Written by: Paul Van Metre

People are accustomed to getting what they want, when they want it, the exact way they want it. Like their favorite: Triple, Venti, Half Sweet, Non-Fat Soy, Caramel Macchiato at Starbucks.  If they get it the same way 100 times, and then all of a sudden it’s different one day, watch out! You’re likely to have an unhappy customer! It’s because people want reliability and consistency in their lives. They don’t like unexpected surprises or things to be different than what they are used to.

The same is true with your customers. When they do business with you, they will have certain expectations that they expect you to meet, time and time again. Those expectations will often be driven by a few different things, including how you’ve interacted with them in the past and what you tell them will happen in the future. Ultimately, your customer is in the business of reducing their risk, so they can do their job and serve their customers. Your shop is one link in the supply chain, which can be very fragile at times, and if you don’t follow through on the expectations they have for you, things can go downhill fast.

Setting Expectations Early
Expectations start building when you first meet your customer. What is your brand image? How do you portray your company and how do you interact with your prospects? Everyone tries to be very responsive to new prospects or customers because you want to earn their trust and ultimately their business. And people like it when you are responsive and attentive to them. They’ll be paying attention to what you say. If you tell them you’ll email them a list of references on Friday, you’d better send that on Friday or before. If you don’t send it until the following Tuesday, they’ll mark that up in the column of negatives that you don’t follow through on things you say.

Expectations will continue to be built when you quote jobs for those customers. Again, they’ll look for a timely return of your quotes. They’ll look for professionalism in your quotation, your language, your correspondence, and your adherence to any other requirements they included in their RFQ to you.  And they’ll look to see what lead times or dates you’ve quoted them for delivery of the job. Assuming everything checks out and they like what they’re seeing, you might win the job.

When the order is received, they’ll be looking for things like how quickly you acknowledge the order and then how/if you confirm all the details including if you say you will deliver on the timeline you quoted to them or any other pertinent details about the order.

Be Honest and Candid
I wrote in the past about delivering bad news to clients, and this is another very key point about managing expectations. You must always be honest with customers. Full stop.  Lying about the status of jobs or being less than candid is never a good option. And the bad news doesn’t age well, so always be very proactive in delivering less than positive news in a timely manner. And have a recovery plan already in place when you contact your customers to deliver bad news.

From that point forward, they’ll expect your parts will be delivered within the on-time delivery window, and they won’t need to hear from you until that time.  Unless they have a lower level of trust with you and they may want regular status updates on their orders.

Be Responsive
When a customer is looking for information or an answer from you, they don’t want to wait long to get the answer. If they call you on the phone, the ideal case is that you can provide them with the information before you even hang up. We had one customer do this in spectacular fashion recently, giving his client detailed information from the side of the road on his phone. It was an amazing move on his part, significantly increased their trust in his company and improved the expectations of how responsive he could be to his customer. If you can’t get them the information on the phone, then follow up with them as soon as you can, and provide them with the information they need for their decision-making. Making them wait hours or days is never a good idea. Getting rid of paper job travelers is a critical step in getting information back to your customers a lot faster.

Listen and be Proactive
As mentioned before, clients are in the business of reducing risk.  So they will communicate with you about things that are important to them or that they care about.  Listen carefully for those signals and build processes to ensure that you are going to manage those needs and concerns proactively.  When they see you reaching out to them before they need to ask you questions, or for a status update, their expectations will have been exceeded, and they’ll consider your shop a lower risk option than others. And where do you expect they will want to place work in the future?

How Can ProShop Help?
Many of the things I mentioned above require a fair bit of process to ensure that they happen reliably and consistently. That is, doing it the same/right way, every time. And it requires much more access to real-time information. ProShop is an ERP system designed in a machine shop environment and helps build repeatable processes and automation to help you ensure that you are getting your customers precisely what they need, when they need it, in the lightest way possible. Freeing up your time to spend it doing more important things like getting parts made and out the door on time.

Written by: Paul Van Metre

It’s important to your clients that when they decide to work with your shop, that it’s the least risky thing for them to do. So when you can provide concrete examples of how you can reduce their risk, and make their lives easier, they will keep coming back and doing business with you.

I recently learned of a great, real-world example of how a customer of ours was able to provide much greater customer service to a client of theirs because they were paperless.

Getting a Panicked Call from a Client
Bryan, the owner, was driving home from work recently. He got a panicked call from a client who realized that they had sent conflicting information on their 3D model and their 2D drawing. There was a precision hole that was modeled one size on the 3D model, but the 2D drawing showed it with a different size. They needed to know if they had machined the parts yet, and if so, which size they had machined the hole to. As I said above, clients are relying on their vendors to have their back, and reduce risk and stress. So how you can respond and support them is critical.

What Would have Happened in the Past
In the days of the past when Bryan’s shop was run on a legacy “Job” type shop management system with paper travelers and zero ability to natively manage inspection records, he would have had to either turn around and drive back to the shop (and be late for dinner with his family), or more likely, wait until the next day to provide an answer. He would have needed to find the job on the shop floor, leaf through the pages of the job traveler packet, assuming there was a paper FAI or in-process inspection sheet with hand written results, and figure out what size they had machined the parts too. It would have been a few business hours later, and Bryan would have spent some of his morning figuring this out so he can call his customer back to provide adequate customer service. 

What Bryan was Able to do to Help His Client
Thankfully, in the current day, Bryan’s shop has completely eliminated all paper off the shop floor: there are no paper job travelers, no paper inspection sheets, and nothing to chase down to find the answer his customer was needing. Instead, Bryan pulled over to the side of the road, opened up the web browser on his phone and logged into ProShop. He quickly found the Work Order in question and clicked onto the FAI inspection results page and found the actual measured size of the hole in question. He was able to give the customer the answer he needed within a couple of minutes of their phone call, all without hanging up the phone, on the side of the road. He could then continue home and make it in time for family dinner, having only spent 3-4 minutes in total helping his customer get the answer they needed. 

Imagine the difference from the customer’s perspective on the results of the two scenarios outlined above.  In the first scenario, the customer would be getting average service depending on how soon the next day they got their answer. Nothing special or notable.  But with the second scenario, Bryan was able to give them exactly what they needed from the side of the road in just a couple of minutes. That is impressive customer service! It reinforces the message that Bryan’s company is high-tech, data driven, on top of things, and can be trusted to be responsive in a meaningful way for the client! When the customer is deciding where to place work in the future, I’d have to believe that Bryan’s shop would have a nice positive checkmark in their favor.

What Next?
I never actually learned if the hole was made to the size the customer actually needed, but if it wasn’t, and needed rework or remake, the process in ProShop would have been to literally drag and drop a rework operation into the right spot, or possibly issue a new line item to the vendor for more material and issue a new work order. In either case, the clerical side of the work would literally take seconds and they could have been helping the customer recover very quickly.

It’s these small details that can make a huge difference in how a customer perceives your company. Being strategic in how you approach running your company can have a very impactful compounding effect in the long run. What might seem like the easy and least cost option in the near term, (less capable software, or do-it-yourself spreadsheets) can often be the most expensive way to manage things when you consider the longer term benefits of choosing to partner with a world class solution and the opportunities that will enable. If you’d like to discuss how ProShop can help you elevate your company, we’d love to talk.

Written by: Paul Van Metre

I’ll let you in on a little secret. Nearly all the problems with your late jobs will not be solved with “better scheduling software!” It’s not the software that’s the problem. It’s your company processes (or lack of them) that are the culprit. Scheduling software by definition must be able to run its algorithms (if it even has them) off of defined variables. When nearly everything is a variable, a software program can’t possibly account for that. This is why you’ve rarely if ever run across a scheduling software that actually works in a dynamic shop environment - and especially in job shops. 

Here are a small list of things that throws a big wrench in any scheduling software:

  1. You go to set up the job and the material isn’t here yet.
  2. After running your first part, you realize you don’t have a special thread gauge you need for the FAI.
  3. You take a very hot order and subsequently need to expedite 3 other orders through outside processing to keep them on-time.
  4. You decide to add a one-off evening or weekend shift to make up some time you need to catch up on.
  5. You run out of a special cutter mid-production, or maybe it wasn’t even ordered in the first place.
  6. At final inspection, you realize you cut some threads with a regular tap, when it was supposed to be an STI tap for Helicoils, and now you have to run a rework operation on a very overbooked machine.

These are scenarios that happen on a daily basis in most shops, especially job shops, and wreak havoc on any production schedule. There is no way to plan for them, and responding to them is very challenging to any software, So generally the schedule get’s so far off that it's useless and people give up on it and go back to whiteboards with magnets or their heads, which is a poor solution.

The real solution to all this mess, is to fix the root cause of all those problems in the first place. All the issues are solved by more thorough up front estimating and planning processes. And when those variables are largely eliminated, everything gets better. Jobs flow faster. Fires are extinguished before they ever ignite. Jobs ship earlier. Customers are happier. Stress reduces. 

The common theme to those six scenarios is that they are all reactive to a situation that could have been avoided with a more proactive approach to estimating, planning, materials management, procurement, job kitting, and really…everything that happens before scheduling.

I’ve heard from many shop owners that they don’t have time to be more methodical and proactive with their upfront processes. They want to estimate on the drawing with a pencil, shoot a price to the client with an email, and then quickly push the job into the shop when it’s won. They claim it’ll be too expensive to do it any other way. Then they spend the rest of the day running around fighting fires and avoiding phone calls from angry customers when their orders are late without any forewarning. Does that sound like a shop you know?

The goal of a more proactive approach to everything before the machining process is to eliminate variables, and allow the shop to successfully execute according to plan. That is a scalable process that will lead to long term success, on-time delivery, significantly higher customer satisfaction, profitability and company value.

Here are a few examples of a more processed based approach which will eliminate scheduling problems:

  1. Estimate accurate setup/run times and outside processing lead times.
  2. Capture all important flowdowns and key details in a structured way.
  3. Quickly process orders and launch all long lead time activities in parallel.
  4. Methodically build a plan to handle all flowdowns and customer/internal requirements so they support the schedule to deliver on-time.
  5. Provide all relevant information needed to execute to plan to the employees doing the work
  6. Make adjustments in real-time to ensure adherence to the plan

When strategies such as those listed above are employed, it’s remarkable how much easier things get, and how much less time it takes to manage the shop and the schedule. In a remarkable example of how powerful this concept is, consider the story of Trulife Engineered Solutions - a 80-100 person shop running 3 shifts per week and approximately 40 CNC workstations. They maintain a high level of on-time delivery and they invest about 1 hour per day to the activity of scheduling. The reason they can spend so little time scheduling such a large organization is because everything runs so smoothly. And this is precisely because they have dialed in those planning processes so well, that out-of-the-blue scenarios rarely happen and the few last minute changes that do spring up are easy to incorporate and adjust for.

How Can ProShop Help?
Most ERP systems have little to no functionality to have structured workflows to make the above items a core part of the company process and help ensure all of those important details are managed. The net result is that it’s generally managed with spreadsheets and paper documents. ProShop flips this idea on its head and has deeply integrated features to ensure compliance to flowdowns and proactive planning to ensure that accurate targets are set, and that your team can execute to plan with the minimum of effort. The net result is high on-time delivery numbers with a lot less time investment and stress. Sounds like the type of shop that most owners envision having. If you’d like help getting there, we’d love to help! Please reach out to us.

Written by: Paul Van Metre

The higher up you serve clients on the value stream, the more regulatory compliance you need to deal with. There are also more client flowdowns, quality requirements, standards, etc. you need to track, analyze, digest and understand. It can easily add up to many hundreds of pages of documentation - an enormous task to digest what actually matters for the orders you’re processing. It’s important for the organization to research and communicate just the relevant parts of those documents to your team. Without a process for handling all those requirements, things can easily get missed, causing major issues with scrap, rework, rejections from clients, schedule impacts, etc. - all very expensive mistakes that can significantly affect company profitability and unhappy customers. It can get ugly in a hurry! Another byproduct of not having a good system is an overcorrection and well intentioned people spending way too much time reviewing the same documents over and over, trying to ensure things get handled correctly.

Requirements come in from all sorts of different areas including:
2. Customer Purchase Orders
3. Drawings/Engineering Data
4. Contracts
5. Regulatory Standards
6. Customer Flowdown Documents

Anytime that a document or requirement is referenced in the course of executing on a scope of work for a customer, it’s essential to distill the requirements down to the most essential things that people must know and understand. And to exclude things that don’t apply. Then, to ensure that solutions for every requirement will be implemented at the point in the process where it makes the most sense.

The customer drawing that references a workmanship standard document published by the customer such as this:

Note: Surface A is cosmetic per current revision of Acme Workmanship Standard AM-4212 Clause 13.

Of course you need to make sure you always have the latest revision of AM-4212 and ensure it’s available to your staff. However the most effective solution would be to have one person review AM-4212 Clause 13 and summarize the requirements in a very accessible place (like on the drawing, or an attached page) so that other team members can easily see that without having to look up AM-4212 every time they need to confirm how to meet that requirement, such as during planning, programming, in-process inspection, final inspection, etc. The cosmetic requirement should then be added to the inspection plan, and the work instructions that might affect surface A or downstream of it.

Back in our shop, we called this the Requirements Distillation Process (RDP). It was a formal process that happened with every new PN and order we received. While it took a bit of time for each new order, it saved vast amounts of time further down the process, and virtually ensured that we wouldn’t get bit by a requirement that slipped through the cracks. Sometimes a summary was added as a supplementary page to the approved drawing that was easily accessible by everyone, and had ALL and ONLY the pertinent information for the order that was pulled from all the related requirements and documents. It was also important to note that we didn’t summarize requirements that would automatically be handled through our standard procedures. That would be overkill.

Here is a summary of the process we used.  Note, we used our Process Development feature to document all the requirements:

1) Establish Requirements:

Review all relevant documents (Customer PO including all referenced documents, Sales Tie-In, WO Notes, Part Notes, Customer Contact page requirements, Statutory and Regulatory requirements, Client Flowdowns) in order to distill each requirement down to a summary of only the pertinent information.

2) Document Requirements:

Note: Documenting requirements is only necessary if items cannot be addressed and completely "Implemented" IMMEDIATELY.  If requirement is already documented within the part level itself, Process Development is not required.

List each requirement (1 per row) in the Description box Under Process Development for the part#. Consider adding the Spec # the requirement is from.

List the action that must be taken to ensure there is a plan to deal with this requirement and that the requirement will be verified during the process. When multiple actions are necessary for a given requirement, each action should have its own Solution row.

Resolve with Sales/Estimating any requirement that does not fit the estimate within "reasonable limits" (i.e. extra costs, extra processes, additional resources, etc). Document the action/resolution in the Solution box.

Check off RDP in Section 1 on PP Checklist when all requirements have been Documented.

3) Update the "Process Dev Status" as actions are completed.

Once the Process Development was completed, it was certain that all the requirements would be handled by the right person down the line, and we wouldn’t get bitten by an oversight. It helped us perform at a very high level for our clients such as Northrop Grumman, General Dynamics, Boeing and others. I’m not sure how we could have managed life without it!

How Does ProShop Help?

Besides the aforementioned Process Development feature, it’s very simple to link all required documents in the correct place depending on the type of document. It could be linked to the client record, in the Documents Module, the Standards Module, at the Part Module as an inspection requirement, or any number of other places. Because ProShop was built in a Tier 1 and 2 aerospace and defense contractor, it was essential that we had extremely robust systems for managing the significant complexity of the design engineering and manufacturing processes we engaged in every day!

Written by: Paul Van Metre

In 2022, nearly every shop is dealing with dramatic increases in raw material prices. Some types of materials are going up faster than others, but nothing is immune to the disruptions in supply chain stemming from various Covid-19 supply issues, as well as the war in Ukraine, and the simultaneous increases in demand as the global economy recovers from the pandemic and demand is at all-time highs. It’s a recipe for high prices which can have a lot of negative effects on suppliers in the metalworking industry who make precision goods out of raw materials. However, there are some simple steps that can be taken to mitigate the risk of increases.

  1. Ensure all of your customer quotes include Terms & Conditions about your ability to pass through raw material price increases. Because all vendors are being affected by price hikes, the end customer will hopefully be understanding that this is entirely outside the control of its suppliers and be willing (possibly reluctantly) to pay for higher raw material prices. But you must include verbiage on all your quotes that your prices are only good for a fixed amount of time, or are quoted with material at a certain price in effect when the order is placed. Without this escape clause, you won’t have much to fall back on when you get quoted a higher price on your materials when you go to buy it. (If you find yourself dealing with price increases without any clauses to protect you, it’s always worth going back to your customers to see what they are willing to do to help you out.)
  2. Do a careful review of prices quoted vs. prices in effect when the order is placed. If you quoted a job 6 weeks ago at a given price for raw materials, and you did include some T&Cs about material prices, the next step is to ensure you aren’t letting those possible price increases slip through your fingers. That means including a formal process for comparing what the price was that you quoted your customer, and what your vendor will actually charge you when you place your order. If you don’t include this formal review as part of your documented and standardized process, you’re sure to forget and lose the opportunity to change prices upon contract confirmation. An order entry/confirmation checklist is a good way to ensure you don’t forget this important step. (Tip - for many buyers, price changes are easier to swallow, if you keep your unit price the same, and quote a variable “material surcharge” or something similar.  It allows them to maintain the unit price inside their ERP system that they are graded on, while giving a different GL code bucket in which to account for variability in material costs.)
  3. Get several quotes from your vendors.  Don’t assume that your favorite or closest vendor will always be your best option for buying raw materials. It’s a responsibility of you as the vendor to get at least 3 price quotes from your raw material suppliers. Ensure you document and save all those quotes in a way that is easy to retrieve and review, with quote numbers, lead times, expiration dates, etc. so you can cover your bases and ensure you have the information you need to decide where to buy that material if you win the order. Don’t be shy to have conversations with your vendors about their pricing in comparison to the other material quotes you’re receiving. If a “preferred” vendor is recently ending up with the highest quote where they weren’t previously, talk to them about the factors affecting them. See if there are options you can leverage to bring costs down (an example is blanket orders, talked about in item 5 below).
  4. Discuss creative options with your customers. Especially if you support production quantities of products that are made on a recurring basis, your customer should be able to provide some kind of forecast, or you can predict future demand based on historical demand (I fully understand this is an inexact art!). Those forecasts may be enough to put some action plans in place to mitigate material cost increases. Clients are often open to discussing creative ways they can control costs. They may be willing to have you pre-buy (ask if you can invoice for the materials in advance so you’re not floating the cash for months) the raw materials in advance, or to even buy the material themselves and have it shipped to your facility. The key here is to be completely transparent about what you’re seeing and experiencing. Most clients (at least the good ones worth keeping) want to ensure their vendors are financially stable and can continue to support them in the long term, and of course they want to keep costs down, so they have an incentive to work with their vendors to come up with options to minimize cost increases. A creative idea I recently heard: a shop proposed to their customer was to renegotiate a temporary reduction in the customer’s payment terms. The customer had a standard Net 60 payment terms with the shop, but the shop needed a more readily available cash flow to purchase some larger quantity material buys. An LTA with the customer wasn’t able to come together fast enough to leverage current market pricing before it increased, but the buyer COULD temporarily agree to Net 30 terms. The quicker turn on paid invoices helped the shop with their cash flow limitations and they were able to maintain pricing with the customer, which otherwise would have resulted in a re-quote when the customer re-ordered with them. Because the shop and the customer both had a good relationship & were transparent in their needs & limitations, they found a solution that worked for both of them. 
  5. Consider blanket or Kan-Ban orders with your vendors. Even if your customer isn’t willing to pre-buy or provide raw materials, there are often arrangements you can make with your material supplier to help reduce cost increases. Based on the forecast or history of your client orders, it may be worthwhile to place long term blanket orders with your vendors. If your customer forecasts or blanket orders with your company protects you for a certain amount of inventory or WIP, then it’s a pretty safe bet to do the same with your material vendors. If the purchase is at your risk, then it’s worth weighing the risks of possible client cancellations or changes vs the cost savings of locking in prices before they increase in the future.

Hopefully some of these 5 tips will help you to recover possible increases in raw material prices, or protect you from future increases. If I could summarize the key element it would be communication. Communicate with your clients and vendors and within your own team. The more discussions you have, and share transparently, the more solutions will likely come to the surface. Your customers do have a vested interest in making sure that the long term health of their supply chain is intact. And if they don’t seem to feel that way, it’s worth considering if they are a customer you want to have in the long run. (See our recent blog post about this)

How Can ProShop Help?
There are a number of ways that ProShop can help with the 5 points above. Here they are in order: 

  1. ProShop has a fully configurable quote T&C section with customizable lines that can be included in all new quotes and checked or unchecked to include or not. Or they can be copied from templates within the estimating module.  So specific clauses about material escalations can be included for many use cases to make sure you’ve covered all the bases.
  2. When contract review is being performed, you can have specific team members automatically notified when new customer POs are created, or Work Orders are created.  Because there are no paper records needed, that review of price quoted vs. current material price can happen immediately.  It’s also a matter of clicking one icon to get the entire purchase history of a material so you can easily see how the price has changed over time. And of course, you can add the requirement to your WO checklist to make sure it gets done in the first place!
  3. Every purchased item can have multiple approved vendors and easy places to document their prices, as well as attach their quotes so they are always at hand, a week or a year later. As always, attached files are securely stored in our proprietary storage system for safety and easy retrieval from only approved users.
  4. When it comes to providing transparency to your clients, the data is all right there and connected in a way that makes it easy to find and retrieve. We can’t make the phone call for you, but we’ll help you back up the conversations with data. If you can get them to provide customer-furnished-material, you can easily track the incoming receipt of that material and all the certifications it may come with, for automatic retrieval and collation when it’s time to ship the product back to them.
  5. You can issue blanket material POs to your vendors, with the correct dates and quantities you want to receive. When each shipment comes in, it’s simple to track the certs, receive the shipment and generate a vendor bill for your AP process. And any future changes and adjustments are easy to make.

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