Customers are an open book. They want a quality product at the lowest price possible. Put bluntly, they don’t particularly care if the process to make their parts is automated or
manual, complicated or straightforward.
“A customer isn’t going to pay extra for his part just because it takes two of your guys to unload your flat-bed laser,” explains Rich Torbeck, president of Coil Laser Solutions. “If you’re going to be his supplier, he expects you to consistently deliver competitive products, whether it’s raw material, sub-components or finished goods.”
Therefore, to earn a potential customer’s business, fabricators must cut the fat in their operations at every turn. Knowing that the competition is likely doing the same, fabricators must play the long game to achieve long-term competitiveness. That includes reducing and eliminating non-value-added processes, re-envisioning what their manufacturing floors should look like to achieve those goals and, equally important, understanding the true ROI of equipment investments.
The true cost
Calculating the true cost to produce a part requires much more than adding up the price of the material and the labor that’s involved. There are always overhead costs that must be addressed, but the scope of underlying costs is not always fully understood. To properly bid a job, a fabricator must be able to identify the value-added and non-value-added costs they are incurring.
Beyond the work that physically transforms the material into a finished good, such as cutting, bending and welding, there are value-added functions that play into the overall cost, including sales, engineering, and shipping or delivery, which must be accounted for when determining the true cost of a part.
Conversely, there are also non-value-added (NVA) activities that do not physically transform the part, but still come at a cost to the fabricator. These include, but are not limited to, loading and unloading materials into a machine, machine setup times and changing out tooling, transporting parts from one machine on the shop floor to the next and part rework if something goes wrong along the way.
According to the Michigan Mfg. Technology Center, an organization dedicated to supporting small to medium-sized Michigan manufacturers, value-added work can be defined with the acronym CPR: Customer pays for it, Physically transforms the product, Right the first time. Non-value-added activities are, simply put, any work that consumes resources, but does not add value to the product. Understandably, NVA activities add up quickly, costing the fabricator more to produce a part and, in turn, more that the customer must pay. These higher costs ultimately reduce a fabricator’s competitive edge.
The approach to reducing and, ultimately, eliminating NVA activities can start with process mapping, which is a function included in many MRP systems. In doing so, fabricators can get a closer look at the process steps required to get raw material to a finished part and the areas where that process breaks down.
Automation is another common approach when attempting to eliminate NVA activities, but what defines automation? While most might say that automation entails some form of robotics, the definition of automation should be broadened to encompass any activity that efficiently moves material toward its end result.
Future of manufacturing
As a distributor of Dimeco coil-fed manufacturing lines, Torbeck’s definition of automation goes much deeper than adding a robotic arm to a laser bed to load and unload parts.
A lack of skilled labor is just one piece of a bigger puzzle that includes rising material prices and competition from abroad.
“The United States today is still operating in the early stages of automation,” he says. “For the most part, we’re primarily just trying to reduce manual labor input because we can’t find workers. But what about rising material costs and overseas competition? I don’t think people understand what has to happen if we’re going to bring manufacturing back and move to the next level of competition with China and so many other countries, specifically Germany, which is more advanced in automation than we are here.”
To tackle these pressing issues, U.S. fabricators must re-envision manufacturing as they know it. To picture that competitive future, Torbeck looks no further than a Dimeco coil-fed manufacturing line.
Coil material, as opposed to sheet, is at the heart of a Dimeco manufacturing line. In addition to reducing material costs, coil-fed equipment delivers a continuous operation, meaning that material loading and machine setup times are greatly reduced. Compared to a flat-bed laser, which can only process one sheet at a time, a 20,000-lb. coil of steel measuring 60 in. wide can continually produce the equivalent of 270 5-ft.-by-10-ft. sheets of cut parts before any further manual intervention is required. When coupled with end-of-line automation, NVA activities are further reduced.
In some instances, Dimeco coil-fed equipment can also combine multiple operations in one continuous line. An example can be seen with rack-and-shelving components that are punched, rolled, and then stacked and sorted in a single, uninterrupted process.
“Manufacturing must be seen not as multiple siloed steps, but as one fluid operation,” Torbeck says. “This can be accomplished with a Dimeco coil-fed line, but it can also be accomplished by reducing the time and manual effort required to transport a part from one operation to the next.
“It’s amazing to see the various ways that companies are able to reduce their NVA activities,” he adds. “Some companies use technology to get there, but to be truly successful, re-envisioning a shop floor must also include a new focus on team dynamics.”
To reboot a manufacturing operation, increasing employee involvement can be the most valuable thing a company can do. Once internal teams, such as cutting, welding and purchasing teams, are established, it’s infinitely easier to address NVA issues. It can start with something as simple as providing these teams with a bonus whenever scrap rates are reduced, as just one example.
“It’s all about establishing trust and accountability,” Torbeck explains. “When employees are incentivized through trust and financial bonuses, of course, productivity naturally follows. Speaking of employees, the term “employee” is hierarchal. An “associate,” on the other hand, is a horizontal term. So, in terms of eliminating NVA activities, hierarchy is non-value added – it doesn’t give your team members the respect they deserve.”
Pay it forward
While there is plenty of low-hanging fruit to pick in terms of reducing the true cost to produce a part, investing in modern manufacturing technology is essential. Taking manufacturing into the next era cannot include the use of old technology just because it’s become more affordable. To justify the investment in new technology, fabricators must look beyond traditional ROI.
“When it comes to a manufacturing line like Dimeco’s, it’s important to remember that the price tag actually accounts for the three or four machines that it will replace,” Torbeck says. “It’s also important to account for the increase in business they could take on if they modernized their shop floor. With the right technology, a fabricator could potentially take on 25 to 50 percent more business tomorrow.”
Keep in mind that if the investment is a common solution that all competitors are using, ROI will be limited at best. It’s all about finding a competitive advantage. Torbeck can’t stress enough how essential it is to invest in new technology – even if a business owner thinks he can’t afford it.
“You’re already paying for the technology through inefficiency,” he says. “NVA costs you money no matter what you think. Why not use that money to pay for new technology?”