July 28, 2014 / best practices, continuous improvement, lean manufacturing, LIT, productivity, skills gap, strategic planning, value-added services
There is no question: Lean manufacturing has forever changed the way the world makes products. However, as the market changes and demands shift, the manufacturing industry is starting to embrace strategies that either challenge or go beyond traditional “lean” principles.
And, really, that is what leaders should be doing. The world is much different than it was 25+ years ago, when manufacturers first starting implementing Toyota’s lean strategies. In industrial metal cutting, for example, the ultimate goal will always be to move more metal, but as this white paper from the LENOX Institute of Technology suggests, global competition, talent shortages, and an unstable market have created a whole new set of challenges that a simple lean tool won’t be able to fix.
Today’s market requires leaders to keep a pulse on “what’s next” so they can create innovative, strategic solutions that balance internal efficiency with external demands. Below are just a few leading-edge trends we found that are stretching the traditional notions of best-in-class manufacturing. Not all of these strategies will be directly applicable to every metal-cutting organization, but they certainly provide new perspectives and alternative approaches that could just change manufacturing as we currently know it.
- Micro-factories. There are several experts that believe custom manufacturing is making a comeback in the U.S. While there will always be a need for large-scale manufacturing, an article from Inc. states that there is a rising demand for small, custom “micro-factories” that can offer faster turnaround and higher quality than a low-cost, mass manufacturer can offer. While some smaller metal-cutting shops may already be taking this approach, the article also suggests that now is the time to amp up your branding message. “Build a reputation for quality products and friendly service,” the Inc. article states. “If you do, you will command premium pricing, rather than the commodity pricing of an anonymous supplier.”
- Co-Creation. Building off the notion of micro-factories, some industry leaders are enlisting the help of others to help innovate, drive, and implement new ideas. In mid-May, GE launched the global co-creation community FirstBuild.com. With this new online platform, the manufacturing giant will give participants the opportunity to help identify market needs, directly participate in the product development, and watch via social media as ideas speed from mind to market at the manufacturer’s newly opened FirstBuild micro-factory in Louisville, KY. Using a combination of co-creation and micro-manufacturing to design, engineer and build new products, GE believes it will “create a new model for the manufacturing industry.” How could this impact industrial metal cutting? In a recent editorial, Robert Brooks, editor of Forging magazine, says he isn’t convinced the co-creation model will replace the current supply chain model or the “obvious need for engineered goods like forgings,” but that doesn’t mean companies shouldn’t be on alert. “If such an development and organizational strategy takes hold for an industrial powerhouse like GE, the incentive will be set for others, including investors and lenders, for similar compressions of production time and cost,” he says.
- Single-Cavity Production. A recent article from Forbes challenges the notion of mass production, stating that making things in batches isn’t always the most efficient way. Quoting lean manufacturing evangelist Ted Duclos, the article argues that “America can revitalize its manufacturing base by making things one at a time.” Specifically, the article discusses single-cavity production and how that strategy has already shown promising results at big-name manufacturers like Chrysler. You can read the full Forbes report here.
July 10, 2014 / best practices, blade selection, cost per cut, lean manufacturing, LIT, productivity, quality, ROI, value-added services
At first glance, achieving the perfect cut may feel like a minor detail to a high-production fabricator. With a host of other operations taking place, a simple process like band-saw cutting may seem like a small fish in a sea of looming operational challenges.
However, as the industry continues to adopt the principles of lean manufacturing more and more managers are realizing that even the smallest details can have a huge impact on an operation. From shop organization to preventative maintenance checks, every improvement—and managing every bottleneck—has a bottom-line implication.
This requires today’s fabricators to focus on improving individual processes like metal-cutting, not only for the small productivity gains they can achieve, but also for the benefits it could offer down the line. Case in point: Straight cuts are necessary for a proper weld. When cuts aren’t straight, welders have to fill gaps with filler or welding wire, both of which can affect the overall quality of the part. Or, in a worse-case scenario, the metal might have to be completely scrapped—a huge waste of time, material, and, of course, money.
On the other hand, if the right equipment and metal-cutting procedures were used, the cutting and welding aspects of the operation would be optimized, costs would be controlled, and time would be saved. In other words, it pays to get it right.
The LENOX Institute of Technology (LIT) knows what it takes to get the best cut out of your operators and the best “cost per cut” out of your blades. The following are few tips and tricks fabricators can use to optimize their band-saw cutting operations:
- Have the right tools. In some cases, optimization may mean upgrading tooling and equipment. For example, a fabricator featured in this white paper found that upgrading to a higher-end, general-purpose bi-metal blade resolved an issue it was having during a high-volume cutting job it was handling for a military customer. Operators were snapping blades, “snaking” cuts, and missing productivity goals. However, after evaluating the type of cut and the material, the fabricator discovered that it was overloading its blade and needed to upgrade to achieve both quality and efficiency. After switching from a 4/6 teeth per inch (TPI) blade to a 3/4 TPI blade (and adjusting the blade speed and feed force accordingly), the company went from getting only eight to 16 hours of cutting per blade to 72 hours per blade with continuous cutting.
- Use the proper band speed. Band speed refers to the rate at which the blade cuts across the face of the material being worked. Faster band speeds can lead to faster cutting rates. However, band speed is restricted by the machinability of the material and ultimately heat produced by the cutting action. Too high a band speed or very hard metals produce excessive heat, resulting in reduced blade life. You can determine if you are using the right band speed by evaluating the shape and color of the metal chips. The goal is to achieve chips that are thin, tightly curled and warm to the touch. If the chips have changed from silver to golden brown, you are forcing the cut and generating too much heat. Blue chips indicate extreme heat, which will shorten blade life.
- Use the proper feed rate. Feed refers to the depth of penetration of the tooth into the material being cut. For cost effective cutting, you want to remove as much material as possible as quickly as possible by using as high a feed rate/pressure as the machine can handle. However, feed will be limited by the machinability of the material being cut and blade life expectancy. As with the speed rate, you can determine if you are using the feed rate by evaluating the shape and color of the metal chips. Overall, the proper speeds/feeds combination should produce chips that form the shape of “6’s” and “9’s.”
- Remember to lubricate. Lubrication is essential for long blade life and economical cutting. Properly applied to the shear zone, lubricant substantially reduces heat and produces good chip flow up the face of the tooth. Without lubrication, excessive friction can produce heat; high enough to weld the chip to the tooth. This slows down the cutting action, requires more energy to shear the material and can cause tooth chipping or stripping which can destroy the blade. Unfortunately, many operators fail to perform this basic maintenance task because they don’t fully understand how lubrication can affect cut quality and costs. For a great training resource on the importance of metal-cutting fluids, check out this video from the Society of Manufacturing Engineers.
- Ask the experts. Tooling and equipment suppliers can offer a wealth of information and tips. This is especially true in today’s marketplace, where suppliers are expected to be more of a partner than a vendor. A strong supply partner should be able to offer value-added services that advance your cutting operation and optimize your processes. This could include troubleshooting support, blade selection, training, and helpful reference tools like the one featured here.
For more metal-cutting tips and tricks, you can download the complete white paper, Understanding the Cut: Factors that Affect the Cost of Cutting, here.
June 28, 2014 / agility, best practices, continuous improvement, customer delivery, customer satisfaction metrics, lean manufacturing, LIT, predictive management, preventative maintenance, productivity, root cause analysis, strategic planning, value-added services
As customers continue to redefine delivery expectations, manufacturers need to have strategies in place to not only meet those changing requirements but, even more so, anticipate them. Getting ahead of customer needs is the key to both retaining and gaining customers in today’s metals industry. As many leading manufacturers are discovering, agility is what sets you apart.
What does it mean to be an agile manufacturer? According to this overview from leanproduction.com, agile manufacturing “places an extremely strong focus on rapid response to the customer—turning speed and agility into a key competitive advantage.” An agile company is able to take advantage of short windows of opportunity and adapt to fast changes in customer demand. This tactic can be especially attractive for industrial metal-cutting companies that are trying to gain an advantage over offshore competitors.
Whether you are a high-production machine shop or a low-mix metal service center, below are a few best practices we gathered to help your industrial metal-cutting organization move from an “on-time” service provider to an agile, customer-focused partner:
- Invest in Smarter, More Predictive Operations Management. Manufacturing agility starts with adopting more predictive operations management approaches. For example, don’t just focus on avoiding downtime; find ways to plan for it. According to a recent benchmark study from the LENOX Institute of Technology, 67% of industrial metal-cutting operations that follow all scheduled and planned maintenance on their machines also report that their job completion rate is trending upward year over year—a meaningful correlation. The implication is that less disruptive, unplanned downtime and more anticipated, planned downtime translates into more jobs being completed on time. By implementing a strategy as simple as adhering to a preventative maintenance schedule, managers can actually anticipate maintenance bottlenecks and turn “interruptive downtime” into “predictive downtime.” This not only makes it easier to schedule and meet time demands, but it can also help with other operational aspects such as improving cutting performance and extending equipment life—all of which add up to happy customers and lower costs.
- Think (and Plan) Like Your Customers. Being agile goes beyond completing a job on time. It also means taking the extra step to anticipate customer needs and then plan accordingly. Karay Metals, a metal service centered featured here in Modern Metals (MM) magazine, has taken this approach with its mandrel tubing customers. Typically, drawn over mandrel tubing comes in certain standard lengths, usually anywhere from 17 feet to 24 feet, the MM article states. However, Karay discovered that such a wide variance creates guesswork for its customers and as a result, can hamper their productivity. In response, Karay now offers tubing in 20- to 24-in bundles so its customers know exactly what they are getting, adding a convenience that its customers have come to expect and appreciate. As the MM article reports, the service center takes the same approach with inventory, stocking items its customers may need quickly. These strategies may veer away from traditional “lean” approaches, but they also build customer trust and loyalty—benefits that may not be measurable, but could prove to be valuable. This also a great example of how being “lean” isn’t necessarily the same thing as being “agile.”
- Above all else, communicate. Put simply, agile manufacturing requires fast turnaround. However, as this article from thefabricator.com confirms, on-time delivery continues to be a struggle for most industrial metal-cutting companies. Why? According to thefabricator.com article, most manufacturers would blame overproduction, subcontracting, customer mix, and scheduling. And while those issues certainly contribute to late deliveries, the article suggests that they are not the root causes. The real culprit, it states, is often poor communication and documentation. For example, improper labeling may cause an operator to cut the wrong material, or a sales person may fail to explain certain job specifics. Neither of these issues has anything to do with the actual cutting of the part. “Often a part spends more time in the virtual world, being discussed in e-mail after e-mail, than it does on the shop floor,” the article states. As senior editor Tim Heston suggests, this means that today’s managers should be focused on breaking down departmental barriers with strategies like cross-training and procedural documentation, to name a few. This type of communication is especially critical for manufacturers looking to achieve speed and agility. There is simply no time for mistakes.
June 15, 2014 / best practices, continuous improvement, LIT, operations metrics, operator training, performance metrics, productivity, quality, ROI, strategic planning, value-added services
Most manufacturers understand that they are only as good as their supply chain. Quality starts well before a product enters the doors of a production facility.
Industry leaders, however, are finding that with a little strategy, the supply chain can add a lot more than a quality service or product. When positioned correctly, they can add value.
A recent report from Tompkins Supply Chain Consortium confirms this philosophy. After polling 172 supply chain professionals, a strong 80% of respondents reported that they felt that the supply chain is an enabler of business strategy. A majority of companies also felt that supply chain is a source of business value and a competitive advantage. This, along with the report’s other findings, led the Consortium to conclude that the importance of an integrated supply chain and overall business strategy cannot be ignored. “The better the level of alignment is, the more likely it is that companies are achieving their objectives for cost reduction, customer service, and other metrics,” the report stated.
What’s interesting, however, is the report revealed that a fairly high 35% consider the supply chain a standalone function. This indicates there still is some work to be done. Positioning and treating your supply chain as trusted partners—not just as independent service providers—can be an effective strategy in helping you achieve company goals. For instance, if your goal is to increase productivity, perhaps your suppliers can offer troubleshooting expertise and even training in specific areas of your operation. Or, as was the case with leading metal service center Aerodyne, they may even be able to provide useful, practical tools like free software to help your operators work smarter.
As this Forbes article states, long-term, worthwhile suppliers should treat manufacturers as more than just clients. They, too, should treat you like a partner, which means they should be willing to offer more than one-dimensional service. If that isn’t the case for your organization, it may be time to reevaluate your supply chain or, even more so, reevaluate how you are utilizing your supply chain.
How do you position your supplier relationships to bring value to your company? A recent white paper from the LENOX Institute of Technology offers the following strategies:
- 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.
- Have your partner help you measure performance. Most managers have heard the mantra, “You can’t improve what you can’t measure.” However, most industrial metal-cutting companies don’t possess all of the knowledge, resources, or infrastructure necessary to collect efficiency data, let alone analyze it. This is where a supply partner can help. By working closely with your supplier, you should be able to gather some quantifiable, useable data.
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.
May 28, 2014 / agility, best practices, bottlenecks, continuous improvement, customer delivery, LIT, quality, ROI, strategic planning, value-added services
What does it take to keep your customers satisfied? In today’s demanding market, most industrial metal-cutting companies would say high quality, competitive costs, and on-time delivery. However, those have always been the hallmarks of any good manufacturer, and some might argue that the last few years weeded out any companies that even remotely lagged in these key areas.
So, what does it really take to keep your customers satisfied? Or, as this Inc. article points out, perhaps the better question is whether or not customer satisfaction is what you should be trying to achieve. According to the Inc. author, customer satisfaction is “tepid and minimal”, has “no bearing on future buying decisions,” and can be “safely ignored.”
Instead, manufacturers should be spending their efforts building some level of customer loyalty, the article argues, as well as what the Inc. author calls “product evangelism.” In short, the author maintains that companies need to focus less on simply satisfying customers and, instead, focus more on: 1. bringing value that goes above and beyond, and 2. a strong brand message that is unique and relevant. As the article title suggests, that is how you develop a customer relationship that “trumps all the rest.”
The Inc. author isn’t the only one buying into this mentality. In recent years, many leading companies have endeavored to take their customer service to the next level, creating what consultant Lisa Anderson refers to as the “Amazon Effect.” From no-hassle refunds to 24-hour availability, Anderson believes that manufacturers and distributors have something to learn from the exceptional service standards set by Amazon. “It has become apparent that those businesses that leverage the Amazon Effect will thrive while the rest are left in the dust,” Anderson said in a recent article from Industrial Distribution.
How you “amp up” your customer service game will largely depend on what you already have in place, but the following are a few strategies to get you thinking:
- Revaluate Outsourced Services. Sometimes enhancing customer service may be as simple as bringing an outsourced service in-house. While this strategy may not always be cost-effective, for D&J Technologies, it was worth it in the long run. The machine shop, featured in this white paper from the LENOX Institute of Technology, 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.
- Engage Customers. As many leading companies are discovering, the voice of the customer can be a valuable tool. According to a recent research report from consulting firm Aberdeen Group: “The customer has become much more than a product delivery channel and instead has morphed into an integral stakeholder with the clout to determine the viability of the organization, and their voice can no longer be taken for granted.” Of course, customer feedback requires some form of measurement, which can mean anything from tracking every call to your service center to having your sales team proactively reach out to customers for input. The goal is to both gather and leverage customer feedback to identify problem areas and reveal new service opportunities.
- Get Savvy. While Twitter hasn’t exactly changed the face of industrial manufacturing, many companies are finding ways to use the digital revolution to gain an edge. For example, Sapa, an aluminum extrusion manufacturer recently featured in a Modern Metals, has added its design manual to Apple’s App Store. According the company, the app provides a new channel to reach customers as well as any other professionals that are eager to learn about aluminum and aluminum profiles. The manual is also available on the company’s website and has more than 4,500 registered users, Modern Metals reports.
- Develop a Story. As the Inc. article states, building a compelling company message can attract customers on an emotional level that goes beyond cost. What is unique about your company and its values? How do your services translate those values? Most importantly, how are you communicating this message to your customers? This article from Fabricating & Metalworking provides more than 20 tools to help you build your organization’s brand story.
May 20, 2014 / benchmarking, best practices, continuous improvement, customer satisfaction metrics, lean manufacturing, LIT, productivity, quality, ROI, strategic planning, value-added services
As the industrial metal-cutting industry becomes more competitive, a growing number of machine shops are looking for ways to differentiate their operations, whether that means offering value-added services or implementing the latest lean techniques.
One best practice that many of today’s leading shops tout is ISO 9001 certification. The standard, described in detail here, is based on a number of quality management principles, including a strong customer focus, the motivation and implication of top management, and continuous improvement. The basic goal of the standard is to help companies provide customers with consistent, good quality products and services, which, in turn, often brings business benefits like improved financial performance.
Metal Cutting Service, a specialty shop based in City of Industry, CA, has reaped the rewards of ISO certification, including improved productivity and quality. The company, featured in a series of LIT case studies, estimates that quality has improved 20 to 30% since it became ISO certified more than 12 years ago.
However, ISO certification isn’t a quick fix nor should it be taken lightly. Like any company-wide initiative, it requires time, money, and strategic planning. Here are a few points to consider before undergoing ISO certification:
- Understand the purpose. If you haven’t done so already, do your own research on the standard. You can download a basic brochure here. As this Quality Digest article states, many companies go into ISO 9001 certification under the incorrect assumption that the standard itself is supposed to be implemented to ensure quality. However, as the QD author states, this just isn’t true. “ISO 9001 was never intended to be used to design or implement quality management for any organization, but merely to assess quality management,” he says. “Sure, management might glean some details about QMS [quality management system] development from analyzing ISO 9001 requirements, but the requirements are not supposed to establish any QMS. A company must first establish real-time standard operating procedures (SOPs), and then look at how they compare to ISO 9001 requirements.” In other words, as the author quips, make sure you don’t put the cart before the horse.
- Reach out to other shops. Finding out why and how other machine shops approached ISO certification can help you determine if certification is worth the time and financial investment, as well as what you should (and shouldn’t) do in the process. As this Modern Machine Shop article suggests, contact some certified shops—particularly ones about the same size as yours—to get a feel for whether ISO certification is right for your operation. If you find a shop that hasn’t found value in certification, try to find two shops that have had a good ROI and then compare their approaches. However, managers need to realize that no two certification processes are going to be the same. The cost and time of ISO 9001 registration and implementation will vary depending on the size and complexity of your organization and on whether you already have some elements of a quality management system in place.
- Consider getting some support. If you decide to follow through with certification, there are several services and consultants that can help. Although third-party support may initially seem cost-prohibitive, don’t completely write it off. You may find it is worth the investment, especially if you are short-staffed. You can find a list of training and other service providers here on ThomasNet.com, and there are also several software programs available that can help you streamline the process. This is also an area where external insight from other shops can be helpful. Did they utilize any support services? If so, what was the most helpful? If not, do they wish they would have in hindsight?
April 5, 2014 / best practices, continuous improvement, human capital, industry news, KPIs, LIT, maintaining talent, operator training, performance metrics, skills gap, value-added services
As the industry heads into the second quarter, uncertainty remains. In fact, as we state in our 2014 Industrial Metal-Cutting Outlook, uncertainty may be the only thing that is certain right now.
Like most sectors of the metal-cutting industry, metal service centers have experienced little if any growth in 2014. January started off with a much-needed improvement over December, with small increases in shipments and reduced inventory levels. However, February wasn’t as strong as many had hoped. According to the latest figures from the Metal Service Center Institute, U.S. service center steel shipments in February 2014 increased by 0.4% from February 2013, and 2014 year-to-date steel shipments increased by 0.2% from the same period in 2013. When looking at total volume from January to February, service centers’ shipments of steel and aluminum actually declined, reports IndustryWeek.
In other words, we aren’t quite there yet. Experts like the Manufacturers Alliance for Productivity and Innovation (MAPI) are hopeful that the rebound is coming, but until then, there are several industry trends that we feel will be key for metal service centers in 2014. Here are a few to keep in mind:
- Diversification. Shrinking profits and political issues like budget sequestration are making diversification a key strategy for service centers. In a recent column appearing in the March/April issue of Forward magazine, business journalist William P. Barrett stresses that this is especially important for companies that service the military. He states, “But it also seems prudent, in these times of daffy congressional budget strategies, to diversify as much as possible to dilute the risk that haunts the business of military contracting.” In some cases, this may mean forming new customer relationships, or it could mean offering existing customers a few value-added services (e.g., sawing, laser cutting, and parts fabrication) for a more predictable stream of revenue. You can read a great case study of one metal-cutting company’s successful “reinvention” here.
- The Skills Gap. We’ve all heard about the skills gap, and at this point, we may even be sick of hearing of hearing about it. But the issue is real, and like every manufacturer, service centers need to address it. For example, the latest U.S. Total Manufacturing Index revealed that manufacturing job openings for the latest three months is 16.1% above the year-ago quarter, and the rates-of-change are improving. According to analysis from IndustryWeek, this means that manufacturers should “expect upward pressure on wages as skilled labor becomes even harder to find.” While finding and training new employees is a large part of addressing the gap, as this white paper from LIT points out, it is just as important for today’s industrial leaders to focus on maintaining and improving their existing workforce.
- Metrics, Metrics, Metrics. Continuous improvement is the mantra of most manufacturing leaders these days, and as any lean consultant will confirm, this requires measurement. There is no question that industry buzz words like “metrics” and “KPIs” will continue to be important tools for industrial metal-cutting leaders; however, knowing where to start and what to measure can be a daunting task. Although the “right” KPI will vary by organization, as this blog discusses, there are a few simple guidelines managers should follow to determine the most effective performance measurements for their metal-cutting operation. For those who want a more in-depth look at metrics, MESA International is offering a webinar, “Manufacturing Metrics that Really Matter” on April 16. Based on a 5-month research study by MESA and LNS Research, the webcast is targeted at manufacturing executives, continuous improvement team members, and plant managers/supervisors that want to use metrics to optimize their business performance.
March 30, 2014 / continuous improvement, Cost Management, forecast, human capital, productivity, supplier relationships, value-added services
Steel has a rich history in America and around the globe. It has often been called both the backbone of manufacturing and the building block of society—and rightly so. We rely on steel in many industry sectors, including automotive, aerospace, infrastructure, and consumer durables. The health of our sector is critical to the economy, as well as the quality of life that many of us enjoy.
As a global company that services the industrial metal-cutting industry, we at LENOX Tools have a unique vantage point of what is happening within the larger metals market. We have watched some companies barely survive these last few years, and we have also seen leaders rise to the occasion. And while there is still a lot of uncertainty within the marketplace, we are confident that with the right tools, 2014 can be a year of opportunity for many of our customers.
According to the Steel Manufacturers Association, the short-term prospects for the steel industry are no more certain in 2014 than they were in 2011, 2012, or 2013. While 2012 was a good year for the industry, with significant increases in both crude steel production and consumption, 2013 wasn’t as good as everyone had hoped. According to the World Steel Association, U.S. steel production was down 2% in 2013 compared to 2012, and forecasts estimate that apparent consumption only grew a mere 0.7% in 2013 over 2012. (Final data has not been released.)
But there are some promising signs. The World Steel Association’s October outlook stated that steel demand is expected to increase by 3.0% in 2014, aided by the improving global economy and activities in the automotive, energy, and residential construction sectors. In addition, as reported by Modern Metals, both automotive sales and construction housing starts are expected to increase in 2014.
Even with these positive indicators, most metals companies remain cautiously optimistic about the near-term future. According to an annual survey of metal executives by American Metal Market, the majority of respondents expected business to improve, with only 8% stating they were less optimistic about business as they headed into 2014. However, three in four respondents said political events have heightened uncertainty, and only 30% of executives expected the economy to turn around this year.
As the industry continues to wait for a true economic comeback, we are seeing some major strategic shifts in the businesses that we service. Unfortunately, a few businesses just could not find a way to survive, but many others were able to adapt and found smarter ways to work. They became leaner, more productive, and made investments where they mattered. We have also seen the emergence of several industry trends, such as consolidation and an influx of new services and products, as companies attempt to remain profitable.
One trend that we hear a lot about is “on-shoring” or “near-shoring”—the process of moving a business operation from overseas back to the local country. China, of course, has been the common landing spot for outsourced manufacturing in recent history. However, with rising labor and energy costs, China’s cost advantage is disappearing. That, along with the difficulties in managing a business across the globe in countries with vastly different work and social cultures, is helping drive the “on-shoring” trend. This is great news for the U.S. metal-cutting industry, as we will help rebuild America one business at a time.
When the market does finally rebound, companies need to be ready. Based on our experience, we at LENOX Tools see the following best practices as critical action items for companies that want to be prepared for quick growth:
- Equip Employees. To succeed in today’s competitive market, industrial metal-cutting companies need to optimize all aspects of their operations, including their human capital. This is especially important as the industry deals with a major skills gap. As highlighted in the white paper, Accounting for Operator Inefficiencies in the Metals 2.0 Environment, operator training needs to be ongoing. This is especially important for companies that have multiple shifts and a diverse mix of talent. By instituting regular operator training, managers can level the shop floor talent and add consistency to production procedures. This also encourages a spirit of continuous improvement among experienced operators who often resist change.
- Build Partnerships. Perhaps one of the greatest benefits of an increasingly competitive market is that many suppliers are offering value-added services to differentiate themselves—a trend that is especially beneficial for smaller industrial metal-cutting companies. Support in areas such as preventative maintenance, troubleshooting, and even software tools can help improve productivity and, ultimately, save costs. By leveraging the knowledge and services of trusted suppliers, companies can turn vendor relationships into strategic partnerships that have a real impact on the bottom line.
- Invest in the Right Tools. Forward-thinking managers know that long-term success usually requires some investment, whether in time or capital. Now more than ever, companies need to weigh their cost expenditures against the benefits or detriments of dollar-allocating decisions. However, managers need to be sure they are not shortsighted by upfront costs and, instead, consider the long-term benefits of improved productivity. For example, many of our customers that deal with hard, difficult-to-cut metals have found that investing in carbide-tipped band saw blade is worth the up-front investment because it improves cost per cut. Shop-floor decisions and investments need to be strategic and should help achieve larger company goals.
Another Year of Improvement
The reality is that no one knows what 2014 will bring, which makes agility and strategy critical. In fact, uncertainty is perhaps the only thing that is certain in this market. However, there are two things the last few years have taught us: you can never be too prepared, and there is always room for improvement.
Industrial metal-cutting leaders know they cannot afford to rest on their laurels—not in 2014 or in the future. Continuous improvement is the only way to succeed in today’s market, and best-in-class managers are proactively encouraging change at all levels of their organization. We at LENOX Tools are ready for another year of improvement, and we look forward to helping equip our customers and their employees with the tools they need to make this year one of their best.
February 20, 2014 / customer delivery, 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. In a recent blog post, 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?
Anderson goes on to suggest 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.
What does this look like in a machine shop environment? What services can you add? The answer to that will vary based on the needs of your customers, your budget, and simply put, your willingness to change. Adapting to customer needs is critical in today’s unpredictable market, but as the landscape gets more competitive, anticipating customer needs can give your shop the edge.
Below are examples of three shops 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.
- D&J Technologies, a machine shop featured in this white paper from the LENOX Institute of Technology [LINK], recently decided to bring nickel-plating services in-house. Previously, the company had to send parts out to be plated and then wait for their return, which made it difficult to guarantee on-time delivery of the finished part. By bringing this service in-house, D&J was able to provide its customers with an additional service and speed up the delivery process.
- WSI Industries, a contract shop in Monticello, MN, offers its customers several services that go beyond manufacturing precisely machined components. Featured here as one of Modern Machine Shop magazine’s Top Shops of 2013, the company also provides assembly, component testing, and inventory management to enable daily delivery of sub-assemblies to customers when required. This, the article says, has elevated the shop from a mere vendor to a valued partner.
- O’Neal Manufacturing Services, a Greensboro, N.C-based contract metal manufacturer of fabricated metal components, has found that in some cases, meeting customer needs requires investment. As described in this article from Modern Metals, the manufacturer realized that in order to land a huge project, it needed to upgrade its flatness capabilities by modernizing its processes and investing in a new piece of equipment. Using traditional methods, the article says that the flattening process would have taken 30 minutes. However, with the new machinery, the flattening process was reduced to just 45 seconds—an improvement that made all the difference in winning the project, according to the article. In addition, the article said the company expects its enhanced capabilities to open up new customer opportunities in other market segments.