Several years ago Doug Gardner, president of Johnson City, N.Y.-based Hi-Tech Industries of New York, landed what’s increasingly rare today for fabricators: a multiyear contract. The shop’s Amada Pulsar 2-kW laser ran 24 hours a day and just couldn’t keep up, Gardner said, adding that the machine took 90 hours to process 2,000 pieces.
Gardner then got a new laser, the Amada LC-3015 F1 NT, a 4-kW system that could cut those 2,000 pieces in 21 hours. Later the shop installed a robotized press brake, an Amada Astro 100NT system that changes out specialized press brake tools quickly. The machine tool fits very well with another large contract from a customer who produces four units a week, and Hi-Tech Industries churns out 150 different components for each unit.
He pointed to one extremely complex component: a toaster-size stainless steel filter requiring 13 bends. The robotized press brake needs about 15 minutes to set up for this.
After talking with Gardner last week, I heard that earnestness and excitement so common among small-business owners. You can tell this guy loves machines and he loves his business. But under his enthusiasm is a pragmatic businessman. He didn’t buy machine tools just to get fast processing times. Fast cutting alone won’t make a business more profitable. If a shop owner buys a fancy new laser, and it just floods the floor with work-in-process and shoves insurmountable bottlenecks downstream, the company probably isn’t getting as much as it could out of a sizable investment.
His reasons for the technology investment could be boiled down to three areas, each directly related to the other: manufacturing predictability, flexibility, and inventory reduction.
“For some part [RFQs], we send them right over to programming, and five minutes later they give me a cycle time that’s good to within a second. It’s really easy to quote when you know exactly how long it will take,” he said. The shop’s software gives measurements for a future job’s cycle and setup time. That’s predictability.
Here’s the flexibility. Because the company can predict accurately the cycle and setup times for each job--and because those setup times have been dramatically reduced--managers can schedule based on a customer’s current demand. Say a customer wants 100 parts, but he wants only 10 a week. (These days no customer wants to hold extra inventory, after all.) In the past Gardner’s job shop would have processed those 100 parts all at once, housed them in finished-goods inventory, and then sent 10 out a week to the customer.
Now it’s different. Because inventory ties up cash, producing on forecasted demand, even if it involves just 90 extra parts, still has risk. An order change or cancellation the next week would mean the shop just churned out 90 parts for no reason. This is why if a customer requires 10 a week, Gardner’s company fabricators only 10 a week. The automation allows for those dramatically reduced setup times, so there’s little or no value in producing the complete order to avoid extra setups.
“In the past the setup time is what killed us,” Gardner said. “Setting up doesn’t add any value to a part.”
Dick Kallage, industry consultant and principal of KDC & Associates, Barrington, Ill., put it this way: “Job shops aren’t in the parts business. They’re in the setup business.”
This leads to the final benefit: inventory reduction. Because Hi-Tech managed to bring a certain level of predictability to the job shop floor, the company has been able to reduce raw, WIP, and finished-goods inventory.
“We have a great relationship with our [metal] supplier,” Gardner said. “We actually share our machine schedule with them, so it shows what material we need and when.” He added that because batch sizes are small, WIP remains minimal, finished goods are shipped immediately--and the company is paid for work much sooner.
Good material management, in fact, may be the keystone of healthy profits. According to the last “Cost of Doing Business Survey” from the Fabricators & Manufacturers Association, the shops with the highest inventory turnover happened to report the highest profits. These shops weren’t getting by with razor-thin margins either. As reported in year-end 2008 income statements, the most profitable shops had an average net income of 20 percent.
Altogether, Gardner said, these elements have helped the shop uncover value for customers. He said he doesn’t hesitate to suggest design changes, especially if they take advantage of new manufacturing technologies. For instance, he recently convinced one customer to switch from carbon steel to 0.028-in.-thick stainless. For certain stainless parts, the shop has laser-cut at about 6 inches a second.
Here’s the kicker: Gardner’s customer now doesn’t have to worry about powder coating.