Written by: Paul Van Metre
Profit margins in the CNC machining job shop business are notoriously slim. If you’re quoting your work with a 20% profit margin, everything has to go perfectly in order to make that much profit. If anything goes wrong during the process of quoting or making those parts, you can easily eat away that profit, or even lose money on a job. It happens all the time in shops across the industry. I know it happened in my own shop many many times! It’s a hard reality to deal with, and just one unprofitable job can wipe out the profit of many good jobs. As such, it’s wise to do whatever we can to improve the percentage of jobs that are profitable, and keep them as close to, or higher than the estimated profit margin. Checklists are an excellent way to improve the percentage of profitable jobs in your CNC machine shop.
Checklists can be incredibly effective ways to very quickly ensure that your process is being followed, and that things that might slip through the cracks and cost you a lot of money don’t happen. It’s likely that a checklist for virtually every step of the process is worth having, but I’ll just highlight 5 checklists that I would recommend you put in place.
I hope this selection of checklists resonates with you, and helps you decide to take action by making checklists a part of the documented process in your shop. A good checklist can make it very easy to eliminate common mistakes and help standardize your processes to optimize for profitability. You might even think of other checklists that you can implement to improve the robustness of every part of your business!
How can ProShop help?
ProShop has many types of checklists built into it’s workflow. These checklists can be used to eliminate mistakes in the process. Starting at the beginning, our Process Development feature is a checklist/action list that can be used during estimating to identify things that need to be reviewed and/or solved and are not missed when the job is won. Once you’ve won the job, our built-in contract review checklist can ensure you don’t overlook important details, along with providing a complete audit-trail of who confirmed or checked off each section (this is important for ISO 9001 or AS9100 compliance). Next our Pre-Processing checklist system will cover the checklist needs for planning, procurement, quality plan creation, programming, and job prep/setup. (Insider Tip - the checklist is automatically configured based on the type of job you’re running - so it can be more thorough on a new rev or part vs. a repeat order you’ve done before. So you only need to check the relevant points based on those different types of jobs!) If all these built-in checklists sound intriguing to you, please click here to book a discovery call to see if your company would be a good fit for ProShop. When clients of ours have really embraced our workflows and checklists, they often see efficiency and profitability increases of 20% or more!
Written by: Paul Van Metre
Every shop I’ve talked with cares deeply about doing a great job for their clients. They try hard to keep track of all the important details of their jobs. Due dates, materials, requirements, and a million other details all need to come together to deliver the right parts, within tolerance, with the right paperwork, on-time! It’s a very hard juggling act and despite best efforts, sometimes things don’t come together right and mistakes happen. Maybe you realize you’re going to be late, maybe you scrapped some parts and need to deliver short, or maybe you misquoted a job and need to raise the price a lot next time (or this time). The fact is that even for the best companies out there, mistakes and $#!% happens from time to time! When it does, you need to deliver bad news to your customer. The way you approach this task is really important and can make or break your relationship with that client.
When the uncomfortable work of delivering bad news to a client needs to happen, these are my top 5 tips for delivering that in the best way possible:
Do it NOW
Bad news doesn’t get better with age. As soon as you realize a mistake was made, you need to gather the details and reach out to clients right away. The more lead time you can give them, the more time there is to come up with a recovery plan. If it’s a delivery that’s going to be late, or you made a mistake and need their feedback on a recovery, the more time you can give their clients to mitigate the issue, reschedule things or develop a backup plan, the better it is. If you are nervous about admitting the mistake and put off making that call, it limits the options that your client will have when time gets more crunched at the last minute.
When the mistake is your own, it’s important to take responsibility. Apologize sincerely and own the mistake. Don’t half own it, or throw someone else under the bus. If it was your outside processor who racked the parts in the wrong hole despite your clear instructions, it’s still your responsibility. The difference in the client’s perception between you fully owning the mistake and you only taking 70% responsibility is a night and day difference.
You might be inclined to tell a white lie about what actually happened, but resist that urge and be fully candid. The truth will likely come out in the long run, and it’s hard to remember exactly what you said and have everyone on your team on the same page. However, if the truth is shared, nobody needs to be debriefed on what to say.
After taking responsibility and being honest about the situation and where things are at, a recovery plan will be next on the agenda. Having already thought about and documented potential options that you can share will go a long way in conveying to your client that you’re taking the situation seriously. Having at least 2 options will show that you’re open to different ways to solve the problem. You’ll never know what the customer will think. Maybe they can use a partial delivery until you get them the balance, or maybe they will offer a rework option that’ll still work for their application. Or maybe that higher price (because you underbid the job) is still very competitive and they’ll keep the work with you.
Once the plan is decided on and you’re going to execute it, make sure you do everything you can to deliver on the new promise. If you have to pay expedite fees, suck up and do that. Make sure someone is giving extra attention to the job to make sure it all comes together. Once you’ve delivered on the promise follow up to apologize again and make sure everything is okay on their end. I’d suggest even sending a handwritten apology/thank you note for their patience and grace (even if they didn’t show much of it). There is no downside to being extra contrite and lots of upside. The extra attention and care you showed the client will stand out and not go unnoticed.
As stated above, sometimes bad things happen to good companies. It’s inevitable that you’ll make mistakes and the client will suffer for it. But how you handle the situation will make all the difference in their perception of your shop and whether they choose to do business with you in the future. I can recall mistakes that my shop made that could have been really bad, but we handled it with such an abundance of proactive communication and professionalism that it turned into a net positive for the relationship with the client. Those are the actions that will set your shop apart from the competition and allow you to keep growing and keeping those critical clients.
How Can ProShop Help?
ProShop is filled with features and thoughtful workflows developed over more than 20 years in our own shop and supporting hundreds of shops around the world that are expressly designed to help you reduce and hopefully eliminate mistakes from happening in the first place. From our Process Development feature which helps identify "gotchas" that’ll cause problems down the road if they aren’t addressed, to our ability to systematically identify individual part number based packaging, paperwork and quality requirements, which will ensure that the client requirements are always known and met. From closed-loop scheduling fed from actual shop progress, to help you ensure your jobs are delivered on time, to managing separate versions of the approved drawing which have specific markups for each outside process to ensure your partners get it right, the ProShop Digital Manufacturing Ecosystem is designed to help you execute every time with the minimum of effort, allowing you to perform at the highest level with the lowest possible cost.