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.
Estimating/Quote checklist – This is the very first place that big mistakes can happen, that can result in lost profit. If you forget to check the price of a volatile material, or miss the fact that a custom ground cutter is needed, or you need to buy a special thread gage, all these things will result in you missing an expensive detail and underbidding the job – virtually guaranteeing that you’ll make less profit than you estimated. So a simple checklist is highly recommended. To develop one, review your last 10 most unprofitable jobs to help you determine what should be on the list to ensure you eliminate those mistakes in the future.
New order checklist – When you receive an order, this is the next place to put in a checklist to ensure nothing gets missed. Ensure the price and lead time is what was quoted, that you have all the correct revision drawings and models, that the mil spec for the materials are correct (and you don’t accidentally buy the wrong material), that you have enough lead time to complete the job without incurring expediting fees that weren’t quoted. There are many gotchas that can easily be eliminated by the simple use of a checklist. And those gotchas can be catastrophic when it comes to profitability, so this is a very important list to make!
Programming checklist – CNC programming is a very complicated process. There are a thousand details to keep track of, and possible things to get wrong. So a checklist can easily help improve your chances of success. From the obvious things like ensuring you have the correct model, to making sure that the tools you’re programming are in-stock or on order, to reviewing your drill/tap depths, to gouge checking, and ensuring your tool extensions are correct and won’t cause crashes. By working from a simple checklist (which takes just seconds to complete), you’ll dramatically reduce the occurrence of errors or omissions which will help boost profitability on all your jobs.
Setup Checklist – When you’re about to set up your CNC machine, there are a lot of things that are needed to make sure that process goes smoothly. Missing just one detail can cause a setup to easily go sideways and take hours longer than was estimated, increasing the risk of losing money on the job. Items that should be on that list would include ensuring your tool extensions are all correct (and you have all the tools in the first place!), you have all the inspection equipment you need, your work instructions are current and complete, you have the right G-Code file, and all your work holding is ready to go. If you are missing any of those items, the setup will take you longer than it should, which not only is a hit to profitability, but will make your schedule slide, further risking the profitability of your other jobs which may need to be expedited to stay on-time!
Job completion checklist – When the parts are made, and shipped off to the client, next comes one of the most important checklists of all. This one is a final review to ensure that any mistakes or losses that were incurred during the job, can be identified and mitigated in the future. This step is one of the most important in any job shop environment. The Pareto principle states that roughly 80% of consequences come from 20% of causes. Applied to job shops, 80% of your losses are coming from 20% of your jobs. By using a checklist you can dramatically reduce the chances that you’ll keep taking jobs that are unprofitable, or under-performing compared to your targets. Whether the solution is to increase your price, improve the process or fire your customer, after going through a job review checklist, the solution should be clear and you can take action to avoid the issue in the future.
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 featureis 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-incontract review checklistcan 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!