root cause analysis
June 1, 2015 / bottlenecks, Cost Management, KPIs, LIT, operations metrics, performance metrics, productivity, quality, resource allocation, root cause analysis
With market demand finally on the rise, industrial metal cutting companies need to keep up. However, there is only so much managers can optimize through traditional lean practices and proven technology. While automation has helped create new efficiencies across many industries, including metal cutting, most experts believe the factory of the future lies in “smart” manufacturing.
As reported in this blog post from LENOX Institute of Technology (LIT), “smart” manufacturing technologies such as the Internet of Things (IoT) and real-time data are poised to transform the way manufacturers improve operational efficiency and productivity. In fact, according to an IDC Manufacturing Insights survey, manufacturers expect IoT to lower operational costs, increase the potential to retain and attract customers, improve service and support, and further differentiate themselves from the competition. [LINK].
Traditionally, monitoring shop floor operations in real-time has been cost prohibitive. However, with the prevalent availability of new technology, a growing number of manufacturers are investing in hardware adapters and software upgrades, with hopes of a big return.
As this Fabricating & Metalworking article points out, the potential return on investment is huge. For example, only 5 percent of the estimated 64-million computer numerically controlled (CNC) machines around the world are currently connected to the industrial Internet. However, if the remaining machines were connected and started reporting data, they could contribute a staggering $15 trillion to the global GDP by 2030, according to research by GE.
But can “smart” and connected manufacturing facilities really drive performance—and, —ultimately, drive profits—for industrial metal cutting companies? In the Fabricating & Metalworking article, author David McPahil says, “yes.” According to McPahil, “smart” manufacturers have seen positive results in key performance indicators like overall equipment effectiveness (OEE). Below are several ways connectivity can positively affect the three ratios used to calculate OEE:
- Ratio 1: Availability. With an integrated manufacturing execution system (MES) and machine-to-machine (M2M) communications, McPahil claims shops can see the largest and quickest improvement in availability. Run times increase as the connected machines measure idle time and categorize it per machine. With real-time data, workers can find and eliminate root causes almost immediately with improved accuracy.
- Ratio 2: Quality. A connected shop also helps increase quality by measuring outputs and, for example, keeping track of the number of cuts a certain blade has made. As each machine communicates with the rest of the factory, consistency improves across the entire operation, McPahil notes.
- Ratio 3: Performance. A typical manufacturer believes its overall OEE score is approximately 65 percent; however, McPahil says “smart” operational benchmarks reveal they are actually between 30 to 40 percent. If MES is used to optimize the floor, OEE scores often soar within a few months—some even reaching world-class status of 85 percent.
It’s important to note that getting “smart” doesn’t always require brand new, high-tech equipment. As described in a recent white paper from LIT, one metal service center developed an internal software system to automatically track the number of square inches processed by its existing sawing equipment. At any point, the manager can go to a computer screen, click on particular band saw or circular saw, and see how many square inches each saw is currently processing and has processed in the past. This allows the service center to easily track trends and quickly detect problem areas.
Of course, upgrading to a “smart” manufacturing operation does require some investment, but it often has a high return. If you haven’t already made the jump to add connectivity to your industrial metal-cutting operation, it may be worth looking into—and soon. As many “smart” companies have discovered, the results are both measurable and promising.
root cause analysis
May 25, 2015 / benchmarking, best practices, continuous improvement, customer satisfaction metrics, KPIs, LIT, operations metrics, performance metrics, predictive management, preventative maintenance, productivity, root cause analysis
Benchmarking, peer reviews, and ongoing analyses are considered universal best practices among leading organizations, regardless of industry or industry segment. However, in today’s competitive marketplace, companies need to know more than where they stand among their peers; they need to know where their company is headed.
In other words, today’s leading manufacturers must be proactive in their strategic approaches, not reactive. That’s why a growing number of forges are now transitioning to using predictive operations management strategies, allowing them to not only measure performance, but to also predict and prevent future challenges. Based on research, this approach is paying off for many companies.
For example, the LENOX Institute of Technology’s Benchmark Survey of Industry Metal-Cutting Organizations found that investing in smarter, more predictive operations management could result in additional productivity and efficiency on the floor. The study, which surveyed more than 100 industrial metal-cutting companies, found that 67 percent of industrial metal-cutting operations that follow all scheduled and planned maintenance on their machines also report an upward trending job completion rate that their job completion rate is trending upward year over year—a meaningful correlation. The implication is that less disruptive, unplanned downtime and more anticipated, planned downtime translates into more jobs being completed on time.
Manufacturers are also benefiting from more advanced, data-based predictive management strategies. As reported here, research from Aberdeen Group shows that 86 percent of top performing manufacturers are using predictive analytics to reduce risk and improve operations, compared to 38 percent of those companies with an average performance and 26 percent of those with less then stellar results. The research firm also notes that companies that use analytics to measure their data can more easily obtain a “big picture” of their operations, identify risks, and figure out where to focus their efforts.
According to Aberdeen, these best performing companies also report 18 percent higher overall equipment effectiveness and 13 percent less unscheduled asset downtime compared to the lowest performing organizations. The following are a few other traits the top performers have in common, according to the research:
- Invest in technology. Top performers automate the collection and sharing of data to support predictive decision-making.
- Identify risks. Top performers pinpoint high-risk plant assets and production processes, establish a threshold value to monitor the risk, and notify employees if the value deviates.
- Plan ahead. Top performers develop company strategies to ensure that predetermined thresholds remain accurate.
- Prioritize. Top performers identify and fix problem areas.
- Constant measurement. Top performers continuously track improvements in risk management by comparing current performance against baseline measures.
So how does your forging operation measure up to these “top performers?” Are you simply responding to operational challenges, or are you equipped to identify risks before they negatively impact your bottom line?
By following a strict preventative maintenance schedule or using advanced tools like data analytics, today’s forges can easily identify hidden problem areas or looming operation failures. As research shows, these types of predictive operations management practices can help you reduce risk, improve productivity, and maybe even make you a top performer among your forging peers.
root cause analysis
May 20, 2015 / bottlenecks, continuous improvement, Cost Management, customer delivery, lean manufacturing, LIT, root cause analysis, workflow process
Successfully operating and managing a machine shop is no easy task. Despite a slowly growing economy, the challenges facing today’s machine shops are no less than they were before. In fact, this white paper from the LENOX Institute of Technology describes the top five operating challenges a machine shop faces in its metal-cutting operations—challenges that are universal to every operation, regardless of market conditions.
According to the white paper, the top challenge for most shops is process and workflow bottlenecks. In most cases, lean practices are a huge part of the solution. Successful managers know that in order to achieve overall success, you need to actively identify and solve production issues.
This doesn’t come easy or naturally for every shop manager, however. As Wayne Chaneski says in this Modern Machine Shop article, “It’s surprising to me the number of business owners, division heads, operations managers, and even department supervisors who just don’t know what is going on in their areas of responsibility. To such people, I have a simple suggestion: Find out!”
Put simply: Identifying the problem is the first step. The next step is finding the cause and fixing it—permanently.
One lean manufacturing tool that many shops find helpful is root cause analysis. According to LeanProduction.com, root cause analysis is a problem-solving exercise that focuses on solving the underlying cause, not just the symptoms. There are several techniques that can be used when conducting a root cause analysis, including the following:
- The Five Whys. This strategy suggests that you ask the question “why” five times with the notion that each time you ask the question, you move a step closer to discovering the root of the problem. By repeatedly asking “why,” you discover the cause and effect of the issue.
- Fishbone Diagram. This graphically depicts the results of the Five Whys. Known as a fishbone because of its shape, the diagram shows an arrow with the cause on the left and effect on the right, with various factors stemming from the cause that affect the overall problem.
- Barrier analysis. This exercise controls various factors to identify the barriers related to a particular outcome. The idea is that the barriers either prevent or detect the problem and the barrier that fails is considered the root cause.
For more information on root cause analysis, check out this article from the American Society for Quality (ASQ), which includes an educational video from ASQ Fellow Jim Rooney.
It goes without saying that there are many tools that can be used to attack the common workflow challenges a metal-cutting operation encounters on a daily basis. However, a root cause analysis is one tool that can help shops uncover “hidden” problems before they turn into a full-blown issue that effects your production, your product, your deliveries, and, most importantly, your bottom line.
root cause analysis
May 10, 2015 / agility, best practices, continuous improvement, Cost Management, lean manufacturing, LIT, productivity, root cause analysis, strategic planning, workflow process
Lean manufacturing is nothing new for industrial metal cutting companies. Principles based on continuous improvement, streamlining production, and machine efficiency have long changed the way metal fabricators operate. What has changed, however, is customer demand.
Today, fabricators simply must do more with less to stay afloat—cutting more in less time. For high-mix fabricators and sawing operations, the increased challenge is nothing less than daunting. With a few improvement techniques, however, increased productivity is tangible even for the most customized job and machine shops.
If you are a high-mix fabricator, below are a few strategies to help you operate as efficiently as your higher volume counterparts:
- Get on a schedule. An unscheduled fabrication shop is at the mercy of its orders, which puts customers, employees, and the bottom line at risk. According to a recent column in The Fabricator, a principle called Practical Lean can help high-mix shops schedule without the headache. Developed specifically for high-mix, low-volume fabricator shops, Practical Lean helps ensure parts and orders are received and released at a set time (as is the goal of scheduling), but it also looks at the root causes of why scheduling goes awry. See the full article here to read more about how this tool can help prevent scheduling nightmares.
- Optimize Workflow. An entire fabricator shop is made of many moving parts with various operators and several stations. However, if taken one-by-one, each process can be broken down into a set process. Take those individual processes and improve them where you can. As this white paper from the LENOX Institute of Technology describes, this includes analyzing equipment placement, material flow, and ergonomics. The less times an operator has to touch or move material the shop saves time and money—resulting in increased production.
- Be open and flexible. Despite changing schedules and customer requirements, it’s important to remain open with key stakeholders and flexible with the new processes you’ve put in place. This article from Industry Week says transparency with management, supervisors, and operators increases overall communication and allows the entire operation to adjust if and when needed. This leads to another guiding principle—maintaining flexibility, both figuratively and literally. Operators should be able to adapt to changing orders with their workstations, equipment, and overall shop floor layout, just as the shop should be able to accommodate more or less staffing needs and adjust processes as necessary to ensure orders remain on schedule.
While it is a challenge for high-mix shops to achieve the efficiency of high volume metal-cutting operations, it is possible. Taking time to assess, and more importantly, implement changes to processes can help eliminate downtime, increase productivity, and maybe even boost volume.
As consumer demand increases, how will your high-mix fabrication shop deal with the pressure? Perhaps it’s time to look at your current production processes and see where you can make some changes. Even small improvements can have a big impact.
root cause analysis
April 30, 2015 / best practices, bottlenecks, continuous improvement, industry news, KPIs, lean manufacturing, LIT, operations metrics, Output, performance metrics, productivity, resource allocation, root cause analysis, strategic planning, workflow process
As reported in the 2015 Industrial Metal Cutting Outlook from the LENOX Institute of Technology (LIT), many manufacturing executives expect 2015 to be a solid year. A survey of executives conducted by Prime Advantage, for example, shows that the vast majority of small and midsized industrial manufacturers anticipate revenues to increase or match 2014. For metals companies, industries such as automotive, commercial construction, and energy are expected to drive growth.
It comes as no surprise, then, that analysts expect growth in the ball and roller bearing segment as well. With the economy poised for recovery, research firm IBISWorld says that demand for downstream markets like automotive will rebound, which will bolster demand for ball bearings. A separate study from Grand View Research echoes these sentiments, forecasting that the global bearings market will reach $117.27 billion by 2020 at a compound annual growth rate (CAGR) of 7.5% from 2014 to 2020.
Industry leaders, however, seem to have some concerns. In late January, The Timken Company, a bearing manufacturer based in North Canton, OH, said it was viewing its markets “slightly more cautiously than 2014.” Specifically, the company said that “new business wins combined with modest market growth are expected to result in approximately 4% organic growth, but that will largely be offset by the impact of currency.”
Earlier this month, SKF, a global bearing maker based in Sweden, forecast flat second quarter demand for its business. SKF CEO Alrik Danielson said that while there are some positive signs for growth in Europe, they were “not robust enough to merit a more positive outlook,” Reuters reports. He also said there was still a lot of uncertainty about what the market would do in the next quarter.
Using Connectivity to Stay Competitive
The fact is that the last several years have made it difficult for any company to be anything but cautious. However, regardless of where the market lands, the goal for manufacturers should still be continuous improvement. To be competitive, especially on a global scale, companies need to stay focused on efficiency so that they can be agile enough to respond to whatever 2015 brings.
Of course, there are several ways to attack continuous improvement. Traditional lean tools are always effective; however, more and more manufacturers are literally working smarter by using technology. According to the Prime Advantage survey, many industrial manufacturers are leveraging digital tools, additive manufacturing, and other technological advancements to operate more efficiently.
A separate report from manufacturing.net agrees, adding that manufacturers that want to stay competitive in an ever-changing global market cannot underestimate the value of connectivity. According to the article, leading manufacturers started in 2014 to put buzz words like the industrial Internet of things (IIoT), machine to machine (M2M), and “big data” into practice. To be successful in 2015, the manufacturing.net author suggests that the trend needs to continue.
How? The article states that manufacturers need to start by creating a fully connected framework for top asset performance and strategic data analysis. This framework should include three important processes:
- Measure. “The first step, measurement, is critical to asset strategies because every asset in industrial organizations is essential for successful operations,” the article states. “Regular audits and automated measuring allow manufacturers to detect problems early before they become more severe and costly.”
- Monitor. “While measurement is the first step for asset performance management, machines must be continuously monitored for valuable insights,” the article states. “Software tools today identify root cause failure through data analysis and initiate proactive maintenance to protect assets and reduce downtime.”
- Manage. “Asset performance management provides structured processes and analytics to identify critical assets and failure modes, calculate equipment reliability, and determine downtime impacts,” the article states. “Executives and operators need the end-to-end picture of operations to drive impactful change.”
(For a more in-depth explanation of these steps, you can view the full manufacturing.net article here.)
A Year of Improvement?
In the end, the forecast for 2015 is no more certain than any annual forecast. Even the most educated analyst knows that there is no crystal ball to accurately gauge how the market will fare. There are just too many factors at play. However, by regularly measuring, monitoring, and managing your operation’s performance, ball and roller bearing manufacturers can more accurately gauge how their operations will fare.
Will 2015 be the year your operation improved? That is perhaps the only factor today’s manufacturing executives can control.
root cause analysis
April 21, 2015 / best practices, continuous improvement, human capital, industry news, LIT, maintaining talent, material costs, operator training, root cause analysis, strategic planning
Will 2015 be a year of growth for machine shops, as many are predicting? Recent data is sending some mixed signals. Gardner’s most recent metalworking business index (MBI), for example, showed that conditions in the metalworking industry expanded in March for the 15th consecutive month and the 17th time in 18 months. New orders and production increased have also increased for the 18th month in a row.
This of, course, is good news. However, as Modern Machine Shop reports, compared with one year ago, the MBI index has actually contracted for three straight months. “So, the metalworking industry is growing but not as fast as it was at the beginning of 2014,” the industry publication says.
Meanwhile, industrial production decreased 0.6 percent in March after increasing 0.1 percent in February, according to the Federal Reserve. For the first quarter of 2015 as a whole, industrial production declined at an annual rate of 1.0 percent, the first quarterly decrease since the second quarter of 2009.
But not all hope is lost. Many experts are still anticipating growth in industrial production this year and next year. As the LENOX Institute of Technology reported in the 2015 Industrial Metal Cutting Outlook, the Manufacturers Alliance for Productivity and Innovation (MAPI) forecasts that manufacturing production will grow by 3.7% in 2015 and 3.6% in 2016.
Also, according to Shopfloor, the blog of the National Manufacturers Association (NAM), manufacturers remain mostly upbeat about additional demand and production in the coming months. “We have started 2015 on a softer-than-desired note,” the blog states, noting that a strong U.S. dollar, weakened economic markets abroad, lower crude oil prices, the West Coast ports slowdown, and weather have all eased growth in activity. The blog concludes, “Hopefully, we will see better production numbers in the months ahead.”
Regardless of how the year shakes out, the fact is that machine shops need to continue to optimize their operations. Continuous improvement does in fact mean continuous, regardless of business conditions. The goal is to strategically approach those improvements with industry trends and forecasts in mind.
How can you be successful in 2015? A recent article Production Machining offers three strategies for increasing your chances for success this year:
- Recalibrate Your Plan. According to the article, most customers, suppliers, and competitors are planning for a year of growth. This should play a huge role in how you operate. “Are you prepared for growth, or are you still in hunker-down, play-it-safe mode?” the article asks. “You need to calibrate your plan on the emerging reality that we really are in an industry-led economic recovery.”
- Invest in Training Your Talent. If there is one consistent message in manufacturing right now, this is it. As the article states, there are two things that help manufacturers create unlimited wealth—eliminating root causes of problems, and deploying unused employee talent and creativity. “It is up to us to equip our people with the knowledge they need so they can achieve their highest and best potential in, and for, our shops,” the article states.
- Plan for Mill Leadtime Issues. This is perhaps one of the trickiest challenges metal-cutting companies face. However, the article states that there is a way to “intelligently” manage the risks associated with raw materials. “Losing half a year waiting for raw material is not a plan for success,” the article states. “Neither is speculation and hoarding of materials for price hedging purposes. The key, the article suggests, is identifying critical materials that are likely to be unobtainable in an up market—as well as those materials with historically long leadtimes—and taking steps to assure continuity of supply.
There is no crystal ball for what will happen in 2015, and as the last few years have taught manufacturing executives, nothing is ever certain. But hoping for a better year isn’t really a plan. To strategically approach today’s market, managers need to consider what is happening in the market, while also proactively improving what is happening inside their doors.
root cause analysis
November 25, 2014 / best practices, Cost Management, human capital, LIT, operations metrics, operator training, Output, productivity, quality, root cause analysis, strategic planning
In any forging operation, there are certain overarching goals that are a given. Quality is one of them. When your parts are being used to construct buildings, airplanes, and space shuttles, there is no room for error.
However, claiming that quality is important is not the same thing as actually putting practices in place to ensure that your quality goals are met and maintained. In today’s competitive market, customers expect more than just your word. Quality needs to be baked into your strategy and your everyday operations—and you should be able to prove it.
One quality strategy used by many of today’s leading industrial metal-cutting companies is ISO 9001 certification. The standard, described in detail here, provides guidance and tools for companies and organizations that want to ensure that quality is consistently improved. With requirements such as internal audits, acquiring and sustaining certification can be tedious, but a growing number of manufacturers consider it a key strategy for maintaining consistent, high quality products and services. This, in turn, often brings business benefits like increased productivity and improved financial performance. For example, Metal Cutting Service, Inc., a specialty shop featured here in a series of case studies, estimates that its quality has improved 20 to 30% since it became ISO certified more than 12 years ago.
There are also some high-level strategies that executives can put in place to ensure quality. As this article from IndustryWeek states, taking a thoughtful approach to quality not only reduces error, scrap, and lost labor hours—it keeps costs under control. According to the IW article, there are five steps managers can take to improve their manufacturing quality and, in turn, better contain their costs:
- Use a Team Mindset
- Define Quality from the Customer Perspective
- Develop Organizational Understanding of the Cost of Quality
- Solve Problems Completely
- Employ Strong Process Discipline
Finally, managers also need to make sure that quality doesn’t start and stop with their internal operations. In fact, quality efforts should start before workers even touch a piece of metal. As this white paper describes, operations managers need to be sure they are tracking the quality and accuracy of the material coming from the supplier. Product liability and traceability continue to be huge concerns for forges and other metal-cutting companies, and mix-ups can be both expensive and dangerous. Thorough inbound inspection processes are just as critical as outbound quality processes. By taking the time to confirm what is coming in the door, forges can confidently supply products that are both accurate and fail-safe.
root cause analysis
November 15, 2014 / benchmarking, best practices, continuous improvement, human capital, KPIs, LIT, operations metrics, operator training, predictive management, root cause analysis, strategic planning
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:
- Institute an open reporting system to raise problems
- Train supervisors and employees to use problem solving tools that focus on identifying root causes
- Use cross-functional, team-based approaches to solve problems
- Share lessons learned
Daily Management Subsystem. This includes the practices leaders use every day to identify possible issues and manage critical activities. Recommended best practices include:
- Implement visual controls (i.e., white boards) that report on production goals, defect rates, and safety measures
- Develop a list of tasks that operations leaders should perform every day
- Hold short, stand-up meetings on the shop floor at least once per day
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:
- Executives and supervisors need to communicate and interpret the organization’s strategy down to the shop floor
- Check for understanding by soliciting production ideas from employees and encouraging them to challenge the status quo
- Projects should be prioritized and aligned with the organization’s strategy
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:
- Identify key functional experts and post contact information or make it readily available when there is a problem
- Provide training on how to coach for new supervisors and frequent refresher courses for existing managers
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.
root cause analysis
July 25, 2014 / benchmarking, best practices, continuous improvement, Cost Management, cost per cut, KPIs, lean manufacturing, LIT, material costs, operations metrics, performance metrics, productivity, quality, root cause analysis
In industrial metal-cutting, a small amount of scrap is inevitable. However, reducing material waste should still be a top goal for forges that cut and process metal. Like all other forms of waste, scrap negatively affects profitability, especially if it is generated out of error.
The truth is that any amount of scrap or rework you’re experiencing in your operations provides an opportunity for improvement. Taking the time to reduce scrap often leads to better productivity and higher quality cuts. According to this article from CONNSTEP, a Connecticut-based continuous improvement organization, reducing scrap and rework rates can also improve cash flow. “The number one reason small businesses go out of business is lack of cash flow,” the article states. “If the scrap rate is 8 percent of your production now and it is reduced to 6 percent, that newly created 2% may now be used to produce new/additional product and your savings should account for the cost avoidance of using new/additional material to complete the existing order.” In other words, by reducing rework and scrap from occurring, industrial metal-cutting organizations can actually generate money that goes right to their bottom line.
If you are a forge that cuts and processes metal, here are a few strategies we gathered to help you reduce your scrap rates:’
- Measure and compare. As with any continuous improvement activity, you need to start with measurement. If you aren’t measuring your scrap rate, this is your first step. If you are tracking scrap, you may also want to consider other helpful metrics, including first-pass yield, overall equipment effectiveness (OEE), dock-to-dock time, manufacturing cycle time, and inventory turns. You should also know your scrap and rework costs. Once you have some quantifiable data, you should compare your operation to others in your industry. Benchmarking is the only way to gauge whether or not you need serious improvement. For example, 81 percent of the industrial metal-cutting companies surveyed by the LENOX Institute of Technology (LIT) said their scrap and re-work costs are “always” (23 percent), “mostly” (45 percent) or “occasionally” (less than 5 percent). How does your operation stack up?
- Evaluate Operators. If you know your scrap and rework rates could be better, identifying the root cause of the issue is the only way to make any real, sustainable improvements. Often times, high inventory levels and scrap rates are indicators of “hidden” inefficiencies such as operator error. Are all of your operators properly trained on how to use equipment? Are they running saws at optimal levels, or are they just focused on getting the job done as fast as possible? Have you recently taken on a new job that may require a different cutting tactic or a blade type? Poorly trained operators that misuse equipment or fail to perform basic tasks like breaking in blades often lead to low-quality cuts, higher instances of scrap due to error, and shortened blade life—all of which add up to elevated costs.
- Pick for clean. While quick turnaround is always a goal, scrap can quickly get out of control if operators are reaching for a new piece of material every time they start a job. That’s why many companies are moving away from the “pick for speed” method of inventory selection and, instead, are embracing “pick for clean” methods. Picking for clean is the practice of picking high-quality leftover materials from a previous job to use up the inventory. In other words, you reach for remnants first. This keeps inventory and material costs low. Structural Steel of Carolina, a fabricator featured here in a series of industry case studies, uses a software-based inventory system to help facilitate this strategy. According to Superintendent Gary Kirkman, the software system tells operators exactly what material to use and how much drop off they can expect. “That is how we determine what we keep and what we throw away,” he explains. “Scrap less than 4 feet in length is considered waste, but any pieces 5 feet and longer are entered back into the inventory system to be reused.”
In the end, scrap is just one of the many areas of waste that today’s leading forges are trying to attack. However, with the cost of inventory being so high, no industrial metal-cutting organization can really afford to ignore a pile of wasted material that could have been used for profit. When it comes down to it, every piece of scrap counts in today’s lean manufacturing world. However, by implementing some of the above strategies, not every piece of scrap has to count against you.
root cause analysis
June 28, 2014 / agility, best practices, continuous improvement, customer delivery, customer satisfaction metrics, lean manufacturing, LIT, predictive management, preventative maintenance, productivity, root cause analysis, strategic planning, value-added services
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:
- Invest in Smarter, More Predictive Operations Management. Manufacturing agility starts with adopting more predictive operations management approaches. For example, don’t just focus on avoiding downtime; find ways to plan for it. According to a recent benchmark study from the LENOX Institute of Technology, 67% of industrial metal-cutting operations that follow all scheduled and planned maintenance on their machines also report that their job completion rate is trending upward year over year—a meaningful correlation. The implication is that less disruptive, unplanned downtime and more anticipated, planned downtime translates into more jobs being completed on time. By implementing a strategy as simple as adhering to a preventative maintenance schedule, managers can actually anticipate maintenance bottlenecks and turn “interruptive downtime” into “predictive downtime.” This not only makes it easier to schedule and meet time demands, but it can also help with other operational aspects such as improving cutting performance and extending equipment life—all of which add up to happy customers and lower costs.
- Think (and Plan) Like Your Customers. Being agile goes beyond completing a job on time. It also means taking the extra step to anticipate customer needs and then plan accordingly. Karay Metals, a metal service centered featured here in Modern Metals (MM) magazine, has taken this approach with its mandrel tubing customers. Typically, drawn over mandrel tubing comes in certain standard lengths, usually anywhere from 17 feet to 24 feet, the MM article states. However, Karay discovered that such a wide variance creates guesswork for its customers and as a result, can hamper their productivity. In response, Karay now offers tubing in 20- to 24-in bundles so its customers know exactly what they are getting, adding a convenience that its customers have come to expect and appreciate. As the MM article reports, the service center takes the same approach with inventory, stocking items its customers may need quickly. These strategies may veer away from traditional “lean” approaches, but they also build customer trust and loyalty—benefits that may not be measurable, but could prove to be valuable. This also a great example of how being “lean” isn’t necessarily the same thing as being “agile.”
- Above all else, communicate. Put simply, agile manufacturing requires fast turnaround. However, as this article from thefabricator.com confirms, on-time delivery continues to be a struggle for most industrial metal-cutting companies. Why? According to thefabricator.com article, most manufacturers would blame overproduction, subcontracting, customer mix, and scheduling. And while those issues certainly contribute to late deliveries, the article suggests that they are not the root causes. The real culprit, it states, is often poor communication and documentation. For example, improper labeling may cause an operator to cut the wrong material, or a sales person may fail to explain certain job specifics. Neither of these issues has anything to do with the actual cutting of the part. “Often a part spends more time in the virtual world, being discussed in e-mail after e-mail, than it does on the shop floor,” the article states. As senior editor Tim Heston suggests, this means that today’s managers should be focused on breaking down departmental barriers with strategies like cross-training and procedural documentation, to name a few. This type of communication is especially critical for manufacturers looking to achieve speed and agility. There is simply no time for mistakes.