How quick response drives profits in metal fabrication
CR Metal Products embraces quick-response manufacturing
CR Metal Products Inc., St. Louis, follows the lessons of quick-response manufacturing, which preaches decreased capacity utilization of equipment and increased attention on just how jobs can be turned around in the quickest manner possible.
Steve Walters used to dread daily production meetings. People rushed into the conference room with a stack of papers showing the company’s schedule, which often had more than 1,000 active jobs, and a list of late orders. Salespeople frantically relayed customer requests. They identified which orders to expedite, and production managers rushed to the 100,000-square-foot floor to find a place to squeeze them into a jammed production schedule. This wasn’t easy. The fabricator’s turrets, lasers, press brakes, and welders all churned away seemingly nonstop amid piles of parts on racks, on skids, on the floor—everywhere.
Now Walters, president of St. Louis-based CR Metal Products Inc., no longer must endure daily production meetings. Instead, he holds a brief huddle on Monday mornings. For the first minute or so they may chat informally, perhaps have a good laugh. Then they spend a few minutes talking about major projects on the horizon. Managers talk of potential roadblocks that could prevent on-time delivery. They may bring up expedited orders, but they no longer need to be shoehorned into the schedule. They are just placed as the next job on the docket. The meeting is proactive, not reactive.
Anyone with metal fabrication experience would probably find this an odd sight, especially after visiting the shop floor. Some machines churn out parts, but certainly not all of them. Large machines, some costing more than $1 million, may sit idle for part of the day. Not many parts sit on the floor, either. There are no racks, no queuing areas. The shop looks like it’s just about to run out of work.
Thing is, CR Metal is having one of its best years ever. In 2004 the firm was a $10 million company with 85 employees. Last year the fabricator, then with about 100 employees, made $18 million; earlier this year managers were projecting $20 million, and that’s a conservative estimate.
In recent years the company has poured millions into new equipment, including an automated folding center from RAS Systems and a Safan electric press brake. They have Strippit turret punch presses and various laser cutting systems from TRUMPF, Mitsubishi, and others, including a large tower system for lights-out operation. The company also purchased nine (yes, nine) robotic welding cells. Several from SKS Welding Systems use a specialized microMIG™ process, which continually adjusts power settings to reduce heat input, ideal for the shop’s aluminum work.
Any shop manager who has invested so heavily in equipment may be at least a little worried that so many machines sit idle. But not at CR Metal, and it’s because of an improvement methodology called quick-response manufacturing, or QRM. Boiled down, QRM advocates efficient, effective movement of jobs, all in an effort to reduce the manufacturing critical-path time, or MCT: specifically, the time from when a customer orders a part until the first unit is shipped.
In a traditional shop environment, an order might spend not minutes or hours but days or weeks just sitting as work-in-process. This is what QRM calls “white space” time, and for most organizations it’s what consumes most of that MCT. According to QRM, that ever-lengthening MCT is what really skyrockets manufacturing costs.
The philosophy draws elements from lean manufacturing but adapts them to high-mix, low-volume environments. Like lean, QRM champions cells, though ones that are market-specific, not product-specific. It promotes cross training so that one worker can manage a job through multiple processes: say, from cutting to bending to hardware insertion; or from weld prep to fixturing to welding and grinding.
An unavailable machine—down for unexpected repairs, for instance—is a cause for concern. But an idle machine that’s available to accept more work isn’t worrisome; in fact, it can actually be a good thing, because it can handle the unavoidable machine-loading variability in high-product-mix manufacturing.
Counter to traditional thinking, QRM preaches the virtues of decreased capacity utilization. A highway jammed full of cars has stop-and-go traffic, and the same applies to a manufacturing facility jammed full of parts, with machines and people working furiously to process them all. In fact, a highway traveled at 75 percent of full capacity actually can handle more cars during a given time than when at 100 percent capacity, at which point even the slightest change in the traffic pattern can cause stop-and-go traffic, meaning it takes much longer for commuters to get home. The same thinking holds true for jobs on the manufacturing floor. If a shop on average runs well below peak capacity, it can handle more jobs in less time.
As long as that machine is in good working order, ready to accept a job when needed, it represents available capacity. And in the QRM world, maintaining that available capacity is key. It’s why CR Metal managers have made major technology investments in recent years, even though they may not be utilizing the equipment constantly over two shifts. More equipment builds available capacity, like adding extra lanes to a highway. It’s also why turnaround time has plummeted. An order that used to take seven days to process may now take only two.
“Our goal is to have that 12-lane highway, so that jobs can flow smoothly and quickly,” said Walters.
Making the Transition
A third-generation owner, Walters grew up in the business. His grandfather, Charles R. Walters (CR for short, hence the company name), caught the sheet metal fabrication bug during World War II working in defense plants. After the war he launched CR Metal Products out of his garage. Charles’ first order was to make a sign for a local cookie company. He manually fabricated it from start to finish.
Decades later, when his grandson was supervising the painting department, the operation had transformed into the typical contract fabrication operation, departmentalized and supposedly efficient, with traditional batch-and-queue part flow.
But Walters questioned the status quo. Why did workers stack flat blanks in racks by the press brake department, only to have them sit for days before the brake operators got around to them? Why did the brake operators then take those formed parts and stack them by the hardware insertion department? Why couldn’t one operator take a job from start to finish—or if not that, at least through as many processes as he could in a cell?
In fact, he asked, why wouldn’t cellular manufacturing work in a sheet metal job shop?
Fifteen years ago he and Mark Chadwick, a shop supervisor at the time, even drew a mockup of what they felt cellular manufacturing should look like. In each cell jobs could move from a punch press or laser cutting system to press brakes, hardware insertion machines, and other secondary operations like spot welding, drilling, and tapping.
“It was all there, but we were voted down,” Chadwick recalled. The change was just too dramatic and unconventional. After all, how could they possibly keep their machines running at optimal efficiency if operators moved jobs from one machine to the next? If machines aren’t running, they’re not making money—right? That’s what everybody had been taught for decades, so how could it possibly be wrong?
Years later, not long after Walters became company president, he visited a sales prospect who told him about a book called It’s About Time. Its author, Rajan Suri, developed the QRM methodology and founded the Center for Quick Response Manufacturing at the University of Wisconsin-Madison (www.qrmcenter.org).
“It was as if he was writing about CR Metal,” Walters said.
The company already had a few customer-specific cells, not unusual in contract fabrication, but it still had racks of WIP that sat for days or weeks. Sometimes workers cut, bent, and prepared parts for hardware insertion, only to find that the hardware wasn’t available. So the job was stacked to the side for a week or more. “We’d have workers eat their lunch on stacks of metal,” Walters recalled. “They turned [the WIP] into furniture!”
After Walters read up on QRM in late 2010, he spoke with Chadwick, now vice president of operations. “I remember saying, ‘There’s no one to fight us on this stuff anymore, Mark. We’re in charge!’”
Walters bought a dozen more books for the company leaders, including Chadwick. Managers attended a seminar at the Center for Quick Response Manufacturing in Madison, and by mid-2011 things began to change. Work wasn’t released to the floor until all ancillary items needed for the job—like that all-important hardware—was in-house and ready.
Several product-specific cells for high-volume customers remained as is, but the remaining products were grouped into several segments. From that, they ultimately came up with six fabrication cells, most of which are color-coded: heavy fabrication up to about 0.5 inch (green cell); precision, thin-gauge work (orange cell); low-volume fabrication (red cell); and a very short-run, customer-specific cell (see Figure 1 and Figure 2).
Cells have a turret punch or laser cutting machine that feeds parts to press brakes, hardware insertion, and sometimes a spot welder. Workers choose which job to tackle next, based on due date, then carry the product through as many processes as they can.
The company implemented what Chadwick calls a “bounty-based training system.” Workers receive bonuses if they cross-train on other proc-esses. It bases some of that bonus (or bounty) on a new skill’s difficulty, but most of the bounty is based on what’s needed. The shop now really needs welders who can program a robot, so learning those skills rewards workers with the highest bounty. Next come press brake operators, then laser operators, and so on. The bounty changes depending on what’s in demand.
Chadwick pointed to a short-run cell, with a low-powered laser cutting center, press brakes, and hardware insertion machines. These machines may produce several dozen of the same part, but orders of fewer than 10 parts are more common. “This is the first cell we created, initially to meet the need of one customer, before we started down the path of QRM.” He pointed to a small stack of various parts. “These will be powder-coated today and then shipped tomorrow.”
The cell is near the paint line, and for good reason, Chadwick said. A fork truck transporting $10,000 worth of product can be cost-effective, but driving back and forth to retrieve small orders worth $20 certainly isn’t. Per the company’s QRM practices, no matter how small a job is, if it’s finished, and if capacity is available downstream, it must move to the next job as soon as possible. So to reduce travel time for numerous small orders, CR Metal placed the low-volume cell close to the paint line.
Managing Shared Resources
Equipment like a powder coat line doesn’t fit easily into a cell. But operators do perform quick color change in less than a minute, using a simple box-feeder system. With such quick color changeover, paint operators usually don’t have a problem quickly processing various small orders being fed from cells upstream.
Like in powder coating, metal fabrication is full of manufacturing technology that at first glance may not seem to fit into a cellular concept, but managers at CR Metal said personnel have adapted the machines to make them work with the new part-flow model. For instance, Chadwick pointed out that, before QRM, the shop used to schedule its laser cutting tower system to the hilt, squeezing dozens of jobs onto various nests for maximum material utilization. After analyzing the operation, though, they realized workers spent more time sifting through piles of dissimilar parts, puzzling them together to specific orders. Sometimes they’d actually lose components and have to laser-cut them again.
Now the shop sends those small-quantity orders to the low-volume cell. The lower-power laser cuts much slower, and workers must manually load and unload parts, but that really doesn’t matter. Short-run jobs flow quickly through the cell and on to downstream processes. If a job calls for several thousand pieces, the laser cutting tower system may be run all day or overnight, unattended. But they limit the number of jobs they nest, so that in the morning workers can efficiently separate parts and send them downstream (see Figure 3).
Managers conceded that it has been difficult to break the “keep that machine running” mentality, especially when investing in new equipment. For instance, the company has an automated folding center that can bend parts in seconds. At first they decided that if a part could be formed in the folding center, it should be. So workers brought piles of parts to the folding system, which processed them in seconds.
But in early summer they had a revelation. Although the folder processed parts quickly and with incredible accuracy, the act of moving components to the folder actually increased overall manufacturing time. It was a jam on the manufacturing highway—a minor one, but a jam all the same. It meant fewer orders were going out the door and the shop made less money. This in turn actually made the folder’s return on investment longer, even if the machine ran full-out over a shift.
In mid-July Chadwick walked down the middle of a wide aisle next to the folding center, which at the time was sitting idle, with no parts in the queue. “This is the area formerly known as the queuing aisle,” he said, with arms spread wide.
The open area shows how fully workers and managers alike have bought into the QRM concept. If a job has complex forms, such as hinges or precision bump bends, or if the part is a bear to handle, it’s brought to the folder. But if it takes less time to form it to spec in a press brake, workers choose that routing (see Figure 4).
As Rich Cliver, folding machine programmer and operator, described it, “I used to form a part and have to stick it somewhere, and often different parts for a job got separated from each other. Now a job arrives with all the parts I need. I run them, insert rivet nuts if necessary [with a portable gun], then take them to spot welding—and it’s ready to go.”
Chadwick pointed out a one-piece form with a flange curved to match an adjacent flange perfectly, a design change that reduced customer costs substantially. Within seconds the folding machine formed the part to perfection. Without the folding system, the company couldn’t have formed the part so quickly and, quite possibly, wouldn’t have won the job in the first place. Not only has the folder helped decrease manufacturing time, it has helped the company gain more work in existing markets and enter new ones. Do managers care that the machine isn’t running full-out over two shifts? Not so much.
Scheduling and Estimating
Before the QRM transformation, if a special rush order came in the door, it had to be squeezed in among the hundreds of active jobs on the floor. Now each cell has its own, much less cluttered schedule. And because every job takes a matter of hours or, at most, a few days to make it through a cell, the new job simply is inserted into the schedule not as a “rush order,” but instead as “the next job.”
The cell approach also has made quoting much more straightforward, faster, and, according to Walters, more accurate as well. Previously estimators calculated job costs in a traditional manner, estimating the hours of machine time in cutting, bending, hardware, welding, and other processes. Now, because multiple operations are completed sequentially within a cell, the estimator assigns costs to blocks of processes (see Figure 5). So if a job requires cutting and forming, the estimate will quote one price for “cutting-forming,” instead of a separate price for cutting time and press brake time.
CR Metal’s improvement initiative now focuses on the welding area, where Corey Anderson, robotic welding programmer and fixture builder, is one employee leading the effort. Anderson builds fixtures, programs and operates robots, manually welds, and grinds components. In essence, he carries jobs through the entire joining process (see Figure 6).
Workers may fixture a part in a robot, then remove the part and manually weld the remaining joints the robot couldn’t access, if necessary. (This procedure still is faster than manually welding a component entirely, because the robots complete jobs so quickly.) Managers hope to rearrange the equipment so that everything needed to finish a part—a robot, manual welding station, grinding, and other secondary operations—are grouped together.
“We’re just now getting started with this,” Chadwick said. “It’s easy to move a press brake, but when you start moving robots, it’s a different story. You’ve got to think about electrical power, ventilation, air supply, and other factors. It’s a challenge.”
The Cultural Change
Many have said that the greatest challenge with any improvement methodology—be it QRM, lean manufacturing, theory of constraints, or anything else—is the cultural change. CR Metal’s experience fits this stereotype to some extent, but as Walters explained, the cultural shift wasn’t as difficult for some employees, especially front-line workers.
Many workers have embraced it. They now have a greater degree of control over how to process a job. If the next job calls for a product that can be bent either on the folder or press brake, the operator talks with the cell lead, and together they make the call based on current shop conditions. Not least, they see firsthand how more jobs are shipping out the door.
A greater challenge, in fact, was getting buy-in from supervisors—and who could blame them? For years their job performance was evaluated in large part based on machine efficiency in their departments. A decade ago it would have been unthinkable for them to let a large piece of capital equipment sit idle for half a shift.
“In the end we all took a leap of faith,” Walters said. “I’ve got to hand it to all of our employees. They put a lot of faith in us.”
Hiring is usually seen as an absolute last resort, but CR Metal takes a different view: In high-product-mix manufacturing, jobs don’t move by themselves through cells. Without enough people, work can’t move forward efficiently. The company now employs about 120, a head count up 20 percent from last year, and more hiring may be on the horizon, especially for the second shift. Chadwick conceded that during that shift part-flow velocity slows because cells aren’t staffed adequately to move jobs quickly.
Besides, in metal fabrication direct labor costs can be somewhat low. According to the Fabricators & Manufacturers Association’s 2011 Financial Ratios & Operational Benchmarking Survey, almost half of the respondents said their direct labor costs were less than 12 percent of sales. Meanwhile, over half of the respondents said material costs were more than 40 percent of sales.
The less time it takes to fabricate that expensive material and ship it to customers, the greater capacity a shop has and the more money it can make in less time. CR Metal has cleared floor space and opened up the possibility of investing in even more people and equipment. This has turned money-losing space, filled with expensive WIP, into productive space.
“During the first half of this year, people have been asking us if everything’s OK,” Chadwick said. “They say, ‘Things seem so slow. When are things going to get busy?’ In reality, we’re having a record year.”
A new sales approach
Unlike a lot of small job shops, which grow on the backs of a few large customers, St. Louis-based CR Metal Products had the opposite problem: hundreds of small accounts. Although this did give the company some protection against economic downturns, it also increased costs. Managing hundreds of small accounts takes time.
So several years ago managers launched a new sales initiative. “We identified the whales, the tunas, and the guppies,” said Steve Walters, company president. “We had more than 500 customers, and we realized we couldn’t grow by having 1,000 customers. We could only grow by having fewer customers that were bigger.”
So over the past few years, the sales team has worked slowly to transition its customer base, gaining more business from existing customers, and adding a few large clients—including, most recently, Caterpillar. The customer mix remains diverse; the shop makes products for the electrical enclosure sector, the retail industry, renewable energy companies, and others. But now the fabricator has fewer customers that represent larger accounts.
“We didn’t throw small customers out the door,” Walters added. “But in some cases, we told people that we would do work for them until they found a fabricator better suited for the work.”
Customers still order small quantities at a time, of course; high-mix, low volume piece-part manufacturing remains CR Metal’s sweet spot. But those customers now send more work over the course of a year.
“This took a lot of trust by our salespeople too,” Walters said. “These customers are like family to them. But now they’re seeing the benefits. They have time to prospect as well as serve their customers. We have had some nice success, and we’re going to have more.”
The FABRICATOR is North America's leading magazine for the metal forming and fabricating industry. The magazine delivers the news, technical articles, and case histories that enable fabricators to do their jobs more efficiently. The FABRICATOR has served the industry since 1971.