Job shop uses flexibility, not capacity, to gauge automation's success
August 1, 2009
IMEC, a small job shop in southwest Missouri, invests in automation not necessarily to increase capacity, but to increase flexibility.
These days a shop manager may look at material handling towers, offloading stations, and other automated setups and think the technology might be good for healthier times, but not today. What good is automation when even manual machines aren't running full-out even for one shift, let alone two or three? When demand slumps, automation may not be the best way to go, right?
Eric Merriman doesn't agree.
The plant manager at the Industrial Machine and Engineering Co. (IMEC) in Monett, near the southwestern tip of Missouri, doesn't manage a particularly large operation. With 30 employees and a range of machines on the floor from Amada, Mazak, Ursviken, PennEngineering, and others, IMEC is on the surface the quintessential job shop in a quintessential Midwest manufacturing community surrounded by farm country. Tyson and Hydro Aluminum plants are neighbors. By a bank of rocker-arm resistance welding machines a worker dutifully spot welds an enclosure. Close by another wields a gas tungsten arc welding torch with ease, finishing up some cosmetically important joints.
But look a bit upstream from these processes and you'll see machinery that doesn't fit the small job shop stereotype: a Mazak HyperTurbo-X 510, a 4-kW laser cutting system with a 10-bin material handling tower that can hold 66,000 pounds of raw material and an unload system that can hold 10,000 lbs. That's the stuff of a larger contract manufacturer or OEM, not a 30-employee shop (see Figure 1, Figure 2, Figure 3).
What if the system sits idle? If it's not running, it's not making money, right? Such an automated system is a hefty investment to have just sitting there.
Merriman shook his head and, again, didn't agree.
The Argument to Automate
Merriman conceded that he doesn't run the machine overnight as often as he did just after installing the technology last year, and the system has had its share of idle time. But for IMEC choosing automation didn't hinge on increasing capacity. (What shop needs to do that now?) Automation's biggest benefits have been lead-time reduction and predictable manufacturing time, which have another plus that's especially valuable now: better cash flow. Predictable production allowed the shop to reduce inventory.
"Because of our laser and the way we flow parts through the shop, we can buffer our processes with even less inventory," he said.
To be sure, shop floor automation doesn't automatically lead to better cash flow. Front-office sales and marketing have to bring in the work, and the shop must collect the cash for finished work—a challenge for many these days. But Merriman explained that as part of IMEC's lean initiative, the shop went with automation for the flexibility and fast response time. It all boils down to shortening the time it takes between obtaining an order and getting cash for it. The quicker a shop can respond, the sooner it can get paid.
As Merriman put it, "We were looking outward, not inward. We went to our customer surveys, which asked what obstacles were in their path and causing them pain. The biggest pain was lead-time, and one of our biggest pains internally was spikes in demand."
Automation has shortened manufacturing time to the point where IMEC can respond quickly to demand spikes. Because money is tight, customers often wait until the last possible moment to pull the trigger for a project. For instance, the shop recently turned around large laser-cut jobs in two days, a job that previously had a lead-time of several weeks.
"We approached automation not to run lights-out every day," he added, "but to run lights-out during peak times—those demand spikes. And that was by design. We never looked at automation as a way to run 150 hours a week of laser time. We only looked at it as a way to meet the needs of our customers."
The demand spikes presented an even greater challenge for IMEC because employees work only one shift. Operating lights-out allowed the company to handle those demand spikes without much struggle. True, during slow times the laser doesn't run lights-out often. But if a customer demands quick turnaround, IMEC can meet the need.
Automated systems are marketed to be modular, able to grow with the business, but can they shrink with it as well? Sure, a shop can add another tower as the customer list grows, but what if orders plummet?
"Our automation has shrunk with our business, just like the rest of our equipment," Merriman said. "Instead of running at an average of 50 hours a week, we're running at an average of 35 hours a week. When the economy goes down, the use of capital equipment goes down. When the economy goes up, the use goes up, and I think we're in a better position when the economy picks up than some of our competitors."
During unprecedented drops in demand, struggling shops have had no choice but to let go or furlough some employees; when times pick back up, shops rehire. But what about financed capital equipment? The payments keep coming, and the shop must continue writing those checks, which can be painful when the machine isn't running even close to capacity. Merriman, again, countered this argument.
"The flexibility benefit [from automation] outweighs the cost, even more so today than last year. If you aren't flexible and can't adapt quickly to customer changes, you're going to be out of the game. Automation gives us that ability to say 'yes' to a customer."
For instance, one customer places sporadic orders that involve cutting several hundred sheets of aluminum with a lead-time of about four days. In the past the shop would struggle to rearrange production, which meant sacrificing other orders. "Now we bring the job in, run it lights-out at night, and run the job with no pain," he said.
Also, adding some idle time for an automated system is a lot less painful than laying off workers and then having to rehire and retrain.
Merriman conceded the decision to automate didn't come easy. It took the shop a year and a half to take the plunge, and managers had to change their traditional mindset about ROI. "We had to look away from some of the dollar values and focus on what's important to our customer. And quick-turnaround, quality parts are more important to our customer—and to us in the long term—than always being able to capitalize that dollar amount back within three or four years."
Many shop supervisors have uttered (sometimes muttered) this phrase as automated cutting systems gained a foothold in the job shop marketplace during the past decade. It implies some not-so-subtle negativity. The monster eats sheets and spits out parts of identical material and gauge like nobody's business, leaving workers in the bending and welding cells either scurrying to keep up or waiting for parts in another batch to complete an assembly.
This hasn't happened at IMEC because managers carefully monitor the flow of information from order entry to scheduling and programming, and because they don't follow a batch manufacturing model. They run lean, producing only what's needed per the schedule—a schedule that may call for a range of material gauges, and change quickly.
"Shops need to handle changes in the work schedule easily, because that's the way of the world today," explained Robert St. Aubin, vice president of sales for Mazak Optonics Corp., Elgin, Ill. "There is no such thing as a 'hot job' anymore. It's just a schedule change."
This approach wouldn't be practical without another technical component. IMEC's laser cell features automated setup. Lens and nozzle changeouts, inspection, and spatter cleanouts happen without operator intervention.
True, changeouts could be avoided by using a compromised setup that handles a range of material thicknesses. But doing this, said St. Aubin, creates unnecessary waste and compromises that a lot of job shops lived with for years, including edge quality issues and the overuse of assist gas (because the nozzle is oversized for all but the thickest materials in the run). To run as efficiently as possible requires nozzles and lenses tailored for the job. "If you want to cut 16 gauge, you'd better have a 5-inch lens and a 1.2-mm-diameter nozzle. If you want to cut 0.5 inch, you'd better have a 7.5-inch lens and a 2-mm-diameter nozzle."
Alternatively, shops may nest as many parts onto identical sheets as possible before moving on to different material, which of course leads to batch processing. This increases beam-on time, but it also can flood the floor with parts that aren't needed for the job at hand—not a good thing. What good is an incredibly efficient laser if parts don't flow efficiently through the rest of the shop?
Automation gives IMEC "predictable manufacturing time."
"We're no longer at the mercy of up-and-down variations between changeovers and between jobs," Merriman explained. "The automation allows us to set up the next program and queue the next material while the machine is processing the current job. So it gives us a seamless transition from one job to the next. The operator no longer focuses on the job at hand but instead the job to come."
He added that predictable manufacturing time allows the company to improve quoting and scheduling. The shop uses Epicor's enterprise resource planning (ERP) system along with custom software to ease communication between the ERP and the shop's nesting software.
Because automation has made manufacturing time predictable, managers know how long parts are going to run on the floor, so they can schedule effectively and have a better feel for true load on shop floor machinery, not to mention true job costs. They can look at downstream processes and with a few clicks adjust the schedule to avoid adding to a bottleneck downstream. For instance, if they see excessive load in the brake area, they can juggle the cutting schedule to put flat parts on the laser that go directly to welding.
"Because we're not manually loading material for a job, we can load up multiple jobs at a time and, in the automation system, reschedule priorities as to when parts are cut during the day," Merriman said.
The automated cutting system simply draws from different material in the storage tower and, if necessary, changes the cutting optics to suit, then starts cutting. Cut blanks, tabbed in skeletons, are moved to the offload table, ready for workers to take them to downstream cells.
Shop managers have shifted their thinking away from machine utilization toward people utilization. Idle employees are more expensive than idle machinery. An idle person isn't providing value, no matter the circumstance, and because they're all cross-trained, IMEC's people are the organization's most flexible, dynamic asset. If downstream cells can't take more parts, "we take faith and shut that laser down and move the operator, who can provide value at another area of the shop."
IMEC's growth ranged from 5 to 8 percent until 2008; that year, when the shop acquired its cutting automation, the number jumped to 15 percent. Business has slowed this year, for obvious reasons, but not to the point where the shop is just hanging on to stay afloat. Again, said Merriman, it comes back to response time. As customers squeeze lead-times, this small Missouri job shop has been able to say "yes" to a job when others couldn't.
Robert St. Aubin, vice president of sales for Mazak Optonics Corp., Elgin, Ill., boiled down the problem contract fabricators face in slow times. "In order to maintain revenues, they have to handle more small jobs."
In the past companies may have sustained or grown on a few large orders to keep the floor humming. That's not so today. As demand plummets, so do volumes, which mean shops process more short runs to sustain during the downturn. Fortunately, he said, some of the best fabricators have overcome the challenges. No perfect solution exists, but several factors about automation have made life easier at the job shop during tough times.
Automated Front End. This, St. Aubin said, includes automated quoting, important if a shop is expected to bring a host of small jobs in the door. Once the order comes in, the job is scheduled, the CAD files are pulled, due dates and materials are determined, and nests are developed and downloaded to the laser. "The fabrication industry today has all sorts of great software," he said, "including great accounting systems, job tracking systems, engineering CAD/CAM systems. But historically, none of them talked to each other."
In recent years, though, "software systems have become available that tie everything together," he said, so that the scheduler can draw information from available inventory, and these can connect to CAD software, which in turn can talk to nesting software.
Fast Cutting and Changeovers. Today's lasers "are incredibly fast," St. Aubin said. Most machine tool vendors offer models with linear drives and other technologies to attain faster cutting speeds, automated sheet handling, and part offloading. More recently automated setup and changeover have made it so one laser can cut a variety of materials and thicknesses while maintaining healthy beam-on time. For instance, machines with automated setups now perform much of what the operator used to do: change the torch; conduct focal point inspection; replace the lens as necessary; change and inspect the nozzle; remove spatter as needed; and so on.
Control of Part Flow. With automated front-end operations and primary cutting processes, managers can tweak part flow downstream as necessary. If a press brake station can't take more parts, the schedule can be tweaked so the laser cuts flat parts that go directly to welding.
These factors, St. Aubin said, help shops shorten lead-time, reduce inventory (thereby improving cash flow), and help managers focus on what's truly challenging in a recession: those business relationships that spur a customer to submit RFQs in the first place. With shops tackling a host of small orders, managers spend more time finding customers and selling their shop's services. Short lead-time and high part quality at competitive prices all make a salesperson's life easier.