When I interviewed executives at Mayville Engineering Co., a seven-plant, 1,000-employee behemoth of a contract fabricator, I could tell the CEO Bob Kamphuis was proudest of one statistic. The company delivered on time over 99 percent of the time.
On time delivery of quality parts lies at the heart of contract manufacturing. Since the recession I’ve seen more shops take on the manufacturing of entire products, not just parts. Some already downsized OEMs decided essentially to get out of the manufacturing business. One executive I spoke with talked about how his now much smaller company still designs and sells machines, but outsources nearly all of manufacturing to local suppliers.
This makes sense, he said, because product line manufacturers need to follow the market--and the market may demand an entirely new product made of different materials, requiring different manufacturing processes. Outsourcing nearby, as opposed to overseas, means shops respond quicker. (Besides, inflation and economic uncertainty in Asia has made the labor cost difference less of an issue.)
Companies now think: Why invest in the people and equipment to make things when you have a reliable network of contract manufacturers close at hand? The key word is “reliable.” If that executive couldn’t find contract fabricators who could deliver quality parts on time, his company probably would be very different today.
On-time delivery has been a sticking point for years, and the 2011 Financial Ratios & Operational Benchmarking Survey from the Fabricators & Manufacturers Association reveals some telling figures. Forty-five contract fabricators reported their on-time delivery percentages, and 28 percent of respondents said they delivered on time more than 95 percent of the time. Meanwhile, 12 percent said that they delivered on time less than 80 percent of the time.
The job shop business is by its nature highly variable, of course, especially when it comes to setup times. A new press brake might take five minutes to set up, while an older brake might take hours, and those times may vary depending on who’s available to perform those setups.
Scheduling sometimes doesn’t account for this variability, and these days there is no shortage of opinion on how to fix the problem. We’ll be covering high-mix, low-volume scheduling in an upcoming issue of The FABRICATOR, but one insight I received from several sources made me pause:
Contract fabricators have more machines than skilled technicians who can run them.
One worker running a bank of massive laser cutting machines may seem like the epitome of efficiency, but it also increases risk if there aren’t more workers like him. A few skilled workers not showing up for just several hours can throw a serious wrench into part flow.
Sources tell me shops need skilled workers who are cross trained. Some of the best shops I’ve visited deliver on time not because they have the latest and greatest technology, but because they have workers who can move to different areas to meet demand. An automated cutting cell with amazing capacity may be able to run unattended all weekend, but without a person to program the machines, that advanced technology turns into a hunk of interesting iron.