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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.

Take Responsibility

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.

Be Honest

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.

Offer Options

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.

Follow Through

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.

By: Paul Van Metre

In October 2021, it seems like most shops are pretty busy which is awesome! Although I still hear from multiple shops that they are slammed on some of their machines (5 axis mills) and not nearly as busy on others (their 2 axis lathes for example). If this is sometimes or often true in your shop, there are some things you can do to help ensure all your work cells are equally busy. 

A lot of shop owners I talk with tell me that they quote all their jobs with a single shop rate. Could be $60, $80, $120, or more per hour. (They do job costing this way too...oh heavens!) Whatever the rate is, they use it and apply that same hourly rate to any job they quote and any machine it will take to make the part. While this seems easy and simple at first glance, it will result in an unfavorable mix of work that isn't very profitable at the end of the day. Let’s look at why.

Most shops have a mix of different types of machines that have different capabilities and different costs. Some are pretty basic and relatively inexpensive, while others are much newer, fancier, and more expensive. Consider a G550 Grob that costs $700,000 vs a Haas ST-10 for $50k. Those are very different machines and should be quoted at very different rates. Do you know what’ll happen if you quote all your jobs at $100/hr?

  1. Your high-end machines, which should command a premium rate, will be stuck being 100% overloaded with low margin (or negative margin) work.
  2. Your low-end machines will get a few jobs but will generally be pretty underutilized because you’re bidding a higher rate than the market will bear for that type of work.

If your competitors are bidding high-end milling work at $180/hr and you are bidding $100/hr you’ll be the winning bid most of the time, you will be leaving a lot of money on the table that could be in your bank account! Conversely, if you bid lathe work at $100/hr and your competitors are bidding $60/hr then you’ll rarely win those jobs and your lathes will sit idle much of the time. This is not what you want in either case!

The ideal pricing model in a job shop is one where you can fill up all your machines with work that is a good fit for your shop and at the highest prices that the market will bear for that type of work and work center. Part of understanding the maximum price you can sell a part for will include understanding what your costs are, and the difference will be your profit margin.

Of course, every shop has its unique niche which will determine what the market rate is e.g. 2 axis turned mild steel parts for the heavy equipment industry will generally command a much lower rate than 5 axis milled titanium parts for the space industry, so please keep all that in mind. The market price is also heavily influenced by lead times, material costs, and many other factors which are all important to factor in.

Let’s look at a generic job shop that has a combination of lathes and mills that also does value-added assembly work (and keep in mind these example rates are used for illustrative purposes relative to one another, not absolute! Your rates may vary widely.)

Consider a combo part that starts with turning, gets some complex milling features, and then has 20 helicoils installed. To get the most accurate cost to factor into the price that the market will bear, you should be bidding each category of machine time at different rates. I’d even argue that you should be charging more for your labor for programming and setup time than you do for your machine operators, independent of which machines they’re using. This type of pricing is called Activity Based Estimating which is very closely related to Activity Based Costing or ABC.

At the end of the day, if you have enough staff to run your machines (not a given at all in 2021) then you want to make sure that all your work centers (machines and otherwise) are being estimated at rates and prices that will win the right amount of work at the highest prices. You must then be able to estimate the costs accurately and apply the right amount of margin to just win the work without being too high priced. So do some research, some lost bid analysis, ask your friendly competitors, inquire in machining forums, and crunch the numbers yourself as to what you should be bidding for different types of machines and different types of work. By being more data-driven, you can help ensure all your work cells and people are equally busy by winning work that is producing good margins and contributing to your overall growth and revenue targets.

 

How can ProShop Help?

ProShop’s estimating module is exceedingly fast at creating very accurate activity-based estimates. You can pull pricing levers for nearly anything you can think of: Different work cells, different types of labor activities (such as programming, planning, setup, running, inspection, fixture creation) differing markups on materials, BOM items, overhead rates, sales commissions, and more. So you can be as precise as you want to be, and with our Rapid Templates, you can generate these precise estimates in just a few minutes. Clients have told us that estimating with ProShop is up to 3x faster than their old methods of using Excel or old ERP systems. Reach out to book a discovery call to see if ProShop can help your shop. 

 

We recently completed our Machine Shop Ownership Change Conference. I had a great time putting it together and hosting the event along with Peter Zelinski of Modern Machine Shop Magazine.  The speakers and panelists were astonishing and brought fantastic insights about the ownership transitions they have gone through or been involved with. The attendees were very engaged and we had great questions which revealed the fact that they were genuinely curious about ownership change in general, and as it relates to their own companies.

As I reflect back on all the things the speakers shared and distill the most common and important takeaways that we heard time and time again, a few things come to the top.

    1. Get rid of skeletons in the closet!  We heard this exact phrase from several speakers underscoring how common this is, and how it negatively affects companies being sold. Now is the time to start getting rid of the worst of those skeletons. Make sure you disclose the rest of them upfront when you go to sell your shop. There are fewer things that will implode a deal than last-minute skeletons that WILL come out during due diligence!  It breaks trust from the buyer’s perspective and will leave them wondering what else they will find later in the closet.
    2. Have systems! There are so many machine shops out there that are run out of the head of the owner and maybe a few other people. They’re maybe barely using a bad ERP, have lots of paper, dozens of spreadsheets, files scattered all over their network, and lots of tribal knowledge. Fire fighting, overnight shipping, and last-minute scrambles are a stressful part of daily life. These types of companies are much harder to sell because nobody wants to buy a shop like that, and if they do, you’ll get pennies on the dollar.  The fix?  Start implementing systems today and become more process-driven.  It’ll dramatically improve the value of your business, and the ease of selling to other kinds of buyers, plus you’ll have a lot more fun in the meantime, and maybe start making so much money that selling may take a back burner. With the proper systems, you can realistically improve the value of your shop by 2x in just a couple of years.
    3. Be sales driven! Having a good year or two of consistent growth, profitable operations, and a well-diversified client base is key.  If you have too many eggs in one basket and have big swings in your revenue and profitability, those are all red flags for a buyer. This means investing in marketing and sales on a consistent basis. And the most effective plan for marketing and sales is to make it into a system.  See #2.
    4. Don’t go it alone! Just because you’ve run a machine shop for years, and you’re used to people coming to you for answers, doesn’t mean that you know how to sell a business. Get trusted advisors and listen to their advice! Lawyers, Tax Professionals, and M&A firms are part of an important lineup of people on your side who can make sure you get the best outcome possible.  Yes, you’ll spend some money on them, but the chance of success will be much higher!
    5. Stay cool! As Dave Capkovitz said, selling your shop is like putting one of your children up for adoption. It’s one of the most emotionally wrenching, and financially significant processes you’ll ever go through. So be clear about your intentions, what numbers are important to you, and try to remove the emotion as much as possible from the process. By keeping a level head, trusting your advisors, and taking lots of deep breaths, you’re much more likely to come out of the whole deal much better off.
    6. Communicate! Especially if you’re transitioning from one family generation to the next, don’t be afraid to talk about it. Clear and open communication about all the issues you can think of is really important! Don’t keep everything to yourself and wait until the last minute to bring it up. Even if it turns into an uncomfortable conversation, that’s a good thing and everyone will be better off having worked through the issues in advance and having a cohesive plan about how everything should be handled.
    7. Sell when times are good! Don’t wait to sell when you’re having a down year and just can’t take it anymore.  The time to sell is when everything is going great! You’ll get the highest multiple of your EBITDA when you’ve got a good year of consistent profits behind you.

Even if you’re not expecting to go through an ownership change in the near future, it’s never too soon to be thinking about all the topics above, and all the other great wisdom that the speakers shared.  With a small amount of advanced planning, you can dramatically improve the chances of successfully selling your shop or transitioning it to the next generation. I know how hard you’ve worked to build your business to the place it is today! It’s a monumental achievement, so finish it out strong and ensure an amazing outcome with some intentional planning, great systems, and no skeletons in the closet!!

If you missed the live conference, the recording will be available to buy until the end of 2021.  Registrants will also receive the entire slide deck, other handouts, as well as optionally have the opportunity to be connected with companies who are interested in buying machine shops, selling machine shops, or coaching or facilitating those transactions. 

Buy access to the conference here:

https://www.bigmarker.com/gardner-business-media-inc-w1/The-Machine-Shop-Ownership-Change-Conference?utm_bmcr_source=ProShop

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By: The ProShop Team

[/vc_column_text][vc_column_text]Design engineering and machining are the cornerstones of companies that manufacture products.  Unfortunately, it’s not uncommon for a rift to develop between the two departments.  It can feel like an 8-foot brick wall separates the critical functions: engineers throwing designs over the wall to machinists without context and machinists tossing back finished parts without feedback.

The bricks for this wall are laid by a lack of understanding and sometimes respect, between engineers and machinists.  Although both are instrumental to innovating new parts, engineers and machinists have different backgrounds and experiences.  68% of engineers have their bachelor’s degree whereas the majority of machinists went the technical training route with only 17% having received an associate’s degree. On the other hand, many engineers, especially younger ones, have little to no hands-on knowledge of machining.  These educational differences cause each group to look down on the other. To drive the wedge deeper, the average hourly rate of a design engineer is almost 2.5 times that of a machine operator.1,2  These two groups of highly intelligent, skilled people are working toward the same goal but from completely different angles and for different rewards.  This is the basis of misunderstanding and can lead people to feel the need to prove themselves by challenging and even disrespecting the opinions of others.

As you can imagine, this wall creates a litany of problems for the parent company, the biggest of which is that it significantly drives up costs.  When information doesn’t flow between design engineers and machinists both groups develop a blindspot.  Engineers don’t see how their designs impact fixturing, tooling, tool wear, order of operations, or inspection, all of which add cost.  Machinists don’t see the purpose of tight tolerances or challenging features causing frustration and resentment. A poor relationship between departments can lead to a toxic work culture that increases employee turnover, another significant cost.  In order to succeed the wall must come down.

The first step to taking down the wall is establishing good relationships.  Luckily, despite their professional differences, engineers and machinists usually share hobbies and interests outside of work. A great way for the company to catalyze interaction is to host events that fall into those shared interests.  For example, organizing an employee car/truck/motorcycle/boat show over lunch or right after work is a fun way to break the ice and get everyone talking.  Learning to appreciate the individual will lead to a better understanding of their role and responsibilities.

The buck is passed to the engineers because the work starts when they design a part.  Engineers must involve machinists in the design process early and often in order to visualize their blindspot.  Engineers should explain the objective of the project/product and share sketches prior to ordering prototype parts.  Engineers are usually doing project-specific work whereas machinists have seen a variety of parts across the company’s entire portfolio.  When the engineer shares the bigger picture with the machinist, the machinist may identify cost savings opportunities like reusing a component from another product or leveraging an existing program, fixture, or proven process.

This is also a good time for engineers to solicit feedback from machinists regarding opportunities to make changes that make manufacturing easier and cheaper while preserving design intent.  Designing features that align with standard tool sizes or loosening tolerances are examples.  This is called design for manufacturing, or DFM.  Too often engineers hear “We can’t make this part” or “We can’t hold that tolerance” without further explanation.  Collaborative DFM allows machinists to fully engage with the engineer, providing collaborative and constructive feedback on the manufacturability of the part and building rapport. Engineers, in turn, should be open to this important feedback rather than defensive.

This type of communication early in the project life sets the tone that both parties respect the opinion and value the expertise of the other.  That big brick wall is on its way down!  As the project continues in its life cycle, engineers and machinists should continue to work together in this way to optimize the design and drive down costs.  Engineers are data-driven creatures, so quantifying the cost savings of the DFM effort is a huge benefit.  An enterprise resource planning (ERP) system can help machinists accurately estimate set up, run, and post-processing times and analyze the data for various design iterations.  Over time, the ERP system becomes a database to reference when you start a new project, making informed decisions for new parts based on similar parts.

Once you’ve deconstructed the wall, look to hire individuals who will continue the culture of open communication and positive relationships.  If the wall is particularly high or hard to break down, consider hiring a manufacturing engineer and/or a design transfer engineer to operate as a buffer and facilitate communication between design and manufacturing.  Continue encouraging departmental alignment with regular opportunities to touch base or socialize--maybe the car show becomes an annual event!  Developing healthy and productive working relationships will allow the team to balance design intent and manufacturing costs to produce the highest value of quality products.   

 

References:

  1. https://www.zippia.com/design-engineer-jobs/demographics/
  2. https://www.zippia.com/machine-operator-machinist-jobs/demographics/

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By: Paul Van Metre

[/vc_column_text][vc_column_text]In a recent blog post, I wrote about what to do when you have rejected parts from a customer. From the customer's perspective, it’s all in the response and how you handle the situation and provide them with confidence that it won’t happen again. Internally, this is just as important. If you’re quick to assign blame and point fingers to an individual when a failure happens, then you’re missing out on an amazing opportunity to build up your team, rather than tearing them down. Whether a failure gets to the customer or not, the learning opportunity is the same, it’s the process that needs improving and is the only way that long-term improvement will take place! That responsibility for process improvement lands squarely on the shoulders of the leadership of the company. The buck stops at the top always!

Process Failures

With relatively few exceptions, employees are there at work to do a great job and try their best every day. To achieve those great results, employees should be following the company processes and systems that have been put in place to ensure the results are as repeatable as possible. If the results are not good enough, then one of the following might be the problem.

Process Failure Example

Let’s use the example of preparing all the quality documentation for a shipment. Many clients need a formal FAI like an AS9102 report, any-and-all related certifications that have come with materials and special processes, and possibly a balloon-tagged copy of the drawing. If a client receives a shipment without all the necessary paperwork, then it’s likely because the employee who prepared the document package either wasn’t certain exactly what paperwork was required by this specific client, or when they went to gather the documentation, it wasn’t readily available. In either case, it’s the process that needs to be made more robust, or better training is needed (which is also a failure in the process). Lack of clarity in what an employee needs to do is a failure of the systems of the organization - in this case, possibly the employee didn’t know what paperwork to send. When there is abundant clarity but the result is still not up to standard, then that is the failure of the system as well - in this case, possibly the employee knew what paperwork to send but it wasn’t available to them.

Tribal Knowledge Failures

Most companies are rife with tribal knowledge. This is information that is necessary for managing the company, the jobs, client requirements, and more that is not captured in a systematic and scalable manner. The fact that this information resides in people’s heads, sticky notes, personal documents or spreadsheets, will lead to certain failures on a frequent and ongoing basis. How often have you had failures because an employee is covering for someone on vacation or sick leave? If you’re like most shops, it happens all the time. These failures of tribal knowledge could fall under all 3 of the categories above. Often these failures can be attributed to bad tools, like software, which aren’t well suited to the task at hand and lack features to be able to capture all the relevant information and share it with the right people at the right time. If you research a recent failure in your company and get to the root cause, it will often lead to discovering that the software and systems you’re using lack the ability to properly handle your needs.

Summary

Remember that most employees care deeply about doing a great job. They try their best given the tools, processes, and systems they’ve been offered by the company. They don’t intend to make mistakes or cause failures. So when they inevitably do happen, take a deep breath, talk through the details and be curious about getting to the root cause of the system or process failure. Doing this with grace, understanding, humility, and kindness will ensure that you can turn those mistakes into stronger connections with your team, and improvements in the process. That’s a formula for long-term success!

How Can ProShop Help?

Most manufacturers who use an ERP system, are using one with a strong foundation in accounting, but that often lacks the features and capabilities to successfully manage the manufacturing process well enough. If the system relies on paper travelers, that alone is a prime indication that it’ll be insufficient to manage all the requirements that can result in failures of the process with quality, customer flowdowns, inspection requirements, etc. In the example above with the AS9102 report, all the proper documentation requirements are configured at the customer profile in ProShop, and then automatically flowed down to all client work orders. So preparing a perfect document package is as simple as clicking a single button and every relevant FAI (for multi-level BOMs), all certs, a copy of the balloon tagged drawing, and a perfectly formatted Certificate of Conformance will be generated automatically. This is just one example of how we develop rock-solid workflows and processes that dramatically reduce the chance of failures in the process.

When a shop is fully implemented with ProShop, the typical stressful rush of reactive fire-fighting which often leads to mistakes is replaced with calm, stress-free, proactive workflows, with all the important details and information at everyone’s fingertips. If that sounds appealing to you, book a demo with our team today![/vc_column_text][/vc_column][vc_column][/vc_column][/vc_row]

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By: ProShop Team Memeber

[/vc_column_text][vc_column_text]If a company is still thinking of the people who make the wheels turn in the institution as a resource, then it is no surprise that most times you end up with lukewarm water. Certainly, people are a resource of sorts, they make the decisions, complete tasks, and pour their creativity and expertise into your organization. Unfortunately, when a company only sees people as a resource like inventory, this removes the human ingenuity element from the equation and leads an institution into the murky and tepid waters of a swamp infested with pests. People are not just resources, they bring resources, they are complex beings that have a myriad of unique potentials which benefit those they work for across many situations. Limiting the scope of organizational perception to humans as a resource results all too often in a predicament similar to trying to herd cats. Those employees you want flit, dodge, and evade capture, while the ones you could take, or leave are all too happy to fill your halls and advance themselves ultimately leading to a lack of genius and creative spark necessary for the growth of your organization. If a company wants to attract the best talent, then consider pitching resources as a theme and adding culture to your vernacular. 

No employee ever said, “I want to work for ABC Company because Human Resources hands out apples on Fridays!”

There are three simple (but at the same time subtle) things that every human being, from the simplest to the most complex, needs to fulfill their own psychological needs. When these three concepts are found a person is balanced, determined, and motivated. Imagine a culture where all the talented individuals no matter how simple their task had a powerhouse of well-being and stability in their lives. The successful possibilities are endless. A company that wants to be successful must have human beings full of these three things to build teams that reach their highest potential together.

Richard Ryan and Edward Deci brought to the table the concept of Self-Determination Theory. In their research across global populations, they have uncovered the three absolute needs of every person required for those persons to be the most productive self-propelled individuals to grace a company. A human being who feels connected, competent, and autonomous has the ingredients to build a culture and a world well there is no limit to the potentials that can be discovered. They have psychological well-being (Ryan & Deci 2006).

An employee who cannot find psychological health is not productive, has limited vision, lacks creativity, and will stagnate. Organizations who can look at their own mission statements with an eye for humanity, and honestly analyze the culture they present to the potential recruits have a chance of incorporating these concepts into their overall vision which will spill over into the mass of humanity attracting the best applicants.  A company cannot shift the perception of job seekers until they shift their own perception about themselves as an organization. 

The more authentic the people of the company are the more attractive the company will be to those with similar mindsets. The US Department of Labor reports that companies are describing a lack of soft skills in potential employees. It is the astute business that also realizes the culture they promote becomes the soft skills of the organization itself and with this knowledge can create a fertile field for recruitment, or the company can return to how they have always done it and produce that tepid swamp of human resources. 

 

 

 

 

 

Reference: (2006, 2021), Ryan R. & Deci E. Center for Self-Determination Theory. Retrieved 25 July 2021 from, https://selfdeterminationtheory.org/theory/ 

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By: Paul Van Metre

[/vc_column_text][vc_column_text]Your company tries SO hard to make everything perfect, but occasionally, something slips through the cracks, and you send some parts to a customer that get rejected.  It’s not a fun situation, and it can be like a gut punch, depending on how expensive the mistake is.  How you handle it from the customer’s perspective can make all the difference and even potentially turn a bad situation into a positive experience.  Customers know that mistakes will happen, but how a vendor responds to them can put your relationship on the chopping block, or solidify your position in the partner category.

  1. Immediately apologize! - A heartfelt and unconditional apology is the first step. Let them know you take it seriously, you understand it impacts their business, you’ll figure out what happened, and you’ll make it right as fast as possible. The first response can tell volumes about your commitment to client satisfaction. Then provide them with an RMA (Return Material Authorization) number to track the parts back.  And offer to pay the shipping costs if they don’t request it.
  2. Ask for more information - Ask what kind of recovery they need.  What specifically is wrong with the parts? How did they inspect or catch the mistake? Ask for photos of the pats, their receiving inspection report, or any other information they can provide. Ask what they would like to have done. Maybe the parts can be reworked, or a partial delivery will suffice. When are they needed? The more information you have the better you can respond to their needs. Lastly, ask them about their requested accounting. Do they want a credit and re-bill, or no credit and no re-bill or something else?
  3. Research - Even before getting the parts back, you can dig into the details of what happened in your shop.  Start with seeing if you have any inventory or overruns from that specific work order. You’ll need to purge any bad inventory anyway, and it can give you immediate insight into the problem. If you don’t have extras, pull up the model and drawing that were used to program and inspect the parts. Look at the work order records to see who set up the job, who made the parts, who inspected the parts, etc..  Look at the inspection records of the FAI and in-process inspection results. Look at the calibration records of the instruments you inspected.  These are all possible keys to understanding the issue. By digging into your records, you’ll likely figure out what went wrong and what you need to do to fix the issue right away.  
  4. Confirm The Details - When the parts get back into your hands, you should carefully look over them to make sure you agree with your customer’s assessment of the problem.  Sometimes the parts are perfectly fine, but their inspection method wasn’t correct or is just different from yours.  This can be a tricky situation, but with clear communication with your client, you should be able to work through it. (ProShop Tip: Look over the machining marks or other visual indicators of manufacturing the process very carefully. At our shop, we occasionally had clients try to reject parts that we didn’t make! We could tell by the machine marks that they were not from our shop.  Then you have a really touchy situation because you may need to call out your client for having bad traceability at the best, and pulling one over on you at the worst.)
  5. .Execute Your Plan - Assuming that the parts are yours, and are indeed bad you need to respond quickly. Based on the prior steps you may have already ordered new raw materials by now and your plan is well underway.  If you haven’t kicked the plan into gear already, do so now and provide them with a detailed status of what is happening and when you can get them good parts back. Depending on the severity of the schedule impact to your customer, you may need to pay overtime to get it through the shop faster, to expedite the job for outside processes. Let your client know what you’re doing to recover and when they will get the parts back.  Provide ample communication and status updates - it will help them be informed to make decisions on their end and bolster their confidence in your recovery.
  6. Learn From Your Mistakes  - When the immediate rush is over, take the time to understand what went wrong and what you can do to eliminate the chance of that problem happening again in the future. Provide your client with a CAR (Corrective Action Request) plan, even if they didn’t request one of you formally.  Just like the importance of the first initial apology, this last step can help them to feel confident in continuing to work with you as a supplier.

 

By responding to a mistake positively, it’s possible to take a negative situation and squeeze some good out of it. The key is owning the mistake and doing whatever it takes to make it right and letting your customer know what you’re doing at every step.  If a customer doesn't appreciate it then they probably aren’t a great long-term customer for you. Those that do are going to be good clients in the long run.

 

How Can ProShop Help?

ProShop has countless tools to help you solve the problem in the first place and dramatically reduce the chance of a problem happening in the first place.  From our solid and tight document control and automated archiving of old prints to our customizable checklists to ensure you never miss a step, or to our integrated inspection capabilities so you can ensure your parts are perfectly intolerance, and to our built-in calibration tracking, and so much more!

If you still do have a rejection from the client, with 1 click you can issue an RMA from a WO which instantly pulls all the metadata from the job, ties it to all pertinent records (client, PO number, Part Number, and name, WO number, revision, etc. and allows a highly efficient and auditable process of documenting the NCR, any Corrective Actions needed, dispositions, cause codes, improvement suggestions and much more. Without printing a single piece of paper too! Watch our video on going paperless!!

You can then just as easily issue a new work order, rework orders, see where it fits in the schedule and immediately give you client status on your recovery actions.  Then at the end, you can email them a copy of the Corrective Action so that they can see you are serious about your improvement activities! There has never been a more efficient and cost-effective way to manage quality. The average client that has a quality manager says they save on average, about 50% of the quality manager's time! The time that can be better spent on improvement activities and eliminating scrap from happening in the first place. We can’t think of a better way to spend your QA time than that![/vc_column_text][/vc_column][/vc_row]

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By: Paul Van Metre

[/vc_column_text][vc_column_text]You have a new shop with less than 10 people, (or perhaps you have a 20+-year-old shop) so why would you possibly need an org chart?!? Isn’t that something that big companies use for middle managers to fiddle with to pass the time? I once thought the same thing as you, but as I got “schooled” about why my shop wasn’t growing as fast as I wanted, my eyes were opened to the error of my ways. The reality is that only 45% of companies survive past 5 years, and 72% of companies have fewer than 10 employees. This is because companies past their toddler and adolescent years have learned important lessons to grow past those inflection points and the different things that are needed to break through different levels of growth. What will get you to 15 people is vastly different than what will get you through 50 employees and higher.

The Technician Dilemma

Most small businesses are started by people who are experts in their craft, with great technical skills for doing the job. I know countless machine shops that are started by someone who is a very good programmer/machinist with the guts and gumption to start their own shop. I also know countless shop owners who have been in business for 20+ years and still employ less than 10 or 20 people, despite their best efforts to grow (by the way, there is NOTHING wrong with running a small shop if that’s what the shop owner wants. A small, lifestyle business can be a beautiful thing.) The common theme with these shops with dreams for growth is that the owner is really good at the technical aspects of running their shops, but has little to no experience or schooling in running a business. It's no fault, just lack of prior experience.

Plan Your Future Growth

One of the keys to growing a larger and more scalable business is envisioning and systematically planning for what the company will look like in its larger form. Do you want to have a 50 person shop? Great, then you need to design what that 50 person shop will look like, and how it will operate to ensure repeatable, consistent performance in meeting and exceeding client expectations. Who will be responsible for what? What are the metrics for good performance? What are the closed-loop improvement systems to ensure continuously improving client satisfaction? This is where the org chart comes in.

When you’re a shop of just a handful of people, and everyone wears many different hats, things more or less get done, and most (hopefully) jobs get to where they need to go on time with good quality. When you’re 50 people, the same structure won’t cut it and things will start to significantly break down. More defined structures, responsibilities, and systems are necessary to ensure performance.

Built The Systems for Growth

When a future state org chart is created, it becomes more feasible to define each and every role, the required skills, the duties, and responsibilities, keeping in mind what systems should underpin the entire operation. Just like a well-run franchise like McDonald’s or Starbucks??, the key to client satisfaction is providing repeatable, consistent client experiences. Without systems to ensure this continues to happen while the company grows, client experience will always suffer, clients will leave, and growth will stagnate. When a well defined org chart is created along with all the corresponding roles and responsibilities, and it helps to structure the hiring, training, and promotion of employees in the company, that consistent client experience will not be elusive and the natural result will be the growth of the company.

Work ON Your Business

This is easier said than done. Getting out of the daily scramble of urgent client demands and working on building the systems of the business is no easy task. Even on a small scale, the delegation of responsibilities and tasks is key to finding a few precious minutes per day to work ON the business, not just IN the business. One easy step I can recommend is to read the book “The E-Myth Revisited'' by Michael Gerber. It’s an easy read in a novel format about how to design a business with the systems and principles needed to allow a business to grow. It helped us shape our shop and the principles helped us grow to 75+ people before we sold it. A next step could include blocking out time in your day to spend working ON the business. Even just a couple of hours a week of dedicated time can help you make great headway on your business goals.

How Can ProShop Help?

First of all, ProShop will dramatically reduce the time you spend on clerical tasks and keep things from falling through the cracks - causing everyday chaos in your business. So you’ll have more time to work ON your business while your head is clear, knowing that things on the shop floor are taken care of and running smoothly.

Second, ProShop has all the features and modules for you to define all those roles in the company, build the org chart as it looks today, and what you want it to look like in the future so you can envision what this looks like.[/vc_column_text][vc_single_image image="6832" img_size="full" alignment="center"][vc_column_text]You can also then define all the training requirements for an employee to be considered fully trained in each role so that when you hire employees, the onboarding process is easy and clearly laid out. This provides a roadmap for what roles you’ll hire in the future, and how the duties and responsibilities will be divided up. It also provides a path to advancement for employees who are go-getters!

Summary

Running a precision job shop is one of the most difficult jobs in the world! But it’s also one of the most important! Precision manufacturing is at the foundation of the entire economy and has the highest multiplier effect of other jobs in the economy. It’s essential to allow those shops to grow to the size that the owners want them to grow to. Planning out what the future of your business looks like is an essential part of that growth. Envisioning what your Org Chart will look like is a key part of achieving those future state goals.[/vc_column_text][/vc_column][/vc_row]

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By: Paul Van Metre

[/vc_column_text][vc_column_text]The topic of time tracking in job shops is a sensitive one in many shops. Machinists and others sometimes feel that time tracking is nothing more than “big brother” watching them, looking for mistakes, or ways to get them to work harder. Trying to get these shops to adopt time tracking seems like a daunting task, with a lot of pushback from employees who insist they won’t track their time. These employees have some power because it’s hard to replace a well-experienced machinist these days. As we described in a previous article, there is a significant lack of skilled machinists in the trade, so shop owners are reluctant to do something that upsets their employees. Also, in many shops, there is a precedent of time tracking being misused for the wrong reasons during a failed past attempt, and employees being rightfully reluctant to track time again. I’ve even heard from shop owners that they don’t want their employees taking the time out of their day to track time. They feel that tracking time isn’t worth the time to do it, and they’d rather have their employees spending 100% of their time “making parts” rather than spend even a few minutes per day to track their time.

In other shops, they’ve solved this problem, and employees willingly track time. Shop owners have used the right approach to get employees to understand the importance of doing so, and the owners themselves use the time tracking data effectively to help improve the company to the benefit of everyone in the organization.

The fact is that time tracking is one of the most important activities that shop employees can participate in. The old saying “you can’t improve something that you don’t measure” is highly applicable in this situation. Without good data on how long different jobs and activities are taking, it’s nearly impossible for shop managers to do their jobs well, which creates a dynamic where both parties rely on each other to do their jobs to the best of their abilities which only helps the shop improve.

 

Time tracking is essential for the following activities:

  1. Scheduling - Scheduling of jobs is one of the most important challenging activities a shop must be good at to have a high on-time delivery rating. Time tracking is essential to accurate scheduling. Scheduling for new work orders is based on the estimated time to set up, inspect and run production on the various work centers needed to make those parts. As the job moves through the facility, it’s important to know how much time has been spent and how much is remaining based on the best estimate available. This is only possible with all employees tracking time so the schedule can be as up-to-date and accurate as possible. This data is also used to make bigger decisions about hiring, buying machines, etc.
  2. Estimating - Even the very best machine shop estimator, or estimating software is never 100% accurate. The process of improving the accuracy of estimating over time is contingent on having employees track the real-time it took to do those jobs, and that data is fed back into the system to improve the estimating accuracy for the next time the job is run or the next similar part that needs to be estimated. Anything more than a gut feel will require time tracking data collection from the employees who worked on those jobs. Even better would be noted to describe what happened during those labor hours and why work orders took longer than expected. Having accurate estimates that the shop employees trust is absolutely essential to the success of any job shop.
  3. Job Costing - At the end of the day, fewer things are more important than accurate job costing. The number of shops that have no idea how profitable or unprofitable individual jobs are is astounding to me. Since labor is typically the largest cost in any job shop, accurately calculating the cost of labor hours is highly important to achieving accurate job costing. Accurate job costing allows shop management to make smarter decisions such as what to do with jobs that are unprofitable, either increasing the price, working on improving the job, or getting rid of the job. At our shop we called this process “kill the losers”, and in any shop floor, a well-managed job tracking process to improve or get rid of bad jobs will result in a profound improvement in overall profitability which should benefit everyone.
  4. Employee Evaluation - This is one of the reasons that employees are reluctant to track time. Good employees shouldn’t be afraid of this, and in fact, they should welcome it, because the good employees have nothing to worry about, as they specifically will benefit from a good time tracking system. It’s the bad employees who will eventually be weeded out when a thorough time tracking system is put in place. When the employees who care about the company's success are left, it creates a more positive culture that benefits everyone.

 

Tips to Getting Buy-In on Time Tracking

If your shop employees are reluctant to time tracking, here are a few tips to get them on board with the idea:

  1. Explain the reasons why time tracking is important. It’s not because you want to monitor their every move, it’s because of all the reasons above. It’s critical for the success of your company. If they care about the company, they should understand this. It will also be good for the employees when their formal evaluations and considerations for raises come up.
  2. Offer a cash bonus. For a couple of months offer some cash or a prize to the employee who does the most time tracking. It doesn't need to be a big amount, just something to get their competitive juices going, and something they can look forward to. Then give a smaller amount to everyone who participates as well as the winner.
  3. Pizza party for a company goal. Set a goal for total time tracking for the company and offer to bring in lunch for the whole team. Start low, maybe 60%, and then increase it 10% over time. Once you’re at 90+% and you’ve provided 4-5 free meals to people, there will be a more positive attitude about time tracking. And you’ll have amazing data to help the company.
  4. Say "thank you". When you see an employee doing a good job at tracking time, a genuine 'thank you' and a pat on the back will go a long way. Also, make a point of thanking them publicly as well at company meetings and events.

One last important point is that it’s crucial that shop management doesn’t misuse the time tracking data to beat employees up or make them feel like the data is being used against them. Nothing will torpedo this important initiative faster than misusing the data and not bringing an empathic understanding to analyzing and discussing the data with the team. When time tracking and the data it provides are used constructively, and those positive improvements are shared with employees, the natural result will be a virtuous upward cycle that benefits all the stakeholders in the shop.[/vc_column_text][/vc_column][/vc_row]

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By: Paul Van Metre

[/vc_column_text][vc_column_text]Non-Conformances (NCs) are unavoidable in any job shop or manufacturing process. Some are related to setting up and proving out new jobs or processes. Others happen during production when processes go out of control, tools break, humans make an error, etc. When parts need to be scrapped, reworked, or remade, costs can skyrocket! All manufacturing companies should endeavor to minimize scrap, root causes of scrap, and the cost of scrap, and data found in Non-Conformance Reports (NCRs) is the key to doing this.

When a non-conformance (NC) is identified, many shops consider those parts scrap immediately, and throw them in the garbage, the recycle bin, on the bottom of the cart, or otherwise don’t do any formal process to document what happened. When that happens, valuable information is lost that can help to improve the process to reduce NCs in the future. And also, parts that could possibly be reworked or use-as-is may be discarded unnecessarily. This is more understandable when the overhead cost to generate and manage a report of the non-conformance is too high. If filling out a paper NCR, submitting it to QC, scanning, filing, collating data in an Excel sheet takes a lot of time, the value may be questionable at first glance. In some shops, the decision to make an NCR or not is left to the discretion of the people involved, which means that there is no system, and some employees will create NCRs more often compared to others, skewing the data. If you ask these shops how much scrap costs them every year, or which reasons are the most frequent or costly, they likely will have nothing better than a gut feel.

Every time an NC happens, whether it’s “planned” (ie. setup pieces) or “unplanned'' there is a root cause for that occurrence. Maybe it’s because a new CNC program has an error in it, or the wrong tool was selected from the tool crib. Maybe it’s because a part was misloaded in the fixture, a tool wore out and started cutting out of tolerance, or a part got dropped on the floor and damaged. There are many reasons NCs happen, some far more often than others. Regardless of the reason, NCs can be a very expensive problem. To help determine what the total cost is, and why the NCs are happening, it’s important to always make a non-conformance report (or an NCR for several parts of the same reason). A quote I like that best describes why this is important comes from the famous British physicist, Lord Kelvin: “What is not defined cannot be measured. What is not measured, cannot be improved. What is not improved, is always degraded.” With that in mind...

Top 7 reasons to make an NCR at the moment a non-conformance is identified:

  1. It provides a mechanism for immediately identifying a non-conforming part so it doesn’t accidentally get mixed in with good parts.
  2. It can help identify some immediate changes which can reduce more NCs in the same production run.
  3. It allows a reason to be identified and recorded in the moment, which may be lost or not remembered if the NCR is not created right away.
  4. It allows for an NCR code to be assigned which will be helpful later in the process.
  5. It enables the company to identify which people or departments make the most non-conformances.
  6. It makes it possible to assign a cost to be associated with the non-conformance. Was it the first operation of a $1 piece of stock, or was it on the final assembly operation of a $3500 assembly? Big difference!
  7. Most importantly, it enables root cause analysis of the NC and the variables that culminated in the non-conformity.

Depending on the cost of the material, how far along in the manufacturing process the NC occurs, the cost to replace or remake the part, etc. the cost can vary considerably. If the data for the cause code of an NCR code is collected and analyzed on a Pareto chart, it will become apparent that some causes are much higher than others and far more expensive. These are likely the “lowest hanging fruit” and the best ones to focus on right away to reduce the cost of NCs. It’s through a formal MRB (Material Review Board) process, or a Management Review on a monthly or quarterly basis where those larger trends will be revealed.

In order to reduce the transactional and overhead costs of creating and dispositioning NCRs, the process should be digital. NCR creation should be tied into the inspection process and software should identify immediately if an inspection result is out-of-tolerance and allow instant creation of an NCR, and the software should pull all the meta-data about the part and job onto the NCR, including part number, work order number, client, work cell, operation, operator, dimension tag number, and more. When this is done, an alert should be sent to quality or management staff so that help can be immediately mustered if warranted. When all the NCR data is digital, has all the corresponding meta-data, and took just seconds to produce, it makes it very easy to then analyze that data on dashboards, helping management make the best and most timely decisions on what actions to pursue to reduce the cost of non-conformances in the shop. This can have immediate and positive effects on the bottom line of any shop, and the money that used to go towards dealing with NCs and scrap can be used to invest in the growth of the company.

How does ProShop help:

Not surprisingly, the advice in that last paragraph about making the inspection and NCR process digital is exactly how ProShop works. Considering that the manufacturing staff is directly interfacing with ProShop at the work cell, the NCR creation process can be virtually instantaneous, getting machines running again while collecting that critical data needed for root cause analysis. When alerts are sent, quality staff or leads can be dispatched immediately to help support production and disposition parts right away when warranted. ProShop even allows for giving employees permission to only disposition to scrap, if the parts are clearly bad, but requiring QC staff or a lead to make the decisions about use-as-is or rework during an MRB process. Our Training Access Control feature even allows the ability to lock employees from editing the disposition field (or any field) until sufficient training is provided to the employee. Auditors love this feature!

When the time comes to evaluate NCRs at a monthly Management Review Meeting and take action, Improvement activities can be identified, NCRs can be assigned to staff, and Corrective Action Requests (CARs) can be generated with a tap of a button. NCRs can be easily and instantly analyzed from a part number perspective, by the machine, by the client, by the employee, by shift, and of course by cause and NCR code. This reduced overhead burden makes easy work on the administrative side of quality control, freeing up vast time from Quality Managers. In fact, many clients report freeing up about 50% of their Quality Manager’s time, allowing them to actually work on more strategic and money-saving activities and implementing measures to reduce NCs and the associated cost in the first place.[/vc_column_text][/vc_column][vc_column][/vc_column][/vc_row]

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