Business owners around the country constantly look for ways to increase their margins. They direct their efforts at ramped-up marketing activities and faster quoting processes to increase their order volumes. At the same time, they focus on reducing labor expenses by investing in automation and new equipment.
When it comes to finding cost efficiencies for their raw material purchases, however, many manufacturers have exhausted all of their options. They’ve maximized material usage and negotiated the lowest price possible with suppliers. But, to maintain a competitive edge, they still need to bring down raw materials costs, which oftentimes make up the largest percentage of production costs.
For these fabricators, the remaining option for reducing material costs lies in purchasing in bulk. Whether it’s office supplies, consumables or even toilet paper, buying in bulk reduces the overall price for most goods. In the world of sheet metal fabrication, buying in bulk often means purchasing material in coil form. On average, rolled carbon steel is 5 to 15 percent cheaper than its sheet metal counterpart.
As attractive as 15 percent savings sound, coil isn’t for everybody. Several factors should be considered before making the switch.
Understandably, a fabricator’s product and material mix as well as the type of processing that is being carried out ultimately dictate the type and quality of material to use. With that said, not every fabricator will be a candidate for coil.
“Coil won’t replace sheet everywhere,” says Sylvain Touboul, U.S. managing director for Dimeco, a producer of sheet metal coil production systems. “When it comes down to it, there are some parts where you can only use coil and there are other parts where you can only use sheet. For a fabricator that works with multiple materials types and thicknesses on very short part runs, coil wouldn’t be appropriate. On the other hand, for a manufacturer with longer runs of similar parts or families of parts that don’t have a lot of material variation, then it would make sense to use coil.”
Manufacturers will also need to factor in the equipment on their shop floors. To continue leveraging machines such as a flat-bed laser or a punching machine, the coil material will need to be cut to length. On average, they could expect about 270 sheets of 5-ft.-by-10-ft. material from a 20,000-lb. steel coil that is 60 in. wide.
“There will be an added cost involved for a cut-to-length line, but that cost will eventually be offloaded by the savings that come from purchasing coil,” Touboul explains. “The overall cost, however, will also depend on the quality of the coil you purchase and the quality of the sheet that you need. Typically, when someone has a flat-bed laser, they purchase laser-quality sheets. To produce laser-quality sheets in-house requires an additional investment in a higher quality leveler or straightener.
“It’s important to mention, however, that for manufacturers that are only punching, a leveler might not be necessary,” he continues. “Punching is a mechanical operation where you’re just striking the material. When you’re cutting with a laser, on the other hand, you’re heating the material and releasing stress within that can cause the sheet to bow and affect the quality of the laser cutting operation and its accuracy.”
It should also be noted that all laser cutting applications do not require laser-quality sheet. Ultimately, the choice of investing in a leveler or straightener depends on two main parameters: the quality of the coil material that is purchased at the beginning and the quality of the part that is expected in the end.
“There are basic straighteners that will do the job because the customer has purchased a good quality coil,” Touboul says. “But if they decide to purchase lower quality coil to save money, a leveler might be needed. It’s important to note that a leveler is much more expensive than a straightener.”
When it comes to utilizing rolled material, cutting to length isn’t the only option. Companies like Dimeco produce coil-fed equipment, where the material is fed directly into the machine, that can accommodate a variety of operations, including punching, laser cutting and forming.
“A big question from our customers is in regard to how many parts they can get out of one coil,” Touboul says. “In terms of material utilization, feeding straight from the coil to a punch press or laser results in more parts. On a flat-bed laser, the sheet has four edges – it’s a finite amount of space for nesting your parts. When you run out of space, you have to nest the next parts on the next sheet, which typically results in some scrap from that first sheet. With coil, which only has two edges, scrap is greatly minimized.”
In this scenario, material costs are decreased based on higher material utilization, but labor costs can also be reduced. When automation is added to a coil-fed system, as few as one operator can handle the entire operation.
“One person can load the coil and run the production – that’s all it takes,” Touboul says. “The material goes straight from the coil to the punching machine and then to automated material handling at the end of the setup that stacks and sorts out the parts. The operator is required to load a new coil and pick up the stacks of sorted parts only; they can run other machines during production. If they were using sheet, they would need to load and unload the material more than 270 times. It’s true that loading a coil can take longer than loading and unloading a sheet, but it only has to be done once.”
Storage space is an additional benefit of processing material directly from the coil. If a manufacturer chooses to cut the coil to length, those sheets will need to be stored somewhere. Yes, sheet material can be stored in a tower system or can be placed on pallets on the floor, but for manufacturers with limited floor space, coil utilization should be considered.
“Another thing for manufacturers to consider is that there’s no need to go straight into a fully coil-fed operation,” Touboul says. “That’s the beauty of cut-to-length lines. If you don’t want to start with the full setup, you can ease into it by starting with a cut-to-length line and then adding on the various components, such as for laser cutting or punching, down the road.”
The right application
Regardless of the method – cutting coil to length or working in a fully coil-fed setup – the ability to transition to coil will be based on a manufacturer’s material variation and product mix. The decision to transition will also be based on the level of equipment investments that are involved.
“If you compare the price of a coil-fed laser and a flat-bed laser, you have to factor in the additional cost of processing the coil,” Touboul says. “The investment can be more costly at the beginning, but savings on the material purchasing and utilization side will speed up the ROI.”
As with any investment, the time to reach ROI is determined on a case-by-case basis. More often than not, however, it is dependent on the level of automation that a potential customer already has in place.
“Customers that are using sheet but considering the move to coil will always save on material utilization and material cost, but maybe not on labor costs if they already have a good level of automation in place,” he explains. “But, if you have a customer that is starting from scratch or with a low level of automation in place, ROI will be incredibly fast – sometimes less than a year.”
For businesses that need help rationalizing the investment or mapping out the time to ROI, Dimeco provides consultancy services free of charge. And once a piece of equipment makes its way to a factory floor, service and training are available, as well.
“We continue to consult with our customers long after the initial investment to train their staff and support them in any way,” Touboul says. “In France, Dimeco is recognized as an official training center, so we have robust training programs in place, and we are developing the same in North America.”
In the end, the move to coil requires the right candidate paired with the right coil utilization method. It also requires a realistic approach.
“Customers that have tremendous projections in mind, like increasing production in the 50 to 100 percent range, have two options,” he concludes. “They can duplicate the operations they have today, but that means they have to duplicate their machinery as well as their labor. The problem with that approach is that duplicating labor is nearly impossible in the United States where labor shortages are already the norm. The other solution is transitioning to coil. And although coil alone won’t magically increase margins; coil connected to automation can.”