Metal fabrication in a small shop: The hidden blessing of having no space

Without space, excessive work-in-process just isn’t an option. Source: Getty Images.

Some metrics in custom metal fabrication tend to cloud reality, even cause confusion. A chart on the side of a laser cutting machine may show high machine uptime or parts-per-hour rates, but overall output still may be suffering. What good is a laser head that cuts and rapid-traverses amazingly fast if more parts aren’t shipping out the door?

More than overall equipment effectiveness (OEE) and other measurements with technical names, I like to look at another measurement that doesn’t get much airplay: the dollars per square foot.

America has a lot of space, much of it empty, and that’s often where you find manufacturing—in rural or far-out suburban areas where space is plentiful. More space is looked upon as a good thing, equating to the potential of greater throughput and more sales.

Of course, space also gives employees a place to put stuff that has no immediate value, including rarely used machinery and supplies, as well as excessive work-in-process (WIP).

Several years ago I attended a lean manufacturing event in Columbus, Ohio, hosted by the Fabricators & Manufacturers Association International®. During a group tour at a local fab shop, our tour guide pointed proudly to … empty space, roped off to prevent anyone from putting old machines, WIP, or just outright junk into it. Space, the tour guide said, should not be taken for granted; empty space represents potential productive space. Space cluttered with unneeded WIP is waste.

I first gained an appreciation for the sales-per-square-foot metric after reading Rajan Suri’s It’s About Time, which details quick-response manufacturing, an improvement method tailored for high-product-mix operations. In these environments, thousands of different jobs may be routed every which way; cycle times vary, as do processing methods. Dang near everything varies. All the same, there remains one constant: space. If you can open up space for potential expansion—and not fill it with stuff—while maintaining or even increasing the output of profitable work, that’s a very good thing.

That’s what makes the sales-per-square-foot metric an elegantly simple way to measure the extraordinarily complex. In one sense, it treats the entire factory as a “machine.” Certain pieces may be really shiny and new—a new laser cutting machine, a press brake with automatic tool change—but if it doesn’t help “the machine” produce more sales in less time without using an excessive amount of resources, nothing really changes.

Consider one New England custom fab shop owner I spoke to (on background) earlier this year who touted the fact that his 25,000-sq.-ft. shop usually churns out more than $10 million revenue each year. That’s $400 in sales per square foot. That’s about double the industry average, according to FMA’s “2016 Financial Ratios & Operational Benchmarking Survey.”

From one perspective, the shop may be at a disadvantage. For instance, several years ago the shop purchased a press brake with automatic tool change, a machine bigger than a conventional brake and, for this fabricator, a very tight squeeze. It also purchased a fiber laser around that same time. In a conventional shop, the operation would have kept all of its old machines; but not at this 25,000-sq.-ft. shop.

When a new machine comes in, an old one has to go out. The fabricator doesn’t have a choice.

But as the shop owner explained to me, this situation also presents an advantage. The older machines are so much slower; the old CO² because of its slow cutting speed, the old press brake because of its long setup time. Operating that equipment would be a bit like driving below the minimum speed limit on the interstate. Faster cars need to get around, everything gets more complicated, and before you know it, a backup or (at worst) a crash occurs.

The lack of space has forced the fabricator to throw out the old to make room for the new. It also forced the operation to limit batch sizes and produce only what downstream processes need immediately. There is simply no room for excess WIP.

And excess WIP would be tempting. Some of the shop’s bending work involves very tight tolerances over many bends in a single part. A few thousandths off on the first bend can stack up to a significant error. With more space, the shop may be tempted to laser-cut a buffer stock to account for process variability in bending. But again, it just doesn’t have room, so that forces them to work on making every process as predictable as possible, and that means standardizing and shortening setup time.

That said, according to the shop owner, having so little space also makes having multiprocess workcells impractical. Sure, if the shop had more space, it could organize operations into cells, if it had enough machines. But because of the nature of custom fabrication, employees would need to move to other machines to meet the varying demands of production. Certain stations wouldn’t always be manned, which means some machines would be idle—usually doable, especially if a shop keeps its old machines and has the space. And having cells naturally increases throughput. Instead of flowing through cutting, then waiting for bending, waiting again for hardware, then on to paint, a job flows to “cell 1,” then “paint,” then “packaging” and out the door.

With only 25,000 sq. ft., the shop needs all the productive space it can get. It can’t have, say, a dozen brakes distributed among four workcells, because it simply doesn’t have room for a dozen brakes. So instead, the shop focuses on quick changeover, with brake operators who all can set up their own machines—no button-pushers here.

Considering all this, having no space is a blessing in disguise. If the shop is going to grow revenue, it must squeeze more out of the room it has, and that means focusing on shortening the overall manufacturing cycle, from order entry to final shipment. Everyone literally can see where parts come from and where they’re shipping out the door, and that forces them to focus on the big picture—not just how fast they produce at their machine.

There’s one big caveat. Like most readers, the shop owner said its skilled-labor situation is extremely challenging, which is why he takes training seriously. When fabricating so many different, challenging jobs at such a high velocity, you have a lot of value going through the hands of shop employees.

If all that value is passed through the hands of people who aren’t very focused and engaged, troubles arise. But with the right skills and equipment, a few good people can produce an amazing amount of value in a tiny space.