means it is predictive in nature. However, Gartner’s Searle says many companies don’t have predictive measures in place. “They persist in using historical measures and consequently miss the opportunity to either capture a business moment that would increase profit or intervene to prevent an unforeseen event, resulting in a decrease in profit,” she explains.

If you are still unsure of what qualifies as a KPI, check out this article, which lists five rules for selecting the best KPIs for your manufacturing organization. As the article states, “the key to success is selecting KPIs that will deliver long-term value to the organization.”

Bottom-Line Predictions

The larger lesson here is that in today’s fast-moving market, companies need to anticipate business events—not react to them. From a high level, Gartner is saying that this requires KPIs that are predictive. But what does this mean from a plant-floor level? What type of shop floor metrics can help businesses anticipate business events and provide input into strategic KPIs?

A benchmark study from the LENOX Institute of Technology (LIT) may provide a little insight. The following are two of the study’s key findings:

Both of the benchmark findings are, in fact, key metrics that can help industrial metal-cutting companies better understand strategic KPIs. In this case, we discovered that a proactive strategy like preventative maintenance can help managers plan for downtime and, in essence, allows them to create “predictive downtime,” which can actually improve cutting performance and extend equipment life. This is a much different from “interruptive downtime,” which can hurt performance, reduce on-time customer delivery, and increase material costs.

Based on this example, the KPI might be whether or not an organization is hitting its preventative maintenance schedule or whether or not the cadence of preventative maintenance is increasing or decreasing. For instance, if production was increasing but preventive maintenance measurements were static, it could predict massive failure issues.

Agile Actions

Moving forward, here are a few questions to consider: What metrics are you using to measure business performance? Are they KPIs? Are your management strategies focused on being proactive or reactive? Are there ways you can predict business events such as blade failure and machine downtime?

Answering these key questions may help you determine whether or not your company is on track to increased profitability or at risk for being stagnant. Proactive strategies like the predictive metrics suggested by Gartner and the preventative measures suggested by the LIT study are critical for industrial metal-cutting companies that want improve their agility and, most importantly, their bottom line. Leaders are realizing that they need to act now—not later—if they want to be successful in the future. When it comes to today’s manufacturing landscape, good things will not come to those who wait.

predictive management

2014 Trends Affecting Forges that Cut and Process Metal

April 28, 2014 / , , , , , , , ,


For most of the industrial metal-cutting industry, things are staring to look up. Earlier this month, the World Steel Association released its Short Range Outlook for 2014 and 2015. The forecast projects that global apparent steel use will increase by 3.1% in 2014 and by 3.3% in 2015. Regional projections are also positive. While the U.S. showed a decrease of -0.6% in apparent steel use in 2013, the global association forecasts that apparent steel use in the U.S. will grow by 4.0% in 2014 and by 3.7% in 2015.

However, even with its positive forecast, World Steel expects continued volatility and uncertainty to create a challenging environment for steel companies this year. And many metals executives are feeling that uncertainty. As stated in LIT’s 2014 Outlook for Industrial Metal-Cutting Companies, most industrial metal-cutting companies are only cautiously optimistic about today’s market.

This is especially true of many forging industry executives, who were encouraged by sales increases in 2012, only to be disappointed with no growth and some decreases in 2013. Specifically, the Forging Industry Association (FIA) reports that total industry shipments for the custom impression die forging industry were at $7.313 billion in 2013, down slightly from $7.337 billion in 2012. Meanwhile, 2012 total industry shipments by the custom open die forging industry were 15% below 2012, and shipments for the custom seamless rolled ring forging industry were basically flat. (You can view FIA’s final sales data here.)

As forging executives move into the second quarter, there are some trends unfolding in 2014 that they should be watching closely.  A recent column from IndustryWeek does a good job of describing five higher level trends that are affecting most of the manufacturing industry. These include the following:

On an operations level, there is perhaps one prevailing trend—the relentless push for continuous improvement. In an uncertain market, operations managers are realizing they have no choice but to optimize and become more agile. In some cases, this requires capital investment, but many industry leaders are discovering alternative ways to improve operations. LIT’s benchmark study of industrial metal-cutting companies, for example, identifies three key areas where managers can make improvements without adding new capital expense:

Of course, there is no crystal ball for what 2014 will bring, and as the last few years have taught manufacturing executives, nothing is ever certain. In the end, the key will be for forging companies to strategically consider industry trends (i.e., smaller orders), while also proactively improving what is happening inside their doors.

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