February 10, 2017 / best practices, LIT, operator training, quality, strategic planning, supplier relationships, value-added services
For most fabricators, supplier relationships are the building blocks of success. While there are still some companies that base their supply chain on price, as customer expectations for both quality and delivery continue to increase, many industry leaders are taking the time to form strong supplier relationships that are built on a lot more than an affordable product or service. In many cases, suppliers are becoming strategic partners.
Data confirms this trend. As reported in the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization, a survey conducted by Tompkins Supply Chain Consortium found that 80 percent of supply chain professionals believe that the supply chain is an enabler of business strategy. “A majority of companies also felt that the supply chain is a source of business value and competitive advantage,” the eBook states.
How can you form strong supplier relationships that provide real value? The eBook offers three best practices:
1. Schedule on-site visits. Like any relationship, communication is key. Expect your prospective supplier to assume a “partner” role from day one by focusing more on service than on the sale of the product. To facilitate this relationship, start by asking for an on-site needs assessment. This gives you the opportunity to discuss your business goals in person, as well as providing the vendor with a full overview of your operation.
2. Include training in your purchase agreement. Most suppliers should be willing to provide some level of value-add training as part of the purchase agreement. This is especially important when it comes to your equipment and tooling providers. No one knows your production equipment better than the people who designed it, and they should be willing to share that expertise with you.
3. Expect thought leadership and self-service tools. Industry-leading partners should be able to support your business by providing informational and educational materials, as well as practical tools and services. You can and should rely on your supplier to be an industry thought leader that provides a steady stream of valuable industry trends data, operational strategies, and technical product information.
Of course, maintaining strong supplier relationships doesn’t come without its challenges. According to the 2017 Manufacturing Outlook Survey conducted by ASQ, 83 percent of manufacturers experienced problems with suppliers last year. However, only a third felt concern that those issues would spill over into 2017. In addition, 66 percent of those surveyed said they are working with current suppliers to fix previous concerns—an indication that the majority of manufacturers see the value of working closely with existing suppliers to address challenges they face. As an article from Supply Chain Drive notes, “…a consistent cycling of suppliers can harm long-term performance as relationships take time to cement.”
ASQ does warn, however, that manufacturers should be prepared for those moments when suppliers don’t come through. The key is to openly communicate with existing suppliers to determine any potential risks and, more importantly, to have back-up plans—and back-up suppliers—to alleviate supply chain disruptions. Ultimately, the goal for any manufacturer should be to turn vendor relationships into strategic partnerships. By taking the time to build trust and value into the supply chain, suppliers can become an integral part of your business strategy and, more importantly, your shop’s success.
In what ways can your fabrication shop get more out of its supplier relationships?
February 1, 2017 / agility, customer delivery, customer service, industry news, LIT, strategic planning, supplier relationships, value-added services
Although there is still a lot of uncertainty surrounding the economy, many metals companies and experts are fairly optimistic about the short term. According to the January 2017 Precision Metalforming Association (PMA) Business Conditions Report, metalforming companies expect strong business conditions throughout the next three months.
Much of this optimism is based on positive forecasts for end-use markets. At the Metal Service Center Institute’s Forecast 2017 Conference, for example, economists and industry experts shared positive outlooks for several customer segments, giving the metals supply chain an idea of where to place their focus this year.
Below is a summary of segments that show some growth potential for industrial metal-cutting companies this year, as reported by MSCI. (You can access the full report here.)
- Aerospace. According to Richard Aboulafia, vice president of analysis at the Teal Group Corporation, aerospace continues to be the strongest industry and “the only one that saw growth accelerate through the recession.” Aboulafia said that commercial deliveries to China are setting a new record, but now, in part due to a lot of backorders on jets, it is the civil aviation sector that is offering “major opportunities for long-term growth.”
- Military. Aboulafia expects military aircraft to be stable and profitable, but says he is only cautiously optimistic about any growth over the next five years or so. The good news for steel and aluminum producers and processors, however, is he doesn’t expect a lot of competition. He believes that both civil and military aviation will “continue to favor legacy products” in their manufacture.
- Energy. Experts are the most optimistic about the renewable energy sector. “Federal tax credits are the heart of what is driving this industry,” said Andy Lubershane sector specialist at IHS Energy. “And those credits have now been renewed, so we are looking at a lot of strength for both wind and solar perhaps into 2021.” Costs are dropping in both segments, Lubershane said, and efficiencies are increasing, both good signs for industry strength.
- Construction. A continued demand for new housing is adding muscle to residential construction, according to Ken Simonson, chief economist at AGC of America. He judged the outlook for this sector as “very positive” for the foreseeable future.
While these are broad-based outlooks, they should provide metal-cutting companies with some confidence as they invest in existing customer segments or consider branching out into new markets. Knowing where the growth is located is a critical part of strategic planning.
Of course, the other key element is knowing how to best serve those customers—both new and existing. As reported in the news brief, “Strategies for Improving Customer Service and On-Time Delivery in Industrial Metal Cutting,“ on-time deliveries are no longer enough. Today’s customers are looking for trusted suppliers that go the extra mile. “Whether offering a new, value-added service or investing in certification, metal-cutting companies have several opportunities to cultivate a strategic customer relationship built upon premium service,” the brief states. (For some specific strategies for improving customer service, you can download the full news brief here.)
It is far too early to tell how this year’s market will shake out, but as the above forecasts show, there are several segments that offer growth potential for industrial metal-cutting organizations. With a little strategic planning and a strong focus on customer service, companies may find they can make this year one of their best.
August 30, 2016 / agility, best practices, Cost Management, industry news, LIT, Output, productivity, strategic planning, supplier relationships, value-added services
There is no question that the supply chain is evolving. As reported in a previously published blog, instead of treating supplier relationships as a series of business transactions, more and more manufacturers are treating their supply chain as a valuable part of their business strategy. In fact, this trend is listed as a best practice in the eBook, 5 Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization.
With an increased focus on building closer partnerships with suppliers, it’s not too surprising that many companies are starting to move back to sourcing suppliers closer to home. As one article from Automotive World quips, “local sourcing—it’s the new global sourcing.”
According to the AW article, local sourcing can bring cost savings across the entire supply chain, especially in light of rising costs in traditionally low-cost regions. “This phenomenon of local sourcing is being witnessed across the globe, with leading OEMs sourcing locally from developed as well as emerging countries,” the article states.
A report released by MFG.com, an online manufacturing marketplace, shows similar trends. Based on the data gathered from buyers of custom manufactured parts from the MFG Watch 2016 marketplace survey, 80% of U.S. sourcing professionals chose to source their parts predominantly in the U.S. The report also found that since 2012, buyers have seemingly moved away from sourcing from Chinese suppliers, as sourcing in China has fallen by about 14% in 3 years.
It is worth noting that the MFG.com report found that U.S. sourcing professionals nearly doubled their sourcing activities in regions like Eastern & Central Europe, as well as South America and North Africa. In other words, not everyone has jumped on the bandwagon.
However, there are definitely some benefits for ball and roller bearing manufacturers that choose local sourcing. Local suppliers, for example, can quickly and easily respond to any troubleshooting or maintenance problems with your tooling and equipment, often in-person. They can also assist with other key business areas, such as preventative maintenance and operator training.
Of course, those are just a few examples. An article from Thomasnet gives a more comprehensive list in its article, “Top 6 Benefits of Local Sourcing:”
- More Reactive. Local suppliers are typically more reactive than suppliers who are farther away. They are able to deliver products quicker, and it is much easier for a supplier to coordinate a shipment across the neighborhood than around the world.
- Greater Control. The further away you are from elements of your supply chain, the less control you have over them. There’s also less chance of things being “lost in translation,” which often occurs when working with far-flung teams of people, many of whom aren’t actually on the floor and touching your products.
- Reduced Supply Chain Costs. North American businesses send and receive parts and products all over the continent, and the expenses can add up as quickly as the miles. Localizing your supply chain can reduce many of these costs. And, with less money being sunk into logistics, there will be less weighing down your bottom line.
- Better for Business. Local sourcing doesn’t just help save money; it can also help you generate more of it. That’s because companies in your region may be impressed by your efforts to keep a tight and fast-paced supply chain, which can help you attract new customers.
- Good for the Community. It stands to reason that if sourcing locally increases your bottom line, it would do the same for other suppliers and manufacturers in your area, which can be a big boon to your local economy and the people who live there.
- Helps the Environment. Localizing your supply chain represents a tremendous opportunity to help the environment. When you reduce shipping and storage, you also reduce emissions and energy usage.
Whether building cars or manufacturing ball bearings, more and more operations managers are finding that their success is directly tied to collaborative vendor relationships—relationships that go far beyond the sale of a product. While not everyone believes in local sourcing, it is one of the many ways you can build closer, more valuable relationships with your supply chain.
To read more about building valuable supplier relationships, including some key areas where suppliers can help, check out the white paper, Managing Your Blade Manufacturer Relationship.
August 15, 2016 / benchmarking, best practices, bottlenecks, continuous improvement, KPI, lean manufacturing, performance metrics, productivity, quality, supplier relationships, value-added services, workflow process
As part of the push toward continuous improvement, more and more industrial metal-cutting companies are measuring overall equipment effectiveness (OEE). This is definitely a good trend, as measurement is the first step in making quantifiable change. However, some companies have jumped on the OEE bandwagon without being fully informed, which can cause a lot of misunderstanding and misuse of this important metric.
Knowing what OEE is—and what it isn’t—is the only way to make sure you are using it effectively. The following is a quick primer.
What is OEE?
According to leanproduction.com, OEE is a best practices metric that measures the percentage of production time that is truly productive. It takes into account all six types of loss, resulting in a measure of productive manufacturing time.
In simple terms, OEE can be described as the ratio of fully productive time to planned production time. According to leanproduction.com, it can be measured in one of two ways:
(Good Pieces x Ideal Cycle Time) / Planned Production Time
Availability x Performance x Quality
(You can find a more detailed description of the calculation here, as well as a sample calculation.)
A plant with an OEE score of 100 percent has achieved perfect production—high quality parts as fast as possible, with zero down time. While that’s ideal, it’s not quite possible in the real world. According to oee.com, studies show that the average OEE rate among manufacturing plants is 60 percent, which leaves substantial room for improvement. Most experts agree that an OEE rate of 85 percent or better is considered “world class,” and many companies use that number as a long-term goal for their operations.
Managers can use OEE as both a benchmark and baseline. Specifically, leanproduction.com says it can be used to “compare the performance of a given production asset to industry standards, to similar in-house assets, or to results for different shifts working on the same asset.” It can also be used as a baseline “to track progress over time in eliminating waste from a given production asset.”
How to Use—and not Use—OEE
It’s important to note that OEE is not necessarily a useful metric for every manufacturing operation. “Measuring OEE only makes sense if you are trying to meet a certain demand on a daily basis,” explains Paul Bryant, senior OPEX manager, LENOX Tools. “If you have a problem with yield, then I would definitely suggest OEE.
“If you have a problem with inconsistent production output and/or downtime on a piece of manufacturing equipment, OEE is a great way to measure and identify how to where to improve your operations,” Bryant continues. However, for smaller metal-cutting operations that are more custom and low volume, Bryant says OEE probably isn’t worth measuring.
Bryant also says that a lot of shops use OEE incorrectly. Specifically, he says there are two common ways metal-cutting operations misuse the metric:
- Too Focused on the Benchmark. “Everyone knows that world-class OEE is 85%, but too many people get hung up on that number and how their shop compares to it. When I look at OEE, the number doesn’t mean much to me. I look at three components—availability, performance, and quality—and then break them apart and look for opportunities. That is the true essence of OEE: To find opportunities that help keep your machine and production system optimal.”
- Too Focused on the Operator. “Another misuse is that people use OEE to measure the operator. OEE is used to measure equipment. If you run into an issue with the metric, look at the machine first. There are so many variables, don’t always assume it is the operator. Once you’ve evaluated the machine, look at the material and then the operator last.”
An article from IndustryWeek (IW) adds that OEE should be used as an improvement measure, not a Key Performance Indicator (KPI). It also states that it is best used on a single piece of equipment or synchronized line.
Finally, if your shop is ready to start measuring OEE but doesn’t know where to start, enlist the help of some key suppliers. As stated in the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Company, many companies don’t possess all of the knowledge, resources, or infrastructure necessary to do in-depth measurement. This is where a willing supply partner can help. In today’s competitive market, there are plenty of equipment and tooling suppliers that are willing to share their knowledge and experience as a free, value-added service.
A Helpful Tool
There is no question that OEE can be misused and misunderstood, but as the IW article reiterates, it is not a “bad metric.” When calculated and applied correctly, OEE can be a very useful tool to help industrial metal-cutting companies quantify and uncover new improvement opportunities.
July 20, 2016 / best practices, LIT, operator training, strategic planning, supplier relationships, value-added services
Most manufacturing organizations agree that supplier relationships are one of the key building blocks of success. While there are still some companies that base their supply chain on price, many industry leaders believe that a strong supply chain can (and should) be about more than the most affordable product or service.
In an interview with Modern Metals, Aviva Leebow Wolmer, CEO of Pacesetter, stresses that cultivating strong ties with suppliers is critical to achieving the metal service center’s goals—goals that go far beyond price. “Pacesetter believes in the power of teamwork, where the entire supply chain comes together to focus on reaching goals,” Wolmer tells MM. “It’s easy to provide a low-price model to try to buy business away from the competition, but not every company is built to offer the level of service, partnership and trust that Pacesetter’s customers and suppliers are accustomed to. We want our suppliers and customers to feel they are a part of the Pacesetter family.
“Facilitating long-term partnerships helps to create value and offer advantages that may not be available if we focused only on price,” Wolmer continues. “We promote collaborative efforts up and down the supply chain and find long-term solutions to satisfy everyone’s needs.”
Other companies are taking a similar approach when building supplier relationships. For example, American Axle & Manufacturing (AMM), an automotive parts supplier featured here in Supply Chain World, works closely with suppliers long before price is even discussed.
“Our goal is to source several years in advance by working on new technologies and bringing suppliers in before we talk about price,” explains Jake Stiteler, AMM’s chief procurement officer. “We look at them to find the best technology and delivery, and we look at advanced cost modeling to agree on what prices should be. We’ve flipped the spectrum by having technology and capabilities drive the process, and by working with prequalified suppliers on finding ways to take cost out upfront instead of negotiating pricing at the end.”
Of course, in today’s market, price will still be important for machine shops and other industrial metal-cutting organizations looking to stay competitive. However, there are ways organizations can build more value into their supplier relationships. An eBook from the LENOX Institute of Technology lists three strategies to do just that:
- Schedule on-site visits. Expect your prospective supplier to assume a “partner” role from day one by focusing more on service than on the sale of the product. To facilitate this relationship, start by asking for an on-site needs assessment. This gives you the opportunity to discuss your business goals in person, as well as providing the vendor with a full overview of your operation.
- Include training in your purchase agreement. Most suppliers should be willing to provide some level of value-add training as part of the purchase agreement. This is especially important when it comes to your equipment and tooling providers. No one knows your production equipment better than the people who designed it, and they should be willing to share that expertise with you.
- Expect thought leadership and self-service tools. Industry-leading partners should be able to support your business by providing informational and educational materials, as well as practical tools and services. You can and should rely on your supplier to be an industry thought leader that provides a steady stream of valuable industry trends data, operational strategies, and technical product information.
In addition to the above three strategies, managers should also do their homework on supplier claims. While many companies often promise unmatched service and technical support, the key is to look for companies that provide resource allocation metrics that support their claims. Do they have adequate field coverage? What is the tenure and continuity of their support team? What can they bring to your shop that other suppliers aren’t offering? Therein lies the value.
Ultimately, the goal for any manufacturer should be to turn vendor relationships into strategic partnerships. By looking beyond price and by focusing on value, machine shops can develop a strong supply chain that can have a significant impact on the bottom line.
July 10, 2016 / best practices, customer service, LIT, strategic planning, value-added services
In today’s uncertain economy, diversification continues to be a key strategy for fabricators and other industrial metal-cutting companies. Forming new customer relationships, expanding into new OEM segments, and offering existing customers value-added services can all help dilute the impact of external influences and provide an additional stream of revenue.
Companies also use diversification to reduce business risk. According to an article from Forbes, most small and mid-sized manufacturers fall under the 80/20 rule—they make 80% of their profit from 20% of their customers. In some cases, that 20 percent may mean only one or two customers. While no one denies the value of landing a big customer (or two), relying on a select few to solely sustain your business can be extremely risky.
Diversification in Action
As described here, diversification saved many fabricators in 2015. In fact, companies like Merrill Technologies Group (MTG) are hoping the strategy will help double its business in the next five years, according to another article from the The Fabricator. Starting out as a small machine shop in 1968, MTG has now turned into a $72-million metal manufacturer offering light and heavy metal fabrication, machining, nondestructive testing, machine building, and engineering services.
This type of business evolution, the article states, is a sign that times are changing and that more and more fabricators are moving away from defined customer niches. “The modern metal manufacturing landscape is different,” the article states. “Large OEMs are consolidating their supply chains. Rather than source a large project to umpteen suppliers, they may well be looking for one source—a one-stop shop like MTG—to handle it all.”
Other industrial metal-cutting companies have found the same to be true. Jett Cutting Service, Inc., a 30-year old shop featured in the case study, “Best Practices of High Production Metal-Cutting Companies,” started out with just a few band saws. However, the industrial metal-cutting company has grown over the years to better serve its customers, acquiring new companies and expanding its capabilities to become a multi-faceted cutting service. From precision circular saw cutting to a lathe cut-off on round tubing, Jett Cutting has evolved into what it calls “a whole processor” that serves steel service centers, machine shops, and some mills.
Making the Move
Both the MTG and Jett Cutting examples demonstrate that diversification can be just as advantageous to customers as it can be to your business. If you are considering diversifying your business, an article from Inc. lists several ways to accomplish that. The following are a few of the strategies listed:
- Adapt. Tweak your product or service so it appeals to a new group of consumers or users.
- Find related services. Are there additional services that go along with what you sell or do?
- Open another location. If you only have one physical location, consider opening a second.
- Go overseas. Not every small business has the wherewithal to launch an overseas operation. Right now the big players are eyeing Africa the way they eyed Asia 10 years ago. Network in your community, and see if any businesses are exploring overseas ventures. You might find a project where your company fits in.
- Follow the growth. If you’re in an area with disheartening demographics or punishing tax rates, see if you should expand to a lower tax growth area. Look at the South, Texas, and North Dakota. Would one of these areas be a good candidate for a branch office?
As the Inc. article points out, smart investors place a high value on diversification, and smart business owners should consider doing the same. Could diversification be an option for your fabrication shop?
To read more about other manufacturers that have successfully diversified their business, check out the Forbes article, “The Argument For Market Diversification In Manufacturing.”
November 10, 2015 / agility, continuous improvement, Cost Management, customer delivery, customer service, LIT, ROI, value-added services
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:
- Choose equipment carefully. Machines designed to handle oversized material can take up a lot of floor space. “When looking for equipment to cut large parts it’s important to make sure that the machine is built rugged enough to support all tools over a large working span,” Brad Williams, national sales manager for Koike, tells Canadian Metalworking. In addition, make sure you choose equipment manufacturers that have a strong track record for building and supplying large format cutting systems.
- Consider automation and material handling solutions. Transporting large parts often requires two or more operators, which can pose safety issues and slow productivity. Automation and material handling systems can save on labor costs, reduce safety incidents, and increase efficiency. For extremely large and heavy parts, overhead crane systems are typically a better option than forklifts.
- Maximize productivity wherever possible. Operators often fatigue when fabricating large parts, especially in processes like bending. Brian Welz, product group manager for TRUMP, tells Canadian Metalworking that production accessories like bending aides can help minimize operator fatigue and maximize productivity.
- Base processes on application. For optimal results, large-part fabricating demands that equipment and cutting processes be defined based on the application requirements, Douglas Shuda at ESAB Welding & Cutting Product, tells Canadian Metalworking. Plate size and material thickness are also important considerations when exploring large-part fabricating.
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?
October 1, 2015 / Employee Morale, industry news, LIT, maintaining talent, operator training, skills gap, strategic planning, value-added services
All year long, the manufacturing industry has had its sights set on a healthy 2015. As we reported in April in our 2015 Industrial Metal Cutting Outlook, all signs pointed to a full economic recovery. According to the latest data from MAPI, GDP is growing and will continue to grow in 2016.
The good news is that many manufacturers and industrial metal-cutting companies have felt the benefits of the improving economy and experienced increased demand; however, others are a little disappointed with the way the year is turning out.
According to the Institute for Supply Management’s September PMI report, economic activity in the manufacturing sector expanded in September for the 33rd consecutive month, and the overall economy grew for the 76th consecutive month. However, 11 industries, including primary metals and fabricated metal products, contracted in September. One fabricated metal producer told ISM that it had “concerns about the China downturn and its effect on our consumer confidence.” Another manufacturer in the primary metals segment said that it continues to feel the impact of the oil and gas market slowdown. “Aerospace demand has also been slower than expected,” the company added.
Meanwhile, factors like the upcoming presidential election and unstable foreign affairs continue to feed into uncertainty, leaving manufacturers conflicted about how they should manage their operations. Should they prepare for increased demand or play it safe now that growth has been slower than expected?
Of course, there is no silver bullet answer to this question, but there are some ways that companies can strategically navigate the ups and downs of the market. Below are just a few ways industrial metal-cutting companies can adjust to market “ups” and expand when needed, while also preparing for the potential “downs” and changing conditions.
When business is booming and orders are up, it’s easy to get overwhelmed by increased demand—especially after several slow months. However, there are ways manufacturers can adjust. U.S.-based automaker Ford, for example, recently cut its traditional two-week summer break short to meet demand.
IndustryWeek offers five ways manufacturers can take advantage of the uptick without making any monumental changes to their operation:
- Round up your top talent. A shortage of skilled talent is a business risk for one-third of businesses, according to manufacturing.net. Case in point, training and maintaining talent is one of the three operating challenges in industrial metal cutting, according to this white paper from the LENOX Institute of Technology. Establishing ongoing operator training can help balance the skill level on the shop floor and across shifts. Enlisting your top performers and asking for their input on projects will go a long way when it comes to motivation and morale.
- Stick to what you know. Although it’s tempting to start adding new specialties when demand is up, don’t be too quick to jump on the bandwagon. Be selective and choose projects that can easily be added to your line-up and offer the most profitability.
- Pick your projects carefully. Again, don’t accept work for the sake of work. Accept projects that you can execute quickly and easily without huge disruptions in your current production processes and workflow.
- Revisit recognition. Ensure motivation stays high by recognizing those who go above and beyond expected responsibilities. A simple “thank you” goes a long way.
- Create incentives. Hard work pays off—make it a reality for your team. Tie rewards to specific goals, timelines, or projects and be timely with the reward.
In a cyclical business like manufacturing, a slowdown is inevitable. However, most manufacturers don’t know how to prepare for market shifts and, as a result, fail to strategically adapt when conditions change. The answer, according to one Forbes article, is to embrace uncertainty.
“In our experience, the most effective leadership teams develop a clear and actionable portfolio of strategic actions that balance commitment with flexibility,” Martin Toner, a partner at Bain Insights, writes in the Forbes article. “Instead of relying on a planning exercise defined by conditions at a discrete point in time, they commit to a cycle of ‘execute, monitor and adapt,’ redirecting the company toward the best opportunities over time.”
Toner goes on to offer four ways companies can form a strategy around uncertainty:
- Define uncertainties. Make a list of the uncertain things you face and then prioritize them.
- Create probable scenarios. Imagine how the future might look. Discuss the possible threats and opportunities of each.
- Develop strategic options. For every scenario, plan an action that would help balance threats while maintaining flexibility to adjust to others.
- Identify signals. Determine what indicators signal market changes and know when to start making those scenarios a reality.
How do you navigate the ups and down of the market? What strategies do you find are the most successful?
September 5, 2015 / agility, best practices, continuous improvement, Cost Management, customer delivery, industry news, lean manufacturing, LIT, preventative maintenance, resource allocation, strategic planning, value-added services
Staying ahead of the competition can often seem like an impossible task, especially in today’s marketplace. Continuous improvement is now the expectation, lean manufacturing is fairly commonplace, and uncertainty about market conditions makes it hard to gauge investments and risk.
So how do you get ahead in the current landscape? While it would be near impossible to truly answer that question, the LENOX Institute of Technology (LIT) gathered a few examples of high-performing service centers and outlined some of their key traits below. How does your service center stack up against these leaders?
Reliance Steel & Aluminum
Los Angeles, CA-based Reliance was ranked number one in Metal Center News’ (MCN) annual survey, “Top 50 Service Center Industry Giants.” The industry leader, which operates more than 290 locations in 29 states and 11 countries, continues to expand its reach. According to Reliance’s profile in MCN, the service center shines in three key areas:
- Value-added processing. Reliance’s services range from cut-to-length/blanking and laser cutting, to sawing and water-jet cutting. The company has made 58 acquisitions since 1994 and continues to acquire businesses that add to its capabilities.
- Quick delivery of small orders. According to the company web site, it isn’t uncommon for Reliance to fill and deliver orders within 24 hours of receipt. Perhaps that’s why more than 90 percent of customers return to do business.
- Strategic supplier relationships. According the MCN, Reliance “continues to cherry-pick the best players in metals distribution, along with strategic downstream processors.”
A.M. Castle & Co.
In addition to distributing a wide range of metal and plastic materials, the leading metal service center also performs simple sawing operations at several of its locations, including its main distribution center in Franklin Park, IL. A case study, published here by LIT, describes the company’s three areas of focus:
- Lean improvements. Glen Sliwa, who is responsible for keeping saw operations up and running, says the company is focused on continuous improvement and is “always doing something to upgrade.” About 7 years ago, the operation underwent a lean transformation, which included major changes in workflow and equipment placement as well as simple improvements like color-coding material. The facility also uses the lean tool known as 5S, which eliminates waste by keeping work areas clean and organized.
- Preventative maintenance. According to Sliwa, preventative maintenance is critical to keeping production moving. Operators perform daily maintenance on machines by following a checklist that they have to verify and sign at the end of every job. Sliwa and his team also perform more in-depth PM checks on a quarterly basis.
- Close supplier relationships. Sliwa works closely with his suppliers and relies on their expertise any time his team has a cutting issue or is looking to improve performance. In one instance, operators were having a hard time reaching productivity goals when cutting several grades of stainless steel. A technical representative from Sliwa’s blade supplier came out to evaluate the problem and suggested a new blade type. Not only did the new blade cut Sliwa’s cutting time in half and double the blade life, the supplier also trained his team and tuned up his saws.
Klein Steel Service Inc.
In May 2015, American Metal Market (AMM) magazine named Klein Steel one of its service centers of the year. According to the magazine, the Rochester, NY-based company experienced its largest year ever in 2014 in terms of weight shipped and revenue generated. The following are just a few notable attributes of the service center:
- Technological investments. Klein launched a newly designed web site last year that increased its web site visitors by 50 percent and earned it three awards, according to AMM. The company also invested in technology that uses data and information flow to streamline and improve operations.
- Customer service. After earning an almost-perfect customer retention rate and millions of dollars in new customers last year, it’s clear that customer service is important to Klein. In fact, a 2014 survey revealed that customers do business with Klein because of great customer service, on-time delivery, and rapid quote response time, reports AMM.
- Strategic planning. In addition to the AMM’s honor, Klein was also named Metals Distributor of the Year at the 2015 Platts Global Metals Awards. As detailed in Platts Insight magazine, the service center scored high marks for its ability to strategically plan for growth while keeping an eye on the economy and remaining flexible. According to the Insight, Klein “maintains steady inventory, buying according to customers’ forecasted needs and minimizing speculative purchases that increase risk.”
June 29, 2015 / best practices, customer satisfaction metrics, industry news, LIT, quality, ROI, strategic planning, value-added services
As competition in the industrial metal-cutting sector rises, companies are now forced to compete on both speed and quality. In fact, the struggle to balance speed with quality is one of the top operational challenges facing industrial companies today, according to a white paper produced by the LENOX Institute of Technology. One way metal-cutting companies are addressing this challenge is through ISO 9001 certification. According to BSI, there are currently 1.2 million certified organizations; however, if your company helps comprise this number, it will soon be time to go through the process again.
Preparing for Change
Currently, the International Standard Organization (ISO) is in the process of updating ISO 9001. The new version will be finalized in September 2015, and companies will have three years to become recertified. The 2015 version will look and feel very similar to ISO 9001:2008, with a few minor changes and a new focus on risk management.
The simplest of changes comes in the form of new vocabulary. As listed in this Quality Digest article, there are a couple minor shifts in wording:
- “Product” will become “goods and services”
- “Document” and “records” will be replaced by “documented information”
- “Continual improvement” will now be referred to as simply “improvement”
Apart from terminology changes, ISO 9001:2015 also includes important updates to its fundamentals, with a new focus on risk-based management. Dr. Nigel Croft, chairman of the ISO revision subcommittee, recently gave an interview clarifying these changes, and according to a recent blog post from California Manufacturing and Technology Consulting (CMTC), these changes can be boiled down into the following three core concepts:
- Risk-Based Thinking. The largest change to ISO 9001 is what Dr. Croft refers to as “aiming at preventing undesirable outcomes.” The CMTC blog post describes a scenario ISO 9001:2015 is designed to protect against. In 2011, Japan suffered an earthquake and tsunami, damaging an auto part supplier in the region. This supplier provided auto parts to multiple manufacturers around the world. In the wake of the natural disaster, Nissan and Toyota were forced to halt production, losing 20% of sales. This new core concept would have helped the manufacturers prepare for the catastrophic event and mitigate its ripple effects.
- Process Approach. The main focus of this concept will remain on providing consistent products and services to meet customer needs and expectations. However, there is an added emphasis on aligning the quality management system with the company strategic direction. To accomplish this alignment, added involvement from top management will be necessary.
- Plan-Do-Check-Act Methodology. According to Dr. Croft, the final pillar will continue to emphasize the fit of individual processes within the overall organization and the success of these processes.
Benefits of ISO 9001:2015 Certification
In light of the recent revisions, companies are now faced with the decision to update their quality systems or forgo their certification. Is becoming recertified worth the cost and hassle?
Typically, companies with ISO certification reap many benefits, predominantly because organizations are required to meet strict quality standards to obtain certification. To meet such high standards, many companies implement a quality management system within their organization, and in turn, this system often leads to better long-term performance. According to research from the Chartered Quality Institute, companies that invest $1 on a quality management system on average increase their revenue $6, reduce costs by $16, and increase profits by $3. Furthermore, companies also benefit from the actual certification itself. The certification serves as a mark of consistent quality, and as stated in a report from ISO, organizations with the certification enjoy access to new markets, increased market share, and boosted sales. If you would like to estimate your ROI of becoming ISO certified, BSI provides an ISO 9001 “Return on Investment Calculator.”
While ISO certification is beneficial for many companies, there are several points to consider before becoming recertified or receiving the certification for the first time. As written in this previous blog post, it is essential for companies to fully understand the purpose of ISO 9001 certification and reach out to other shops before making a decision.
Planning Your Next Steps
If becoming recertified makes financial and strategic sense for your organization, it is time to begin planning. While companies will be granted three years to officially become recertified, it is possible to undergo the process sooner. The International Accreditation Forum created a transition planning document that lays out the following five steps for companies preparing to meet the new ISO requirements:
- Identify organizational gaps which need to be addressed to meet new requirements.
- Develop an implementation plan.
- Provide appropriate training and awareness for all parties that have an impact on the effectiveness of the organization.
- Update the existing quality management system (QMS) to meet the revised requirements and provide verification of effectiveness.
- Where applicable, liaise with their Certification Body for transition arrangements.
While it is tempting to delay recertification, it is essential for industrial metal companies to start preparing now. Three years will come quickly, so companies cannot postpone updating their quality systems or re-evaluating the cost-benefit of obtaining an ISO certification.