There’s a typical scene on the floor of fabricating and service center companies across the nation: They’re chugging along OK, keeping their head above the water, but along the way, many are leaving money on the table – maybe a lot of it. No business is entirely leak-proof; a few extra hours of machine time here, some excessive scrap there, a couple of lost bids – it all adds up.
To get insight on this common situation, Shop Floor Lasers spoke with two industry veterans, Scott Lindley, U.S. national sales manager at Alpha Lazer, and Brad Stropes, chief operating officer at SecturaSoft. With their perspective on where companies may be able to plug the leaks, they offer advice on how to maximize profitability.
SFL: Where are the biggest opportunities for improvement in a fabrication business?
Lindley: On the fab side, it’s essentially old equipment, outdated processes and outsourcing. I visit many shops where they’re using an old plasma table, punch turret or CO2 laser, believing it’s a more efficient or cost-effective process since it’s paid for. The reality, however, is that more often that not, the old equipment is holding them back.
Fiber laser technology, for instance, is now far more efficient than CO2 lasers. And the previous notion that punch turrets are more efficient than lasers is no longer true. Similarly, routers used to be the best way to cut aluminum for boats, considering plasma tables and CO2 lasers couldn’t provide the cut quality. Today, fiber lasers now serve as an extremely good option for cutting aluminum, providing up to seven times the cutting speed, significantly tighter part spacing, and no hassle of tabbing parts in or worrying about the vacuum table. On top of that, the maintenance and energy cost of old machinery can easily eat up any savings gained by having the machine paid for.
But investing in new equipment is just one piece of the puzzle. I often see companies that have purchased new equipment and completely ignored the upstream and downstream processes. It doesn’t do much good to buy a more efficient machine that can cut parts seven times as fast if you can’t keep up with the machine. Software, too, will play a huge role in process improvement, allowing you to feed the machine more efficiently. Outsourcing is also another big consideration. A shop outsourcing $400,000 a year for profile cutting is likely paying about $115,000 for someone else to cut their parts, often having issues meeting production schedules, quality standards, and paying extra to ship parts and materials.
What’s your advice in regard to tech investments?
Stropes: From my perspective, the biggest obstacle for fabricators is winning business and being sure that the job will be profitable. In sales and profitability, the top shops deliver 45 percent better results than their competition. This is all due to their ability to quote much quicker, win more contracts, set standards and decrease estimating to delivery time. Keeping your pipeline filled by decreasing estimating time is the biggest key to get parts to your machines. Too many companies continue to rely on manually driven methods, such as spreadsheets or the experience of their most senior salesperson, but when automated quoting technology is available and affordable, it must be leveraged.
Lindley: Today’s modern fab shops, job shops and metal service centers incorporate a wide variety of machinery and software. But not every business needs the most expensive and sophisticated systems. For some, less is more, and careful consideration should be given before making a substantial equipment investment.
For example, today the gap has been closed between fiber lasers in terms of machine quality, cutting speed and part quality. What remains significant, however, is the cost and support. Unnecessarily overpaying for fabrication machinery adds years to recoup one’s investment. The most important thing, therefore, is to ensure that no matter what you invest in, don’t get nailed after the fact by extraneous support costs, held hostage by the machine manufacture for replacement parts at a huge markup or hit with long delays in getting support.
Once you buy a machine, your costs are locked in. The machine will cut parts at a fixed speed, consume a given amount of electricity, need maintenance and require set secondary processes. So, if you’re looking for ways to squeeze more profitability from your company, look at these old machines. Imagine saving 50 percent on electricity or cutting your maintenance costs by two thirds. What if you no longer needed to use micro joints to hold parts in place and your operator didn’t need to grind off the tabs? Imagine if you could cut twice as many parts in half the time with less equipment running more efficiently? It sounds crazy, but it’s not unrealistic.
A growing number of fabricators are replacing multiple machines on the shop floor with a single fiber laser. Because of their functionality and versatility, today’s fiber lasers are replacing CO2 lasers, plasma tables, routers and punching machines. Consider the savings realized by consolidating the costs of running multiple machines and multiple shifts.
In a recent benchmark study I conducted for a local manufacturer running five punch turrets over two shifts, I looked at three days of production on one machine, cutting about 77 sheets of anodized aluminum. After analysis, I was able to nest all 2,012 parts onto 62 sheets and cut the 48 hours of production parts in 5 hours. The fiber laser provided a 20 percent material savings and a 90 percent labor savings. Those numbers are hard to ignore.
What about material usage?
Lindley: Fiber lasers provide better material utilization via tight kerf diameters, dynamic nesting, common-line cutting and other material optimization features. I was able to reduce 77 sheets down to 62 by dropping the part spacing from 0.75 in. on the turret to 0.1 in. on the fiber laser and dynamically nesting all the parts. Rather than running the same program for each part or product with no chance of ever seeing a better yield, I combined all the production parts for three days and let the software sort it out dynamically. Today’s advanced nesting software can integrate with MRP/ERP systems, be fed by production schedules, deliver just-in-time product and eliminate waste.
How does intelligent data-driven quoting compare to traditional methods?
Stropes: Traditional methods focus on a group of individuals with a lot of experience, a spreadsheet and hours of detailing processes. Although this method has been used for a long time, it’s now being challenged with new technology. Today, we are capable of utilizing technology to obtain information directly from a part’s geometry. We can tap into the geometry to develop run times, material costs, sheet utilization and secondary operations to turn estimates around in minutes rather than days. Because of this, we can also maintain a level of cohesiveness and accuracy and win more by developing quotes much quicker.
How does automation impact the quoting process?
Stropes: At SecturaSoft, we have tripled the number a typical job shop can quote in a day.When you are able to produce three times the number of accurate quotes in the same time as it took to previously create one, you’ll see an increase in winning bids. As an example, the team at SecturaSoft was able to help a customer allocate more time on selling and less on estimating by allowing a single individual do the job of three. Because of this, the customer was able to reallocate those two extra resources to sales roles.
Are there additional areas for improvement?
Lindley: It’s so common for some companies to say, “this is the way we’ve always done it and it works.” But, I doubt any of the people saying that would trade in their smartphone for a rotary dial phone.
If you’re running an old CO2 laser, a non-hi-def plasma table, a waterjet, punch turret or router, check out the feed rates of fiber lasers. Find out how long it would take to cut your parts on a fiber laser and at what cost. Let the numbers speak for themselves. If you’re outsourcing about $300,000 or more in profile cutting and you own a press brake that can keep up, it might be worth bringing that work back in-house. A standard 5×10 Alpha Lazer M-Series fiber laser will begin to provide a return on your investment in the first year at about the $300,000 outsource level.
If you are considering a fiber laser, know this: Some machine manufacturers pick out a few key features of their machines to differentiate their machine over the competition. These features often serve as a distraction to what I have found to be consistently the most important factor in every machine purchase, which is service and support.
No matter the OEM, the cutting process is driven by the physics of cutting. Every laser machine applies a high intensity laser beam to heat the material and blows gas at high pressure to evacuate the cut. It doesn’t matter what brand or color the machine is. They are all limited by physics and should cut comparably. So, pick a machine that offers quality fiber laser profile cutting solutions with outstanding support at a reasonable cost.
Stropes: Because the speed of internal estimating and throughput are increasing, a company needs to focus on more traditional sales methods if they are looking to grow. The most successful shops I see in our industry are always driving new business and are looking to take on more work. In the past, this was impossible as the estimating process took so long, which is why we would see such a large number of estimators to a small number of traditional sales individuals. Because estimates can now be developed so quick, you must increase the sales funnel and look to obtain new customers.
Do you have advice for companies that are looking to invest in new laser equipment?
Lindley: As mentioned before, there are a number of well-established laser manufacturers on the market that are essentially offering the same machine build quality, level of componentry, cutting speeds and part quality. At Alpha Laser, we focus on building partnerships while providing quality fiber laser profile cutting solutions with outstanding support for all projects and budgets. We are a smaller North American company that is built on the understanding that aftersales support is the most important aspect of owning a machine. You want a machine that cuts parts with minimal downtime, and we want to know our machine is meeting expectations.
What advice do you have for companies in search of a new MRP system?
Stropes: I don’t believe it’s always necessary to replace a traditional ERP/MRP solution.Therefore, we oftentimes leverage the ERP/MRP solutions already in place and tie in our quoting platform. There are so many great solutions built to fill this market that we have no reason to try and compete in the ERP/MRP space. However, these solutions do a very poor job at developing quotes, leaving companies to rely on spreadsheets or pen and paper. At SecturaSoft, we would rather our customers develop their estimates in such a manner that the operations, geometry and cost information can be leveraged and transferred back to the ERP/MRP solution.
What about profit margins? What costs should be scrutinized?
Stropes: Engineering and part development costs are often looked at as sunken costs because they usually need to be done prior to developing the estimate, bid, RFP or RFQ. I, however, believe that re-engineering someone else’s drawing just to create a bid is counterproductive. Developing proper techniques and utilizing tools that allow you to bid on a job without engineering is the ideal approach. When you only engineer the job once you have won it, countless man-hours are saved – which means profitability rises.
What is the single biggest obstacle between a fabricator and profitability?
Lindley: It’s often hard or nearly impossible to see the inefficiencies from within. Things are working, you’re making parts, selling products, everything is good. Many fabricators think the key to profitability is to sell more, but pushing more products through an inefficient process will just make more waste – not more profit. It may take bringing in someone from outside the organization to take a look around, ask questions and uncover the low hanging fruit.
I often see companies that know they are maxed out at 6,000 rpms and can’t let up to grab a gear. They know they need to change, but they can’t. They need to let up on the throttle in order to shift gears and accelerate. Shift production elsewhere for a few weeks, upgrade your equipment and processes feeding it, and ramp it up.
It’s like a cartoon I saw recently showing a man pushing a cart with a flat tire and another guy standing beside the road with an air pump and a sign saying, “I can help.” The guy pushing the cart kept on going, saying, “I don’t have time to stop.” The time spent pumping up the tire would be made up many times over with his increased speed.