Profits in metal fabrication: Selling time

The staff at K-Zell pose after hosting a tour during this year's The FABRICATOR's Leadership Summit.

What’s your on-time delivery? For the people at Phoenix, Ariz.-based K-Zell Metals Inc., that question isn’t at the top of their minds. Sure, the metric matters, but in reality, OTD folds into another, far more meaningful metric: Are we making the money we thought we were going to make? What determines this? It’s all about time.

That was the overriding message during a tour the 35-employee custom fabricator hosted as part of The FABRICATOR’s Leadership Summit and Fabricators & Manufacturers Association Annual Meeting, taking place this week in Scottsdale, Ariz. The shop has some new, powerful equipment, including modern press brakes, a tube bending system with an integrated measurement arm built to measure tubular geometries; and, not least, a 10-kW fiber laser, capable of slicing through 1 in. thick material, and even beyond.

But behind all this technology is a clear, refreshing, let’s-keep-it-simple philosophy.

“We use technology in the shop to make better parts,” said Darcy Funk, the shop’s accounting manager. “But we also use technology in the office to make better business decisions. We don’t sell products. We don’t sell stainless counter tops, bent angle iron, or anything else.” Of course, the company makes all that and more, but it’s not selling it. “The only thing we’re selling is time. So everything we do—our forecasting, our budgeting—it’s all based on hours.”

It starts with the estimate. If it takes more hours than expected to ship a job, the job is late, but that also means profits are lower (or nonexistent). And profits are what really matters. Improvement centers around the discrepancy between the estimated and actual time. The shop’s software helps the organization drill down to find the root causes. It could be a clocking error; that is, someone didn’t clock in and out of a job when they should have. But it also could be myriad other things, much of which can be solved by better training and documentation. When the shop solves these issues, profits rise and OTD performance improves.

This “selling time” philosophy helps keep everyone’s eye on what matters: the profits that sustain and grow a business.