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ROI

Optimizing Your Metal Service Center with Cost per Cut Improvements

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


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

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

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

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

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

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

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

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

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

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

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

ROI

Automation Options for Low-Volume Machine Shops

February 20, 2016 / , , , , , , ,


The question of whether or not to automate is a difficult decision for any operations manager. As we covered here a previously published blog, the challenge is not only ensuring a good return on investment, but also figuring out how to effectively balance the allocation of technology and process automation with shop floor personnel.

In most cases, deciding whether or not to automate is neither a simple nor straight forward process and requires strategy, careful consideration, and a little bit of risk. This is especially true for low-volume/high-mix machine shops. While research has shown that many small manufacturers still believe that automation is reserved for mass production operations, more and more low-volume shops are finding that automation can work for them as well.

According to an article from Canadian Industrial Machinery, just-in-time manufacturing has made automation in low-volume/high-mix a growing trend. “Automation is suitable even for job shops, where the shop owner often doesn’t know what jobs will be running from week to week until an order request arrives,” CIM reports. The key, the article states, is investing in a flexible automation system that can be set up and changed over quickly.

As listed in the white paper, The Top 5 Operating Challenges Facing Today’s Machine Shop Metal Cutting Operations, today’s shops have at their disposal a number of automated metal-cutting options, including:

Another more advanced automation trend that is starting to show up in low-volume shops is collaborative robotics. In fact, ABI Research estimates that the collaborative robotics sector will increase roughly tenfold between 2015 and 2020. The robotic systems, which are designed to work safely in close proximity and cooperatively with human coworkers, are said to save space and money, as well as permit more flexible manufacturing practices.

High-mix/low-volume electronics manufacturer Scott Fetzer Electrical Group (SFEG), for example, has benefited from collaborative robotics. According to a recent article from Fabricating & Metalworking, the robots helped the manufacturer optimize production by 20 percent. SFEG used the robots to take over monotonous and potentially hazardous tasks from employees, who were then reallocated to more rewarding jobs.

“One of our biggest challenges is that we’re a high mix-low volume producer, most of our lines don’t run all the time, so trying to find a way to put robots on the line in the traditional sense was a very big challenge,” Matthew Bush, SFEG’s director of operations, tells Fabricating & Metalworking. “We wanted to build a mobile, flexible robot force. The only way we would accomplish this was with a collaborative robot.” (You can read the full article here.)

Of course, shops don’t have to invest in high-tech robotics to automate their metal-cutting operations. Thanks to software advancements, there are plenty of other tasks that can be automated as well.

As described in another white paper from the LENOX Institute of Technology, one metal-cutting company developed a software system that connects the sawing equipment to  its order-tracking system. Historically, employees would input order information into the company’s system, print out a report, and deliver it to the operator. The operator would then have to reenter the data into the sawing equipment. By creating a communication bridge between the saw and the computer system, the company no longer needs to enter the same data twice. This has not only reduced the chance of human error, it has also eliminated an unnecessary production step.

Is automation a good option for your machine shop? That is a question only you can answer, but the good news is there is a growing number of options available for low-volume operations. In the end, the deciding factor should really boil down to one key question: Will it help you better serve your customers?

ROI

Is Growth a Smart Goal for Industrial Metal-Cutting Companies in 2016?

February 15, 2016 / , , , , , ,


In general, growth is good in business. It means more customers, more orders and, typically, more profit. Growth also typically indicates a healthy market, a stable economy, and increased market demand.

In today’s uncertain market, however, industrial metal-cutting companies are finding that growth might not be possible, and in some cases, shouldn’t even be the goal.

According to the Metal Service Center Institute, December metal shipments and inventory levels for both steel and aluminum declined 11.4% and 21.7%, respectively, from December 2014. In addition, the Institute for Supply Management’s January Purchasing Managers Index rating of 48.2% indicates a contracting manufacturing industry for the fourth consecutive month. (A reading above 50 indicates expansion; below 50 indicates contraction).

This has left many industrial metal-cutting companies unsure about how to grow while balancing fluctuating demand, raw material costs, and shop floor process and machinery improvements. A recent survey conducted by the Fabricators & Manufacturers Association Intl., for example, concluded that small and medium-sized job shops and fabricators are “facing a lot of headwind and uncertainty,” according to a report from The Fabricator. While most of the survey respondents believe their companies will grow in 2016, only 39% were positive and a significant 23% said conditions aren’t getting any better.

The reality is that based on current conditions, growth in the traditional sense probably isn’t going to happen in 2016 for many manufacturers. In fact, according to the article, “Achieving Smart Growth: A Guide for U.S. Manufacturers” from manufacturing.net, growth may not be the healthy—or profitable—path to take.

Before trying to achieve growth of any kind, the article states that manufacturing executives should ask themselves a few key questions:

Once companies answer these questions, the article states that “smart growth” is possible. What is “smart,” however, will look different at every manufacturer, depending on its unique circumstances. For example, a “smart” path for one company could mean maintaining their current size and optimizing operations, while another manufacturer might want to consider making some larger investments to achieve bottom-line growth in the future.

The manufacturing.net article says regardless of the circumstances, there are three key principles all companies should follow for “smart growth”:

  1. Plan. This includes defining objectives, planning how to achieve growth, and identifying risks. Managers should review their plans quarterly and change as needed.
  2. Invest. This includes looking for profit-generating opportunities for your business. Whether it’s through technology or training, managers should actively find new ways to improve the status quo.
  3. Fund. Managers need to find a balance between cash and credit. Relying on cash keeps interest costs away and demands financial discipline. However, relying solely on it can limit a company’s ability to grow when opportunities arise.

As reported in a benchmark study from the LENOX Institute of Technology, many of today’s metal-cutting companies exist because of their ability to survive even the toughest market conditions. However, best-in-class operations know they cannot afford to rest on their laurels. By developing a tactical, healthy “smart growth” strategy, industrial metal-cutting companies can continue to find opportunity, identify areas of improvement, and achieve long-term success, even in uncertain times.

Do you have a “smart growth” plan for 2016? What strategies are you using to ensure success?

ROI

Industrial Vending Machines Help Metal Service Centers Improve Productivity, Save Costs

February 5, 2016 / , , , , , , , , ,


Many technologies have helped advance the manufacturing industry to where it stands today. From the Industrial Revolution in the late 17th Century and Ford’s assembly line for its Model T to robotic automation and the Industrial Internet of Things, new applications and advanced software solutions enable the manufacturing industry to adapt. One such technology—the industrial vending machine—is currently helping the industrial metal cutting industry adapt as well.

Industrial vending machines are based on the traditional machines you know and love, but instead of providing a quick snack, they distribute metal cutting parts, tools, and other consumable supplies (e.g., safety gloves, goggles, metal-cutting blades). The key benefit is streamlined inventory control—the machines keep track of the person or department requesting the part and the time and frequency of requests, in addition to monitoring inventory levels. This can eliminate the need for storage rooms or tool “cribs,” as well as the necessary staff needed to manage them.

With metal cutting companies facing diverse economic conditions and shifting shipment levels, industrial vending machines can help service centers increase operational efficiency and productivity. As reported in this white paper by the LENOX Institute of Technology, resource allocation and efficiency are top operating challenges for metal service centers. Industrial vending machines can help resolve both, while also saving costs.

Below are a few benefits of industrial vending:

Several metal-cutting companies are already reaping the rewards of what industrial vending can bring first-hand. The following are just two examples:

As service centers and other manufacturing operations look to save money and improve efficiency, industrial vending machines are quickly gaining popularity. While they have been more common in larger manufacturing operations over the last few years, smaller shops and service centers are starting to realize that automated inventory control is a fairly simple way to eliminate paperwork, save floor space, streamline purchasing, improve workflow, and, ultimately, save costs.

Could industrial vending machines be an option for your metal service center?

ROI

Bringing Mobility into Your Machine Shop

January 20, 2016 / , , , , , , , , , , ,


As smart phones and other mobile devices become ubiquitous among consumers, it’s not surprising that mobile technologies are also finding their way onto the shop floor. In fact, according to PwC’s 18th Annual Global CEO Survey, mobility is the top technology priority among industrial manufacturing CEOs.

For many companies, the choice to make their manufacturing operation “mobile” is strategic. As a recent article from Forbes explains, companies are designing mobility into new production strategies, processes, and procedures to gain greater accuracy and speed. “Augmenting existing processes with mobility is delivering solid efficiency gains,” the Forbes article states. “The net result is greater communication, collaboration and responsiveness to customer-driven deadlines and delivery dates than has been possible before.”

Of course, how you choose to use mobility in your operation will truly dictate its impact—both positive and negative. There are still a lot of managers who are hesitant to allow mobile devices on the shop floor, fearing that workers will be distracted and less productive. In some cases, those fears are warranted. One machine shop, featured here in Modern Machine Shop magazine, found that it was beneficial to completely ban cell phone use on the shop floor. While some employees resisted the change at first, the ban allowed the shop to avoid a hike in their insurance premiums, increased productivity, and eventually helped improve employee morale.

There are plenty of other ways, however, that manufacturers are using mobility for their benefit. Kawasaki Motors Manufacturing Corp., featured here in a case study, recently replaced its card-based Kanban system with a more efficient electronic method that could better manage its just-in-time parts system. Using tablets and a custom mobile software application, Kawasaki eliminated the waste of 4,500 Kanban cards per day, which ultimately led to $3,500 in operational savings per day and a quick ROI, the article states.

How can your shop incorporate mobility into your operation? LNS Research, a consultancy based in Cambridge, MA, lists nine key ways companies are using mobile devices in manufacturing environments. Below are the top-five uses (you can read the full list of nine here):

 

 

 

If mobility is something you want to bring into your shop, but you aren’t sure where to start, check out the feature, “7 Tips for Taking Your Operation Mobile,” published by American Machinist.

If mobility isn’t on your radar, you may want to reconsider. Slowly but surely, industrial manufacturers are finding that there is indeed “an app for that,” which means your shop may be missing out on some prime opportunities for cost savings or efficiency gains. In fact, according to Mike Roberts of LNS Research: “If you’re not on the path to using mobile apps to better manage your production operations, you’re seriously at risk of being stuck in the past.”

How could mobility help your machine shop function better?

ROI

Industrial Metal-Cutting Companies Find New Technologies Can Be Worth the Investment

December 1, 2015 / , , , , , , , , , ,


Last month, executives from the metal forming, fabricating, and welding industries visited Chicago to walk the aisles of McCormick Place for Fabtech 2015. As to be expected, the trade show featured hundreds of new products and technologies. However, many are saying this year’s show was about more than just the latest gadget.

“A certain excitement permeated this year’s show, and it wasn’t just about this incredibly fast laser, that press brake that eliminates setup time, or that welding power source that connects to the cloud and simplifies welding parameter selection,” writes Tim Heston, senior editor, in a column appearing on thefabricator.com. “It was about how all these technologies and more can work together to make a shop better.”

Indeed, it seems the attitude of Fabtech attendees mirrors what several industrial metal-cutting leaders have found: Investing in new technology isn’t about simply cutting a little faster or reducing set-up time. It is about optimizing processes so that every area of the company can benefit—from shop floor operations and maintenance to quality and finance. As Heston writes: “…a fast laser alone won’t ship a product out the door any faster. Even the smallest shops now are tackling front-office planning, scheduling, and often investing in software to streamline information flow throughout an organization.”

In other words, managers should look at the big picture before adopting any new “groundbreaking” technologies. How will this new technology affect your entire operation? What other processes down the line will be impacted by the benefits of the new technology? Do these other processes need updating as well?

That’s not to say, however, that companies should shy away from investing in new technology. In fact, a recent article from manufacturing.net stresses that cutting-edge technology is critical in today’s marketplace.

“The manufacturing sector is a fast-changing, cut-throat industry,” Martin Hurworth, states in the manufacturing.net article. “Firms who make their living there should be constantly looking to invest in new technologies to make their operations smoother, smarter and swifter, not to mention more cost-effective. In a globalized world, staying at the sharp end has never been more important.”

According to Hurworth, strategic technology investment allows companies to improve in three key business activities:

Jet Cutting Service has found this to be the case. Last year, the industrial metal-cutting company reached a record-setting 1.1. million cut parts in just one month—310,000 more cut parts than it typically produces on a monthly basis. “I would like to believe that our increase in sales is due to investing in the latest cutting technology, which increases our capacity and production capabilities,”  Vice President Mike Baron says in a case study from the LENOX Institute of Technology. “The newer technology also allows us to offer competitive pricing, which has led to many new customers.”

Although Baron admits the financial commitment can be risky, he finds that many technologies are worth the investment. “We need to constantly keep on top of the latest technology out there,” Baron states. “We don’t want to spend extra money, but if it’s going to cut 20 percent quicker than I do now…then we’ll go after it.”

For example, a few years ago, Baron had eight different circular saw blade manufacturers come into his factory to see which blades performed the best. While the process was time-consuming, Baron said it was a huge learning experience for his team and ended up giving him a 20-percent cost savings in the long run.

Will the latest metal-cutting tool or gadget be the answer to all of your operational challenges? Of course not. However, when carefully considered from a strategic, long-term perspective, it could set your company on a growth trajectory you may not have achieved any other way.

What metal-cutting technology investments could positively impact your bottom line?

ROI

Key Considerations for Tackling Large-Part Metal Fabrication

November 10, 2015 / , , , , , , ,


As the market gets more and more competitive, a growing number of fabricators and other industrial metal-cutting companies are diversifying their services to gain an edge over the competition. For some, this might mean adding a value-added service to benefit existing customers, while for others, it might mean investing in equipment and training to serve new customers.

One specialty that could open up new opportunities is large-part fabrication. For shops that have been focused on smaller segments like home appliances and automotive, large-part fabrication could expand the customer base into areas such as agriculture, commercial construction, and aerospace.

Greiner Industries, for example, has spent the last few years investing in new technology to differentiate itself and has now earned a reputation for taking on extremely large and complex fabrication projects. According to an article from The Fabricator, the Mount Joy, Pa.-based Greiner now has the cutting, drilling, and welding capabilities to take on large railroad girder jobs.

“You have to keep looking for opportunities or areas to explore,” Frank Greiner, founder, told The Fabricator back in 2014. “That will never stop. That’s just part of growing.”

Quality Iron Fabricators, another fabrication shop based in Memphis, TN, is currently working on providing structural steel sections that will be used to build a 161-ft rocket test stand that will be used by NASA, reports Modern Metals. Like Greiner, Quality Iron Fabricators has made investments to better serve large-part customers. Specifically, the fabricator has invested in an integrated fabrication system that includes an automated material handling system and software to connect machines to each other. President Brian Eason tells MM that his company is also looking to revamp its production line to make it even more efficient.

“We always strive to get better at everything we do, and this has been a key part to improving our process,” Eason says in MM.

As both examples demonstrate, moving into large-part fabrication offers great opportunity, but it also requires careful consideration and, usually, some investment. If your fabrication shop is considering large-part fabrication, we have gathered the following considerations based on an article from Canadian Metalworking:

Even if large-part fabrication isn’t a good fit for your shop logistically or economically, perhaps it is time to consider taking on some new capabilities to better serve your customers. According to a white paper from the LENOX Institute of Technology, in addition to higher quality and tighter tolerances, a growing number of customers are asking fabricators to provide value-added services. This provides shops with a prime opportunity to differentiate from the competition.

What new services or capabilities could add value to your existing customer relationships and, more importantly, open the door to new relationships?

ROI

Four Changes Ball and Roller Bearing Manufacturers Can Make to Address the Skills Gap

October 30, 2015 / , , , , , , , , ,


After years of focusing on automation and processes, today’s manufacturers are starting to realize the growing importance of allocating resources to the workforce. According to the U.S. News & World Report, it is estimated that more than half a million skilled manufacturing jobs remain unfilled due to the labor skills gap in the U.S., and that number will likely increase as more Americans age out of the workforce. This shortage in skilled production workers—often referred to as the “skills gap”—is forcing managers to rethink how they spend their time and their money.

As explained in a white paper from the LENOX Institute of Technology, there are two reasons for the growing skills gap. “First, a large number of workers are facing retirement in the coming years, which will have a significant impact on shop floor experience,” the paper states. “In addition, reports state that by 2020, companies will have up to five generations in the workforce at once. This unbalanced level of skill and experience in a metal-cutting operation can have a significant impact on both
quality and productivity.”

Michael Collins, president of MPC Consulting, feels one of the root causes of  today’s workforce challenge is the fact that companies haven’t invested in advanced training, either because they didn’t want to or because they didn’t have the money.  “It has been at least 25 years since the alarm was sounded on skills shortages in manufacturing and the threat of retiring baby boomers,” Collins writes in an article published in IndustryWeek. “Just about everyone who follows manufacturing has known about this problem for a long time. So the question is: Why didn’t we invest in advanced skill training before it became a serious problem?”

Collins goes on to suggest that it’s time for manufacturers to learn from their mistakes and to start making changes. Specifically, he lists four ways manufacturers can acquire the highly skilled workers they need. These include the following:

  1. Invest in training
  2. Recalculate the ROI of training
  3. Stop the pursuit of low-cost labor
  4. Demonstrate that manufacturing jobs are a secure career opportunity

Some industry leaders have already started to make some changes. As we reported here, ball and roller bearing manufacturer Timken Co. is working with Apprenticeship 2000, an apprenticeship partnership located in the Charlotte, NC region, to offer technical career opportunities to high school students and employment after graduation.

Pegasus Manufacturing Inc., a Middletown, CT-based fabricator of tubing and parts for jet engines, is taking advantage of its state’s training and efficiency programs. “Our focus on maintaining the workforce here in Connecticut and adding to it, getting the pipeline out of the technical skills system, making sure we have high caliber folks, is really second to none in the United States and probably worldwide,” Chris DiPentima, the Pegasus CEO, told the Hartford Courant. Since participating in the state-wide programs, Pegasus has added 16 jobs to its payroll in less than a year.

In the end, successfully managing the skills gap will require manufacturing executives to take a hard look at how they are investing in their workforce, whether that means investing money into advanced training programs or investing time into seeking apprenticeship opportunities. Companies that fail to make real, active changes now may find themselves dealing with bigger, bottom-line challenges in the future.

How is your company actively tackling the skills gap?

ROI

MTConnect Helps Boost Production for Metal Fabricators

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


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

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

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

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

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

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

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

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

ROI

Can Your Service Center Be More Environmentally Friendly?

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


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

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

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

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

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

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