June 5, 2015 / bottlenecks, customer delivery, customer service, industry news, lean manufacturing, LIT, value-added services, workflow process
According to data from the Institute for Supply Management, the May PMI increased 1.3 percent to 52.8, indicating growth and economic expansion in the manufacturing sector for the 29th consecutive month. Of course, this is good news for the manufacturing supply chain, and many service centers are taking steps to position themselves as preferred suppliers. These steps include everything from holding inventory and working directly with mills, to preparing material to custom specifications and upgrading to electronic databases.
Service centers are also continuing to work hard to address the increasing demands for faster turnaround. Although efficiency improvements have been the focus of almost every manufacturer the last several years, data shows that it is still a major challenge for most industrial metal-cutting companies. For example, according to an industry benchmark study from the LENOX Institute of Technology, machine downtime, blade failure, and operator error remain the top-three sources of frustration for industrial metal-cutting operations on the shop floor. In other words, there is still room for improvement.
Mapping it Out
To improve efficiency, many leading companies are using a lean manufacturing tool known as value stream mapping. In fact, one company, featured here in IndustryWeek cut its lead time in half—from 10.5 days down to 5 days—by creating a value stream map.
Value stream mapping, as described by iSixSigma, is a paper and pencil tool that helps managers see and understand the flow of material and information as a product or service makes its way through the value stream. The “map” takes into account not only the activity of the product, but the management and information systems that support the basic process as well. This can be especially helpful when working to reduce cycle time because managers gain insight into both the decision making flow in addition to the process flow.
Although it is easy to become overwhelmed by the terminology, an article from Ryder does a good job of outlining the process in five simple steps:
- Identify product. Determine what product or product groups you will follow. Focus on one product at a time and start with the highest volumes.
- Identify Current Flow. Once you’ve defined the scope, the next step is to create a “current state map,” or a visual representation of how the process (or processes) in the warehouse is operating at the present moment. Key data points such as units per month, shipping frequency/schedules, hours of operations (available time), number of shifts worked, or any pertinent information around customer demand should be gathered before beginning the current state.
- Observe. Get on the floor and walk the entire process through step-by-step. Take notes and compile data such as inventory, cycle times, and number of operators.
- Make the map. Literally map out the process you just witnessed by drawing it out on a board. Include the data you collected and place inventory numbers under each step in the process. This will identify your bottlenecks.
- Create (and implement) a plan. Now that you know what and where your process improvements are, choose one or two to focus and improve on in a set amount of time. Once those are complete, you can prioritize the other bottlenecks to improve lead times.
Taking the Time
In an industry driven on speed, taking two days to participate in a class or complete a value steam mapping exercise may seem like a lot. However, managers need to consider the price of not taking the time. Investing in tools like value stream mapping can help your metal service center operate more efficiently, reduce lead time, and, most importantly, allow you to better serve your customers.
April 1, 2015 / agility, best practices, blade failure, Cost Management, human capital, industry news, KPIs, LIT, operations metrics, performance metrics, predictive management, preventative maintenance, productivity, skills gap, strategic planning, value-added services
Like most manufacturers, industrial metal-cutting companies went into 2015 with both optimism and caution. While all signs seem to be pointing to a full economic recovery, concerns surrounding an unstable political landscape, foreign markets, and pricing continue to keep many metals companies on their toes.
Some Growth Ahead
As we enter the second quarter of 2015, most experts anticipate growth in the metals industry. Early predictions painted a positive picture for the year, and recent reports are confirming that the industry will, at the very least, see slight improvements over 2014.
According to the Manufacturers Alliance for Productivity and Innovation (MAPI), industrial production increased at a 3.8% annual rate in the fourth quarter of 2014 and posted 3.6% growth for the year as whole—over a percentage point higher than the 2.4% gain in the overall economy. The manufacturing outlook for 2015 and 2016 calls for a minor acceleration from the 2014 growth rate. According to the MAPI Foundation’s most recent U.S. Industrial Outlook, manufacturing production is forecast to grow by 3.7% in 2015 and 3.6% in 2016.
MAPI’s outlook also predicts that 21 out of 23 industries will show gains in 2015. This includes growth in metals industries such as iron and steel products (5%), alumina and aluminum production and processing (7%), and fabricated metal products (3%). The top industry performer will be housing starts, which is expected to increase by 16%.
Forecasts for steel demand are also positive, but growth rates will not be as strong as they were in 2014. According to the Short Range Outlook 2014-2015 from the World Steel Association (worldsteel), U.S. steel demand is expected to increase by 1.9% in 2015—much lower than the 6% growth the U.S. experienced in 2014. Globally, worldsteel forecasts that global apparent steel use will increase by 2.0% this year. This is a downward revision from previous forecasts, due to a slowdown in emerging economies like China.
“Recoveries in the EU, United States and Japan are expected to be stronger than previously thought, but not strong enough to offset the slowdown in the emerging economies,” stated Hans Jürgen Kerkhof, chairman of worldsteel’s Economics Committee. “In 2015, we expect steel demand growth in developed economies to moderate, while we project growth in the emerging and developing economies to pick up.”
Concerns and Challenges
Buying into the positive forecasts, most metals manufacturers expect business to improve this year. According to an annual survey of metals executives by American Metal Market (AMM), 42% of respondents expect the economy to turn around in 2015 and 67% expected business to improve overall, mostly due to growth in the auto and energy sectors.
However, AMM reports that respondents did have some reservations. Political events, cheap imports, and foreign markets were all causes for concern, as well as uncertainty about “where important industry segments like construction might be headed,” AMM states in its survey report.
In his State of the Industry address earlier this year, Robert Weidner, president and CEO of the Metals Service Center Institute (MSCI), listed several trends that will affect the metals industry in 2015 and beyond. Below are the five challenges he outlined, as reported by thefabricator.com (You can read the full coverage here.):
- Market Intelligence – Volatile markets and increasing competition have heightened the need for trustworthy data and analysis tools, as well as the need for cybersecurity resources and training to secure market intelligence.
- Business Disruption – World events have an even bigger impact on local economies than before, creating a need for topic- and area-specific experts and information and enhanced vehicles and technology to provide information.
- Congressional Gridlock – U.S. partisan politics have stalled action in the legislative branch, often resulting in extreme actions through regulators that have impeded manufacturing growth.
- Safety and Risk Management – Slow market growth has left companies cautious to invest.
- Skilled Labor and Changing Demographics – Attracting a skilled workforce remains a challenge for the industry.
With both forecasts and anticipated challenges in mind, industrial metal-cutting companies can strategically approach the market from both a business and operational standpoint. In fact, as we reported here, it is critical for today’s managers to develop operational short-term plans that are effective in achieving the overall strategy set forth in the business plan. For instance, if the goal is continuous improvement, then make sure your metrics, your daily practices, and communication with your team all point to that overall strategy.
As a global company serving the industrial metal-cutting industry, we at LENOX Tools have a unique vantage point of what is happening in the marketplace. We have watched some metal companies barely survive, while others have found ways to thrive. The difference, in most instances, seems to be the company’s commitment to making improvements. Whether investing in new equipment to improve cutting time and quality or investing in training to improve and empower their human capital, industry leaders are continuing to focus on making positive changes on the shop floor so they can be ready to respond to changing customer demands. In other words, the only way to offset external uncertainties is to focus on making internal improvements.
Based on industry trends and our own experience, LENOX sees the following as key strategies for industrial metal-cutting companies that want to be successful in today’s marketplace:
- Invest in Operators and Training. In light of the manufacturing industry’s ongoing skills gap, experts like MSCI’s Weidner are stressing the importance of employee safety and ongoing training as a means of attracting and maintaining workers. In addition, LIT’s benchmark survey of industrial metal-cutting companies provides evidence that investing in areas like training can provide additional benefits, including better quality, faster on-time customer delivery, higher revenue per operator, and lower rework costs.
- Embrace Proactive Care and Maintenance. No matter how efficient an operation, some machine downtime is inevitable. The key is to be proactive and minimize it as much as possible. This includes practices such as breaking in blades and regular coolant checks. By adhering to a preventative maintenance schedule, managers can actually anticipate maintenance bottlenecks and turn “interruptive downtime” into “predictive downtime.”
- Form Strategic Supplier Relationships. Whether you need help with training, gathering metrics, or de-costing, help is likely no further than your closest supplier. And if that’s not the case, you may want to rethink your supply chain. By utilizing value-added services from trusted suppliers and making them more of a partner than simply a supplier, metal-cutting companies can improve quality and productivity—both of which impact the bottom line.
- Seek New Opportunities. Market trends such on re-shoring and an automotive boom could translate into new opportunities for your metal-cutting company. Are there value-added processes you can add to your operation to stay competitive? Are there previous customers that could now benefit from the convenience and cost benefits of your U.S. manufacturing base? Is there new equipment or tooling that could help you better serve a certain customer base? Asking critical questions such as these may reveal new prospects for growth. Start brainstorming.
February 10, 2015 / best practices, continuous improvement, customer delivery, LIT, strategic planning, value-added services
By now, most managers have heard that winning business in today’s marketplace requires fabricators to become a “trusted supplier.” This is especially true as competition intensifies and metal-consuming OEMs streamline their supply chain.
A recent report from Modern Metals, for example, states that more and more large manufacturing customers are starting “to winnow” their supplier list. “They want to deal with fewer and fewer suppliers, and work with them to help develop new products, improve and optimize products and improve delivery performance,” Christopher Plummer, managing director of consultancy Metal Strategies, tells Modern Metals. By working with only a select list of suppliers, Plummer states that customers want “closer, more cooperative relationships.”
Of course, the question then becomes, how? How do fabricators build closer, more cooperative relationships with current or perspective customers?
Perhaps the answer lies in some research coming out of the University of Tennessee. As reported by Forbes, university researchers studied some of the world’s most successful business relationships to learn the “secret sauce” for getting the most out of business relationships. The research project, which was funded by the United States Air Force, found that the answer starts with the intent of building a “a win-win relationship,” Forbes reports. The findings also revealed that the most successful organizations followed five rules when developing business relationships. According to Forbes, these five rules include:
- Outcome-Based vs. Transaction-Based Business Model
- Focus on the WHAT not the HOW
- Clearly Define and Measure the Desired Outcomes
- Pricing Model with Incentives that Optimize the Business
- Insight vs. Oversight Governance
(To read more about these higher level strategies, you can check out the full Forbes coverage here.)
On a smaller scale, this could simply mean adding on some additional capabilities to meet the specific needs of your customers. According to this white paper from the LENOX Institute of Technology, in addition to higher quality, tighter tolerances, and zero errors, a growing number of customers are asking fabricators to provide value-added services.
Waukesha Metal Products, a metal fabricator and metal former based in Sussex, WI, is a great example of what this could look like. In a case study published by thefabricator.com, Jeffrey Clark, the company’s president and CEO, describes how Waukesha Metal Products evolved from a simple parts supplier into a provider of “best value solutions.”
“We have provided them the solutions they need in metal forming, and that’s why we went from being just a tool and die shop to a stamping provider then to a metal former to a fabricator of assemblies for our larger OEMs that require those components,” Clark tells thefabricator.com. “We are now graduating into more and more complex assemblies as we go. We’re becoming much more integrated into the supply chain for the customer.”
According to the article, the company accomplished this by some key investments in analysis software and automation, as well as some strategic acquisitions that enhanced their capabilities. You can read more about the company’s journey here.
While there is no sure-fire formula for becoming a value-added supplier, these examples show that it can be done and, more importantly, that many companies are already doing it. By closely evaluating the needs of existing and potential customers—and then finding new, innovative ways to meet those needs—fabricators have a prime opportunity to add value to their customer relationships and their bottom line.
January 15, 2015 / best practices, Cost Management, human capital, industry news, LIT, resource allocation, strategic planning, value-added services
Industry reports continue to paint a positive picture for the future of U.S. manufacturing industry. As we reported in a previous blog, one trend that continues to gain traction is “reshoring” or “near-shoring”—the process of moving a business operation from overseas back to the local country. While China has been a common landing spot for outsourced manufacturing, rising labor and energy costs are quickly taking away the region’s cost advantage and many companies are bringing manufacturing back to their local countries.
According to an article from Forbes, the greatest reshoring will likely occur in industries that benefit most from cheap natural gas and have access to global markets, as well as industries with products that change rapidly but whose product value/weight ratios do not justify air freight. This includes the apparel and technology industries, chemicals, and metal manufacturing and fabrication.
That’s great news for the U.S. metals industry, but how can companies make the most of this opportunity? In an editorial for IndustryWeek, Jim Moffatt, CEO of Deloitte Consulting LLP, says the key will be for companies “to think beyond costs and consider the ways that manufacturing in the U.S. can unlock value, unleash innovation, and create opportunities for growth.”
As a key player in the U.S. metals supply chain, you too can create opportunities for growth. Below are a few questions to consider:
- Are there previous customers that could now benefit from the convenience and cost benefits of your U.S. manufacturing base? This article from thefabricator.com gives a great example of how one supplier of fabricated metal assemblies was able to win back old business.
- Could a little investment attract some new customers or industries that are starting to reshore? Appliance makers, automotive, and aerospace are just a few of the industries starting to reinvest in U.S. manufacturing. Check out A.T. Kearney’s 2014 Reshoring Index for a list of the top reshoring industries.
- How can you better serve existing customers? Are there value-added processes you can add to your operation to stay competitive? According to this white paper from the LENOX Institute of Technology, more and more service centers are relying on adding services like sawing, laser cutting, and parts fabrication for a more predictable stream of revenue and to gain an edge over the competition.
- Does your company have access to talent that could accommodate possible growth? A recent editorial published by Forward says that reshoring is heightening the need for recruitment. Are you prepared?
Of course, there is no guarantee that reshoring will take off as much as everyone expects. In fact, there are several reports, including these from Manufacturing.net and The Guardian, that say reshoring trends are overstated. There are also some very real challenges that American metals companies are up against when competing with the global market, most notably high U.S. steel prices.
No one really knows the future, but right now, growth is happening—whether it is simply part of a cyclical recovery or the start of a manufacturing boom. Either way, it boils down to this: There has been a shift, and how you respond will dictate the impact it will have on your industrial metal-cutting operation.
December 30, 2014 / agility, best practices, Cost Management, customer delivery, industry news, Output, productivity, quality, resource allocation, ROI, strategic planning, value-added services
As a critical part of the aerospace supply chain, industrial metal-cutting companies need to be sure they understand both the needs and challenges of their end users. As a supplier, this not only helps you provide better service to existing customers, it allows you to anticipate new growth opportunities.
Overall, the aerospace and defense industry had a decent 2014. According to the Year-End Review and Forecast from the Aerospace Industries Association (AIA), sales were expected to end up at $228.4 billion in 2014, up from $219.4 billion in 2013. The association also reports that aerospace exports maintained an upward trend throughout 2014, and sales of commercial aircraft paced the industry’s sales growth.
Early reports indicate that this year may show similar trends. According to mid-December article from Reuters, Boeing is expected to deliver a record 754 commercial aircraft in 2015, an increase of up to 5.5 percent. Honeywell also expects industry deliveries to be “up modestly again” in 2015 and forecasts a 4-percent average annual industry growth in jet deliveries over the next decade.
However, experts are also anticipating major challenges for aerospace industry, including the continued effects of sequestration and decreasing defense budgets. AIA believes that these obstacles are “adversely stifling innovation, resulting in significant layoffs of the industry’s highly-skilled workforce” and, ultimately, will hinder the aerospace industry’s global competitiveness. In fact, AIA uses the term “uncertainty” to describe its overall outlook for 2015.
So where is the opportunity for the industrial metal-cutting companies serving this industry? As AIA suggests, aerospace manufacturers will need to focus on efficiency and innovation to stay competitive, whether that includes developing new approaches to solving everyday challenges or exploring cutting-edge processes. In other words, they will have to look for additional avenues for saving money and time, which is where a trusted supply partner can help.
The key for metal-cutting companies will be finding ways to offer their aerospace customers value. This could include investing in advanced metal-cutting tools designed to meet the unique demands of the industry or equipping employees with certifications and specialized training.
Below are examples of two metals companies that have intentionally positioned themselves to better serve the aerospace industry:
- TW Metals, a specialty metal distributor and processer recently featured in Modern Metals, has focused its efforts on helping its aerospace customers shorten the supply chain and eliminate any waste. Using machinists approved by the OEMs, TW Metals partners with the entire supply chain to provide the end customer with just in time parts, including full “kits” like wings and tail assemblies, MM reports. The metals supplier also has its employees go through extensive training and certification specific to the aerospace industry’s needs. “The more you add value, the less total cost there is for the customer,” Bob Mraz, TW Metals Sales & Marketing VP, tells Modern Metals.
- Universal Machining Industries Inc. (UMII), a job shop based in Muenster, TX, has invested heavily in aerospace manufacturing technologies to address the unique needs of its customers. According to an article from Canadian Metalworking magazine, the company has transitioned from primarily stand-alone vertical machining centers to horizontal machining centers in automated cells. This helped the shop meet customer requirements for shorter lead-times and reduced part costs, as well as internal benefits such as improved workflow management and a more positive team atmosphere. “Through these investments, UMII has witnessed continual year-over-year growth and a 60 percent increase in total production over just four years,” Canadian Metalworking reports. You can read the details about the technology investments here.
In the end, successful suppliers know that winning customers has to be about both cost and value. Tailoring your company and processes to meet the unique demands of the industries that you serve will not only position you as a valued supply chain partner, but as an agile, industrial metal-cutting leader.
November 10, 2014 / best practices, Cost Management, LIT, operator training, performance metrics, resource allocation, strategic planning, value-added services
In today’s competitive marketplace, it is tempting for fabricators to base their supplier relationships on price. Yes, quality may be important as well, but cost typically makes or breaks the deal.
However, a growing number of manufacturing leaders are starting to place more value on their supply chain and seeing it as an enabler of business strategy. Aligning Supply Chains with Business Strategy, a report by Tompkins Supply Chain Consortium, makes a strong case for the importance integrating strategy with supply chain management. According to the report, 80 percent of participants felt it was important to connect your supply chain strategy with your business strategy.
“We found that the better the level of alignment, the more likely it is that companies are achieving their objectives for cost reduction, customer service, and other metrics,” states Bruce Tompkins, executive director of the Consortium and author of the report. “The greatest take-away from this report is that the importance of an integrated strategy cannot be ignored.”
There are many ways to strategically manage your supply chain. For example, this article from the Institute of Supply Management outlines a tool known as “supplier relationship management” (SRM). However, the first step in good supplier management is to clearly identify and define the relationships you currently have. “The Strategy Behind Choosing Strategic Suppliers,” an article published by IndustryWeek, divides supplier relationships into four categories:
- Strategic suppliers are those suppliers that provide services or products that expose a purchaser to excessive cost or order fulfillment risk.
- Key suppliers are those where alternatives exist, but resourcing would expose a purchaser (assume OEM) to above average cost or order fulfillment risk. Key suppliers are less “strategic” than strategic suppliers.
- Approved suppliers are those where alternatives exist and resourcing exposes an OEM to average cost and order fulfillment risk. Approved suppliers are less strategic than key suppliers.
- Basic suppliers are those where alternatives exist and resourcing exposes an OEM to only routine cost and order fulfillment risk. These suppliers are non-strategic.
Paul Ericksen, author of the IW article, warns managers to make sure they categorize their suppliers carefully. While it might seem logical to throw suppliers of commodity products in the “basic” category, these types of suppliers can actually be strategic (“approved” or “key”) depending on how critical they are to your operation. “It is important to be highly disciplined such that suppliers are categorized solely based on the potential for negative financial impact that resourcing from them presents, not by the type of products they supply,” Ericksen says in the IW article.
Once you have identified your strategic suppliers, the next step is to position those relationships so that they bring value to your company. A white paper from the LENOX Institute of Technology offers a few best practices:
- 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.
- Do your 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?
- 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 the end, today’s competitive marketplace requires manufacturers to focus more on value than on cost if the objective is long-term success. While cost-effective products provide short-term benefits, aligning the right suppliers with your business strategies—and then leveraging their services to achieve company goals—will likely offer a greater ROI than any product ever could.
October 5, 2014 / agility, Cost Management, customer delivery, customer satisfaction metrics, LIT, Output, productivity, resource allocation, strategic planning, value-added services
In today’s competitive landscape, many industries are finding that enhanced customer service is becoming more important than ever. Companies like Amazon are raising the bar on what customers should expect from a service provider, whether that means Sunday deliveries or using the latest technology to improve the purchasing experience.
Not surprisingly, the so-called “Amazon effect” has found its way into the manufacturing world. Supply chain consultant Lisa Anderson says she has seen this first hand with all of her manufacturing and distribution clients. On-time deliveries, she says, are no longer enough. Today’s customers are looking for suppliers that can offer faster lead times and value-added services that will benefit their bottom line. Sound familiar?
In this blog post, Anderson suggests several ways manufacturers can provide Amazon-type service in their own operations. From same-day delivery to collaborative programs, she challenges manufacturers to think outside their service “comfort zone” and consider new ways they can add value to their customer relationships.
This trend has already started to take root among leading service centers. As stated in this white paper from the LENOX Institute of Technology, more and more service centers are relying on value-added processing services like sawing, laser cutting, and parts fabrication for a more predictable stream of revenue. These additional services offerings are also helping these companies gain an edge over the competition.
What could this mean for your service center? What services could you add? The answer to those questions will vary based on the needs of your customers, your budget, and simply put, your willingness to change.
To help get your wheels turning, below are examples of three metal service centers that decided to enhance their current services in some way. While each company took a different approach, all three have found that value-added service has been beneficial to both their customers and their business.
- Klein Steel, a service center recently featured in MetalMiner, decided to pursue a national nuclear quality assurance standard called NQA-1. According to the MetalMiner article, this not only helped the company better serve its existing customers, but expanded its geographic footprint. In addition, because the NQA-1 standard goes beyond ISO standards, it has opened doors for the service center to serve the wind, oil, and gas industries as well. You can read the full article here.
- Recently named the 2014 Service Center of the Year by American Metals Market, Berlin Metals LLC literally turned its attention to its customers as a means for differentiation. The company conducts a formal customer satisfaction survey every year and then uses the results to set its improvement objectives and strategies. It also engages in a continuous feedback loop where all customer concerns and accolades are constantly communicated to management and employees. To enhance communication, the company has developed a multidimensional website that serves as an educational resource for its customers, as well as for its employees and suppliers. Berlin’s efforts have more than paid off — the service center’s 2013 survey showed that 98% of respondents would strongly recommend the company and 95% said the service center had earned their support. You can read more about the company and other AMM winners here.
- Churchill Steel Plate Ltd., a service center startup featured here in Modern Metals magazine, is focusing on the strengths it offers as a smaller firm. Jim Stevenson, the company’s president, believes that consolidation within the service center industry has compromised customer service, and his goal is to change that. “We are small, customer oriented, flexible, nimble and able to do things most customers don’t get from larger competitors: Fast delivery and quick response times,” he says in the MM article. “I want to provide a response to customer inquiries in hours, not days.” So far, the strategy has been working. Stevenson tells MM that he is “burning plate in two to three days after receiving an order” and that he is “picking up new customers from all over the country.”
September 20, 2014 / best practices, bottlenecks, continuous improvement, Cost Management, customer delivery, customer satisfaction metrics, customer service, productivity, strategic planning, value-added services
In today’s world, most manufacturing executives wouldn’t exactly consider metal cutting to be the most innovative industry. Important? Yes. Evolving? Yes. But innovative? Probably not.
However, experts are saying that too many people underestimate the value that innovation can bring to any industry—or to any company for that matter. A recent article from Jeffrey Chidester, director of Policy Programs at University of Virginia, believes that innovation is the key to saving American manufacturing. And he’s not just talking about efforts from big names like Google and Apple.
“For over a century, America has produced individuals and ideas that have transformed how we interact with the world around us, and it remains the global leader today,” Chidester says in the article published by IndustryWeek. “Yet, while America continues to lead the way in disruptive innovations, its insatiable drive to open new frontiers sometimes overlooks the importance of innovating within current industries.”
Chidester goes on to argue that it would serve our country (and its industries) better to stop thinking “outside the box” and start thinking “inside the box” so that we can enlarge what we already have. This concept, widely used throughout Germany, focuses less on radical innovation and more on incremental improvement.
And while Chidester’s argument is focused more on smaller firms creating technology for the manufacturing industry—not necessarily the manufacturers themselves being innovators—the case for innovation holds. If innovation is the key to leadership, the question becomes: How can your machine shop innovate? If given the opportunity, what new ideas could your staff come up with to improve productivity, save costs, or expand your business? How can you “enlarge your box” to become an industry leader?
If we use Germany’s theory of incremental improvement as a basis for innovation, the concept seems less daunting. Instead of trying to revolutionize your operation, start with trying to find a new approach within the ordinary processes you follow every day. Not sure where to start? The Harvard Business Review offers four steps for “finding something original in the ordinary:”
- Question. Don’t just ask the obvious questions. Look deeper and don’t be afraid to rethink basic fundamentals about your business and products.
- Care. Caring doesn’t just mean giving great customer service. Get to know your customers as intimately as possible.
- Connect. Find ways to bring together concepts, people, and products. Many great breakthroughs are “mash-ups” of existing ideas.
- Commit. Give form to your idea as quickly as possible. This is the only way to know if you’ve touched on something truly promising.
What could this look like in a machine shop? D&J Technologies, a machine shop featured this white paper from the LENOX Institute of Technology, was able to expand its “box” by simply re-evaluating its outsourced services. After taking a close look at its operation, the shop discovered that sending out parts for nickel-plating was causing a bottleneck and making it difficult to guarantee on-time delivery of finished parts. By bringing plating in-house, D&J was able to provide its customers with an additional service, remove a production bottleneck, and speed up the delivery process.
A recent article from Modern Machine Shop goes even further by suggesting that shops should consider forming their own insurance companies to save money on taxes. “Section 831(b) of the Internal Revenue Code specifically creates a tax incentive for businesses to form their own small insurance companies that can provide them with a broad range of risk management capabilities,” the article states. “Basically, the captive insures those risks that a typical property and casualty insurance company does not, such as the loss of a large customer or a key employee.” (You can read the full article here.)
The point is that innovation doesn’t have to be about iPhones and analytical software, and it shouldn’t only be expected from tech firms. In fact, many people consider Disney to be an innovative company because of how it runs its business, not because of what it makes. Can your customers say the same thing about you?
August 28, 2014 / blade selection, bottlenecks, continuous improvement, Cost Management, human capital, material costs, operator training, productivity, skills gap, strategic planning, value-added services
With this year’s International Manufacturing Technology Show (IMTS) just wrapping up, investment decisions about production equipment and technology are at the forefront of just about every manager’s mind. While unstable market conditions make it tempting for companies to keep their dollars close, demands for faster delivery and a shortage of skilled workers are making it hard for most metal-cutting companies to keep up without some capital investments.
For many companies, those investments will be in equipment and tooling. According to the 2014 Metalworking Capital Spending Survey by Gardner Research, U.S. metalworking facilities will spend $7.442 billion, an increase of almost 19%, on new metal-cutting equipment in 2015. The same report forecasts that tool sales will be at their highest level in more than a decade.
Another report from market researcher IBIS states that “private investment in metalworking machinery has been improving and demand has been steady.” IBIS also predicts continued growth over the next few years due to renewed demand from machine shops and an upturn in automobile sales.
Meanwhile, experts are saying that managers need to start spending more time and money on their human capital. As this white paper from the LENOX Institute of Technology (LIT) discusses, today’s metalworking executives need to optimize every aspect of their operation. While it is easy to rely heavily on equipment and tooling to improve efficiency, more and more companies are finding that it is just as important to account for—and correct—the human variables that can contribute to productivity. This could include everything from working with colleges to secure new talent to instituting ongoing training and incentive programs.
To help companies get a bigger picture perspective on where they should put their money, LIT asked two industry experts to share their thoughts on industry trends, the benefits of technology, and what they think it will take for metal-cutting companies to stay competitive. Read as Don Armstrong, national accounts manager at Marvel Manufacturing Company, Inc., and Rick Arcaro, vice president of Sales & Marketing at Hydmech, weigh in.
What technology advancements have helped metal-cutting companies address the challenges they face in today’s marketplace?
Armstrong: I think the problem of how to increase productivity without adding personnel has been greatly helped by the amount of automation that is available in today’s machine tools. In addition, the advances in cutting tools have given our customers the ability to process more product with fewer machines. The concern over the availability of skilled workers has been offset to some extent by user-friendly controls, preprogrammed settings, and the ability to network machines.
Arcaro: New machines and blades have improved productivity and lowered cost per cut, and simple controllers have allowed companies to hire a lower skill level of operator to run them. Machines that are simple to maintain with the availability of parts off-the-shelf when needed have also helped customers get parts out the door faster with lower processing costs.
How have these advancements contributed to the bottom line?
Armstrong: The highest cost for any business is generally people, i.e. salaries and benefits, so whenever you can increase productivity without increasing your workforce, the bottom line will benefit.
Arcaro: Companies that have adopted continuous improvement management have reduced processing bottlenecks, kept their operations and workers as efficient as possible, while lowering operation costs and increasing the bottom line.
What is one up-and-coming advancement that industrial metal-cutting companies should know about or should consider as today’s market evolves?
Armstrong: I think a trend that metal-cutting companies should keep an eye on is the increasing use of composites and other materials in areas where metal was once used. This trend has been most noticeable in the automotive and aerospace industries.
Arcaro: Service centers need to continue to invest in value-added processing. Several factors are fueling investment in new equipment today: automation and computerized controls that make the latest machinery much more efficient, productive, easy to service, and user friendly. Companies should also look for machines and technologies that will extend tool life and reduce tool-change downtime.
What practical tip would you give an industrial metal-cutting company trying to compete in today’s marketplace?
Armstrong: I would advise them to build on their most valuable asset, their employees, by emphasizing training and ongoing education. I would encourage employees at all levels to get to know their customers in order to better understand their needs and help provide solutions for them. And, finally, I would remind them to look beyond traditional manufacturing processes for new ways to apply the knowledge that they have gained in metal cutting.
Arcaro: Knowing your place and position in the market is key. Trying to be good at everything is impossible—be great and profitable at something.
August 15, 2014 / best practices, bottlenecks, continuous improvement, Cost Management, customer satisfaction metrics, KPIs, LIT, operations metrics, Output, performance metrics, productivity, quality, strategic planning, value-added services
If the words the “Internet of Things” and “real-time data” mean nothing to you or your metal-cutting operation, you may want to lean in. A growing number of industry experts believe these buzzwords may just transform the manufacturing industry.
“Today’s more powerful sensors and devices, connected to back-end systems, analytics software, and the cloud, are transforming industries, right now,” says Sanjay Ravi, Worldwide Managing Director, Discrete Manufacturing Industry at Microsoft in this blog post. “With the rise of these connected operations, manufacturing executives are not only finding new ways to automate and create efficiency, they are also focusing on a big new opportunity for revenue growth—services.”
In other words, forward-thinking manufacturers are finding that connecting their production equipment to the Internet and/or to other devices is providing insight into their internal operations they may not have been able to get otherwise. By gathering production data and then using software to make it understandable, they are improving efficiency and uncovering new service opportunities.
And according to Ravi, this is no passing trend. Quoting research from IDC (commissioned by Microsoft), Ravi says “manufacturers stand to gain $371 billion in value from data over the next four years.”
A recent article from Forbes echoes this sentiment, stating that factories that are connected to the Internet are more efficient, productive, and smarter than their non-connected counterparts. However, the article also says that only 10 percent of industrial operations are currently using the connected enterprise, which means 90 percent are missing out.
The way in which manufacturers can use connectivity will vary by industry and application, but as this article from O’Reilly Radar describes, the Internet of Things (IoT) and connectivity are revolutionizing manufacturing policies and procedures in two key ways:
- For the first time, managers can actually know what’s happening on the assembly line to both products and machinery in real time.
- That information can be shared, also in real time, with anyone inside or outside the enterprise who could improve their operating efficiency and decision-making with that real-time data.
As the Forbes article describes, companies like manufacturing giant GE, bread maker King’s Hawaiian, and Sine-Wave, a provider of technology solutions, are already taking full advantage of what many are calling the “information revolution.” At GE’s Durathon battery factory in Schenectady, NY, for example, 10,000 sensors on the assembly line, along with sensors located in every single battery it produces, allow managers to instantly find out the status of production.
This is happening in the metal-cutting world as well. According to this white paper from the LENOX Institute of Technology (LIT), one metal service center developed an internal software system to automatically track the number of square inches processed by each band saw and each blade. At any point, the operations manager can go to a computer screen, click on a saw, and see how many square inches that saw is currently processing and has processed in the past. This has allowed the service center to easily track trends and quickly detect problem areas.
Tim Heston, senior editor at The Fabricator, also sees the opportunities sensors, data, and connectivity offer the metal fabrication industry and its supply chain. “Imagine a future in which you have trillions of sensors able to predict customer demand throughout the supply chain, monitor machine conditions to prevent unplanned downtime; and a future with machine tool technology and manufacturing methodologies allowing shops to change over between jobs within seconds (some of this technology is already here), all synced with customer demands,” he says in a recent editorial. “In short, imagine a future in which the majority of activities in the supply chain add value.”
Does connectivity have a place in your metal-cutting operation? Could it? At the very least, these are the questions leading companies should be asking. Unless, of course, they are part of the 10 percent that is already connected.