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Author: Paul Van Metre

[/vc_column_text][vc_column_text]Machine shops are a hotbed of research and development (R&D). Yes, you heard me right. R&D isn’t just scientists and equipment working in a lab. Job shops especially, and machine shops of all kinds participate in substantial R&D efforts every year. Did you know that R&D costs are eligible for a tax credit? According to Fabricating & Metalworking Magazine, it’s been estimated that just 1 in 20 shops apply for the R&D tax credit. Most are leaving hard-earned dollars on the table when it could be in your bank account! Just consider these common scenarios you likely engage in daily:

• Every time a new part number is won and needs to be programmed, fixtured, setup, and proven out.
• A new type of machine is put on the floor and needs to be learned and tested.
• A new type of cutter is put into use and you need to figure out the right feeds & speeds and cutting conditions.
• New CAM software is implemented and you test out new cutting paths that are different than what you could do before.

These activities are considered R&D from a tax point of view and may qualify for the R&D Tax credit. Heck, even researching a trade show is considered R&D!! Few shops take advantage of this credit and end up paying way more in taxes than they need to.

Let’s go into a bit more detail about a few of the most common activities that a CNC machine shop or job shop may be able to apply to the R&D Tax credit. I’ll also preface this by saying, I’m not a tax professional, and you should always consult with your accountant or tax advisor on any of these topics. There are also companies who specialize in helping shops apply for the R&D tax credit.

The tax code says eligibility for the R&D Tax Credit hinges upon improving a product, process, technique, formula, invention, or software. Sounds like things you do every day?

Does the Activity Qualify?

When trying to figure out if an activity meets the requirement of the R&D Tax Credit, there are 4 tests it must pass to potentially qualify:

• QUALIFIED PURPOSE - The purpose of the activity is to create a new or improved product or process that results in increased performance, function, reliability, or quality.
• TECHNICAL UNCERTAINTY - The activity is being performed to reduce technical uncertainty
• PROCESS OF EXPERIMENTATION - There is a process of experimentation undertaken to eliminate or resolve a technical uncertainty.
• TECHNOLOGICAL IN NATURE - The process of experimentation relies on the hard sciences, such as engineering, physics, or computer science.

Sounds a lot like things your shop does every day, huh?

Improvement in general is R&D

Improving a process or a product is something that most shops do all the time and falls directly in line with all 4 of the above test criteria. Just think about all the activities that meet the criteria that you do every day. When a client asks you to quote on a prototype job, or you provide DFM feedback, you’re working on an R&D activity. When you build and help iterate to improve that product or process, that’s absolutely R&D. When you decide to build a new fixture to improve the work holding of a part you’re manufacturing, that’s R&D - both the labor and the materials you have to buy. When you decide to reprogram a part to take some cycle time out of it, that’s R&D. When you buy a fancy new insert mill or other cutter and need to dial in the cutting parameters, that’s R&D. When you think of it through that lens, you’ll quickly realize that you do R&D every day!

Research is R&D

As shops grow in the sophistication of their equipment and machines, taking on new manufacturing processes and learning how to use them, that activity should qualify as R&D. So the cost and the time to learn about new 5-Axis machines or a new EDM technology at IMTS or other trade shows is considered R&D. If the cost is incurred on these types of activities, it will likely qualify.

• Technical Labor hours involved in the research of new equipment
• Time spent at trade shows learning and researching
• Time spent to integrating new equipment into the facility and operations

Lean Improvements are R&D

I can’t think of a better win/win than spending time on dedicated improvement activities to reduce waste in your value stream while receiving tax credits for the time and cost incurred! If you move machinery around to promote better flow of product, build new lean workstations, or just study a process with a Kaizen team in order to analyze your before state, and then work to improve the process, that’s all likely eligible for the R&D Tax credit.

We’ve identified that many common shop activities may very well qualify for tax credits, so what’s next?

Documentation of Activity and Cost

Uncle Sam isn’t going to take your word for it. You must have hard evidence of your activities and cost. This documentation should include things like:

• Time tracking records of the activities
• Purchase order records of supplies, and equipment purchased
• Drawings, 3D models, sketches, notes
• Photos, or video of before and after

It’s not on the top of everyone’s list to document these things, but when a bit of thought is put in upfront, and a system for this record-keeping is developed, you can easily see that the small amount of effort to document the costs will be well worth the time.

Carryforward and Other Things

If you’re one of the 19 out of 20 shops that hasn’t applied for an R&D Tax Credit, you can retroactively apply for up to 3 years. So think back on what projects or activities you could apply for and what records you have, talk to your tax professional and get some of your hard-earned money back. Around 36 of the US states also have their own tax credit system, so the benefits could multiply if you operate in one of those states. There are upper limits to how much tax credit you can apply for, but if you’re a typical job shop doing lots of the activities outlined above, you should have ample activities to apply for.

How Can ProShop Help?

ProShop can primarily help with the documentation side of things. There are a few ways we can help with this. Every Work Order can have a “WO Class”. R&D Tax Credit is one of the default options, along with our “WO Types” of Prototype or 1st Run/New Rev. All three of those are likely to have highly qualified costs. You can also add any other options to WO Class or Type you’d like if you want to further segment your work. A quick query by the WO class will pull up all the work orders in a given time period instantly. From there, it’s a simple function to pull out all the labor hours and out-of-pocket expenses which can dramatically reduce the time spent on researching costs for the credit.

If you’d like to pull out just isolated time tracking activities, it’s possible to add notes to any time tracking event. So if you train your staff on what activities qualify as R&D, then it’s possible to pull up a list of time tracking for the year and filter just the ones with the R&D tag on it, pulling out thousands of dollars of credit in just a few minutes of work.

Recently we had a customer email us in the early afternoon telling us his accountant needed this data. He wasn’t quite sure how to pull it out the easiest way. By 4 pm we were on a Zoom call with him and shortly after had compiled all the information he needed to apply for thousands in tax credits for the prior year. When it’s that fast and easy, you’re much more likely to do it, and get those credits that Uncle Sam genuinely owes you!

For more detailed information, this guide from Moss Adams is a great one to start with.[/vc_column_text][/vc_column][/vc_row]

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By: Lacey Hill

[/vc_column_text][/vc_column_inner][/vc_row_inner][vc_column_text]Purchase orders (POs) are legally binding contracts between your company, and the company placing the order. If you aren’t treating each PO as a formal contract and reviewing the details of it as such, it’s time to!
When you send the Buyer your order confirmation, you are agreeing to that contract and all the terms therein.

For the past decade, I’ve sat on the customer side of the table (as a Buyer, Purchasing/Planning, and Supply Chain Manager), and I’ve issued and reviewed hundreds of POs and order confirmations. When I say I know a lot of the scenarios you’ll run into during order entry/contract review, know that I’ve experienced them first hand myself. I’ve been on both the advantageous side of a supplier not completing a thorough contract review, and I’ve been burned by missing contract terms myself….and there’s nothing worse than the moment you realize what you missed!

There are numerous aspects of a Customer PO to be reviewed before sending your order confirmation back to a Buyer. I’m going to review 4 scenarios that I’ve commonly run across in contract review and suggestions for how to address them, but know that there are hundreds more. The more attention & effort you put into contract review the more you reduce your risk of agreeing to terms of an order you shouldn’t.

1. Orders placed within the quoted lead time

You open the email from the buyer, you see they’ve awarded you the job. ‘YES!!!’
You open the attachment, look at the total value of the order, you’re excited ‘this is just the size order we needed this month!’

Then you look at the delivery date… ‘2 WEEKS?!!! But I quoted them a 4 week lead time!’

If you aren’t thoroughly reviewing all aspects of Customer POs that are coming into your shop, you may miss that a buyer has just cut your lead time in half, requiring you to pay for all the expedite costs out of your own pocket.

Make sure you’re being allocated the time needed to complete the job. After all, you took the time in estimating to accurately calculate the lead time and outlined that lead time on the quote to the Buyer. If you rush a job you run the risk of high scrap rates, defects, poor quality, negatively impacting other jobs, eating into your profits...just to name a few.

If the delivery date on the Customer PO is under the quoted lead time, this is a great opportunity to contact the Buyer and discuss expedite charges or other options.

Would they like to pay to have the parts delivered in the expedited window? This can cover overtime labor charges, charges to program/run the job on an alternate machine, or expedited outside processing charges.
Would they consider taking partials of a delivery? You might be able to run 1-2 parts through a prototype cell and the rest of the order at the standard lead time as intended. If the prototype cell is more expensive, outline that cost to the Buyer and consider breaking out the early delivery quantities to a separate PO line and charging them the increased cost.
Are you scheduled to run another job for them at the same time and could that job be scheduled out to make room for this one? Depending on the ERP system your Buyers are using, most can run an open order report that shows all open jobs they have with you and advise potential shifts in schedules that could be made.

2. Orders placed with outdated pricing

You sent the Buyer a Quote three weeks ago, but on the PO you just received from them, the pricing they listed is last year’s quoted price. What gives?!

There are several reasons a Buyer might have entered the incorrect pricing.
Here are a few to consider:

• Their ERP software doesn’t have a solution for tying your Quote # (or a copy of the quote) to the part number. So the quote is saved in a separate file folder, and if the buyer is moving quickly they may not refer back to ensure they are purchasing parts at the most up-to-date pricing.
• They are copying a previous PO in their ERP system and did not update pricing.
• In their ERP software, they may have entered your original quoted price as a standard cost, meaning each time they place an order for that part number, that outdated cost is going to default on the PO. On the other hand, they may have neglected to update the standard cost for the part when you re-quoted. Also, if they are required to manually override that standard cost at the time of PO placement, they may forget to.

If the pricing isn’t current on the PO, when you conduct a thorough contract review, you are more likely to catch these mistakes. Seeing these mistakes gives you the opportunity to contact the Buyer and have them revise their PO before you send them an order confirmation.

In ProShop, to ensure you are accepting the PO at the latest quoted price, we developed a best practice workflow of creating a Customer PO (aka Sales Order) directly from the Quote! The pricing, quantities, rev levels of each part, etc are all copied from the Quote onto the Customer PO. So it’s obvious as you look at the PO the Buyer sent you compared to the fields in ProShop if there is a disconnect.

[/vc_column_text][vc_single_image image="6220" img_size="full" onclick="link_image"][vc_single_image image="6202" img_size="full" onclick="link_image"][vc_column_text]3. Customer directs you to use preferred or single-source supplier

A Buyer calls you up, “I’m sending over an order today, and I want the finish to be done solely at this designated finish house. Then go ahead and have the finish house dropship the completed parts to us once complete. Here’s their contact info, they’re expecting your call in the next week to schedule the job with them.”
‘Great’, you think! ‘They did the leg work for me and I can skip final inspection AND shipping!’

This CAN be a great job for you, HOWEVER, it’s worth some effort upfront to ensure that the customer’s preferred supplier arrangement is going to work for you. Factors to consider are:

• Location of the customer preferred supplier - Is this going to require new or additional shipping/logistics that you don’t currently handle.
• Parts scrapped at the supplier - Who covers the cost to remake parts? What methods are in place for the supplier to communicate scrap situations to both you and the customer? Will you require an NCR from the supplier? What’s your lead time for re-making scrapped parts and what is the customer’s stance on updating delivery dates on their order?
• Incoming receiving procedures at the supplier - What are their receiving inspection procedures? What method should they use to reach out to you if they find a discrepancy at receiving? Do you require them to send you pictures of any receiving discrepancies?
• Risk evaluation of the preferred supplier - It’s assumed that the customer has completed a risk evaluation of this supplier, and you may want to ask if you can have a copy for your records.
• Dropshipping as an aspect of the scenario - How will you get the packing slips and certs for your records from that supplier upon shipment to the customer? What method will you use to confirm a customer's receipt of finished goods so you can invoice the order? When can you invoice the customer; upon receipt of finished goods or proof of delivery to the supplier?
• Approved Supplier List (ASL) - What period of time should you maintain this supplier on your ASL? Have you been provided the full scope of work they are qualified to provide you (as it pertains to the orders you’re receiving from your customer)?

Without review and answering many of these questions you are putting yourself at risk for being liable for aspects of this job that should be handled by either your customer or the supplier. Also, the moment when parts are scrapped, or shipments are delayed (time is of the essence), that is not the time you want to be developing or negotiating a workflow process to handle this scenario with the supplier. Taking the time upfront to discuss these scenarios ensures that the customers preferred supplier arrangement is going to work for your shop in a smooth manner.

4. Extensive, in-depth, or easy-to-miss Terms and Conditions (T’s & C’s)

T’s & C’s are the fine print of the contract you are reviewing. It is in your best interest to read the fine print thoroughly, ensure you understand each aspect, and ask the Buyer to provide clarification if needed.

T’s & C’s may be printed on the bottom of the order for you to easily review, HOWEVER, they may also be listed on a website, and/or on the order portal. Be sure to look for statements on the base of an order that read something like “Purchase order subject to Terms and Conditions form/document in your possession or available at [URL link]”. If you have not received, or have in your possession, their T’s & C’s document, be sure to ask for it before confirming the order back to the Buyer.

If up till now the customers you’ve worked with have minimal T’s & C’s, then it’s probably good for you to be aware that they can vary quite a bit customer-to-customer. When quoting and taking jobs from new customers it is critical to review their standard T’s & C’s and dialogue with the buyer on questions or concerns you have.
I’ve listed some of the common components you’ll find outlined in T’s & C’s, but know there are many more that can be included:

• Order cancellation and/or amendments
  • Buyer reserves the right to cancel/amend POs with ____ days notice.
  • Expectations of stop or completion of work at the time of cancellation.
  • Liability for the cost of materials, labor, etc associated with canceled or amended orders.

• Payment terms/invoicing
  • Payment terms applied to all orders unless specified otherwise on the PO.
  • Invoice payment terms apply at receipt of goods or receipt of invoice.

•  Delivery
  • Delivery of goods must be in full and cannot be changed without prior written consent.
  • Charges for packaging, crating, insurance, or other extra charges will not be allowed unless agreed upon in writing.
  • Packaging and insurance shall conform to commercial standards.
  • Responsibility for loss or damaged goods.
  • Responsibilities for exportation of goods (payment of customs duties, taxes, tariffs, etc),
  • Penalty fees for late deliveries.

• Labeling of packages
  • Package or crate must be marked with an order number, weight, part number(s), etc.

• Tooling
  • Responsibility for paying and supplying tools, fixtures, gauges, etc.

• Subcontracting
  • Subcontracting of any part of work/process or transference of an order must have prior written consent.

• Retention of records
  • Retention and issuance of quality documents.
  • Retention period.
  • Retention of records by subcontractors.

• Supplier performance rating expectations
  • Outline of performance rating requirement to be maintained & actions required if the rating falls below that requirement (ex: root cause analysis and corrective action plan submitted to customer).

How can ProShop help?

In ProShop, contract review at the point of Customer PO order entry is built into the system! You can’t miss it!

We have included checkboxes for the critical fields on the PO that need to be reviewed (ex: Part Rev, Part Number, Delivery Date, Qty, shipping Address, Price, Terms) and added a list of key aspects to be completed as part of Contract Review/Risk Evaluation (ex: Payment terms, T’s & C’s, FAI requirements).

We even leverage the ability to create and review a Task in ProShop dedicated to following a step-by-step process for Contract Review/Risk Evaluation.[/vc_column_text][vc_single_image image="6203" img_size="full" onclick="link_image"][vc_column_text]With these tools at your fingertips during order entry, you can quickly & efficiently complete the required contract review and get to the best part…..making parts!!!

If you aren’t using ProShop, I can’t stress enough the importance of developing & implementing a standard contract review process now for your business! A small amount of time upfront can save thousands of dollars and a lot of fire fighting in the long run.

Or if you’re interested in knowing more about the solutions ProShop offers for this and many other challenges facing your shop, we’d be happy to talk with you.

 

By: Lacey Hill, Implementation Specialist[/vc_column_text][/vc_column][/vc_row]

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Author: Paul Van Metre

[/vc_column_text][vc_column_text]When I started writing this blog post, it seemed oddly familiar to me, and I had a feeling I had written something similar before. So I went searching in my Google Docs, and sure enough, I had written a blog post on this exact topic for Production Machining Magazine not more than 6 months ago, with a focus on how Covid has forced many shops to look for new clients. Besides needing to visit the doctor to get my memory checked, I thought I’d just link to that article and update this blog with a bit more client feedback I’ve received in the past 6 months.

The premise is that shops can’t just promise great quality and delivery. They need to prove they have the processes and systems to guarantee they will execute. This will open doors to more discerning clients. Through discussions with clients over the past few months, this theme has proven itself to be true. Here are just a few examples of things that clients have told us about their usage of ProShop as a sales tool:

“Just last week we were able to get on the approved vendor list for a new customer, which is very promising. It’s a globally recognized brand, and we can compete now on larger volumes than we are used to seeing, and that’s something we want to do more of. We wouldn’t have been able to get on that approved vendor list if it wasn’t for proving that we could meet their quality requirements, and once we showed them once what the inspection reports and dim-tagging and quality capabilities were in ProShop. Once we showed them what that output looks like, they said, "Perfect, this lines up exactly with what we need. So here’s a bunch of drawings to quote.” And that was huge! I was so excited. I’m not trying to sound like such a ProShop fanboy, but the reality is without having ProShop we wouldn’t have been able to do that. So we’re very excited at the doors that are opening as a result of having this system in place, and how that enhances our reputation, our manufacturing prowess, if you will, to be able to compete for jobs we traditionally haven’t been able to...It almost felt too easy.” - Dave, G&S Tool

“Our new sales rep is blown away by its capabilities, and he’s bragging about it every time he makes a call. I am setting him up with the proper equipment to do a short demo of its capabilities when he’s out and about. One client that followed him to Kajan is interested in ProShop for his own business.” - Kurt, Kajan Mfg.

“ProShop has been a cornerstone sales tool for us since we got it. We’ve had customers like SpaceX come in here and literally tell us that this is the best system they’ve ever seen, and when we open up ProShop, their eyes get wild...We had one of the toughest customers we do work for, tell us that ProShop was sexy! We thought that was one of the best compliments you could get.” - Matt, 3D Industries

Lastly, here is an article that was written in Modern Machine Shop Magazine about a client of ours who saved a very large client and grew their business with them based on their use of ProShop and having it feature prominently in a vendor audit. It’s a hard-hitting, real-world example of the stakes that shops deal with every day.

Want to read more examples? Click here

Can ProShop Help?

While we’d love to talk with you about adopting ProShop in your company, these principles are universal and you can build robust business processes yourself starting tomorrow. Possibly with your current ERP, connected digital travelers using something like Google Sheets or Office 365, or some other creative use of the tools at your disposal. The main takeaway is that in order to stand out from the competition and grow your business, you must overcome the skepticism of your potential clients by proving to them proof that you’ll deliver as promised.[/vc_column_text][/vc_column][/vc_row]

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Author: Paul Van Metre

[/vc_column_text][vc_column_text]I haven't talked with a single shop that loves having job travelers, but so many of them can’t imagine running their shop without them. It’s hard for them to imagine a different way because they’ve done it for so many years, or they believe that trying to eliminate travelers will not be well received by their employees. In the meantime, enormous costs are being incurred every day because of their paper travelers. These costs are not obvious and aren’t on top of people's minds.

What functions do job travelers serve? Let's clarify what I mean by a “job traveler”.

 

4 Functions of Job Travelers

1. It contains crucial information about the job. Important information including customer, PN, due date, the material needed, routing steps, and work centers the job will travel through. Often called the job router, it is THE identifying document showing what the parts are out in the shop. The parts have to be traceable at all times so the traveler must be with the parts at all times.
2. It has fields and barcodes. The fields for people to sign off the work they've done, the number of parts they've made or processed, or track time. Sometimes the barcodes need to be scanned, so people can look at the last scanned status of the job from within the ERP system.
3. The job router is often accompanied by several sheets of paper used for other purposes such as work instructions and inspection forms (see Fig 1). These are to help explain to workers what they are supposed to do to make the part, and what features to inspect to ensure the quality of the parts is good.
4. It usually has a drawing accompanying it as well. This is typically the drawing that the customer sent with their order. This identifies the part to be made, and the criteria for gaging acceptance, along with perhaps some referenced related documents.

 

Most ERP systems create a job router based on the information that is in effect at the time the order is processed. That information is a snapshot in time and the printed router becomes the controlling item that moves around the facility and triggers people to do things and tells them what to do. The router identifies what material to buy, what rev of the drawing to build the part too. It will also be the document where signatures or quality stamps will be recorded, creating an audit trail of who did what to ensure the part was made properly. There is no doubt that the information contained on the router is vitally important and every shop (at least QMS certified shops) needs to capture and retain that information.

The fact that all this crucial information is conveyed and recorded on a piece of paper in so many shops in 2021 is mind-boggling. To try to make the point, imagine this: You want to see how the big game of your favorite team is going, so you walk to the corner market to buy a newspaper? Of course not! By the time your newspaper publishes the score, the game will have been long finished.
Why then do shops keep insisting that paper job travelers are so important to their business? There are huge numbers of liabilities inherent in paper travelers. Let's just list a few:

 

7 Liabilities of Paper Travelers

1. The information on the traveler is highly likely to change. More in some businesses than others, but it happens all the time. When information changes, people need to chase down the traveler and replace it or mark it up with the latest information. If that doesn't happen, people can and will make mistakes and parts can be scrapped, late, made wrong, or any number of other bad outcomes.

2. Paper travelers slow down the process. People in planning, purchasing, quality, and programming don't know that they need to work on something until it lands on their desk. What if it gets stuck at the bottom of a pile? Material or tools aren't ordered, programs aren't created and work doesn't progress on-time. It can lead to late jobs, expedite situations, and worse. Or what if they need to work from home because of a pandemic?

3. Travelers get lost. All...The...Time! This causes all sorts of waste like waiting, motion, transportation, overprocessing, scrap, and more. Probably all 7 wastes identified by the Toyota Production System. It has ramifications for the current job in the process, and also for future jobs of the same part number. Crucial notes that shop workers scribbled on the back of drawings or scraps of paper get lost which means the next time the parts are made, that information is lost and needs to be recreated. It's a snowball effect of waste. See fig 2.

4. Jobs often need to get split up into multiple batches. Hot jobs need to have partials sent ahead of the rest of the job. Parts need to be re-worked and catch up to the main work order later. What do you do with the job router? Photocopy it? What about all those supporting documents like work instructions and inspection sheets? There are no great answers.

5. Penmanship and legibility can be big factors on paper documents. Someone jots down a note, a quantity, an inspection result, and someone else misinterprets the information. This can cause many problems.

6. Traceability is suspect when relying on people to enter their initials for signing off crucial steps. Even unique rubber stamps can be “borrowed” by someone else who signs off on work not done by the person in question.

7. If a job traveler package makes it through the shop unscathed, it then needs to be filed or scanned. If filed, managing a year's worth of old travelers is a huge headache and expense. Filing cabinets fill up, rooms fill up, storage units fill up. Some customers require job records to be held for 10, 20, or 30 years to retain that audit trail of who made what, out of what, and inspected it with what. Having to go look up records for an audit can be a monumental undertaking. If they can't be found, that's a major liability for a shop facing a customer or ISO/AS audit!

These are just a few of the liabilities inherent with paper travelers. We've identified that the information contained on the router and traveler is crucial. So then our goal is to retain and enhance the good parts of those documents and mitigate the liabilities of having paper versions of that information. We are advocates for 100% paperless, digital-only versions of the information contained on that paper.

 

5 Benefits of Going Paperless with Digital Shop Routers:

1. The information on a digital router is always up to date. When the customer order is changed with a new quantity, delivery date, drawing revision, the router, schedule, etc. are instantly and automatically changed. Workers ONLY have access to the latest information when they view it on a device.
2. Digital routers speed up the process. Everyone who needs to know about something they need to do on a job can be instantly notified when a job is created. They can parallel process their part of things and get it done much faster than with paper. Hot jobs can't get stuck at the bottom of a pile. Instead, they are filtered and prioritized on digital dashboards and lists which are always up to date. The speed of the workflow and risk of jobs getting forgotten is vastly improved.
3. A digital traveler can't get lost. An identifying job tag should be attached or affixed to the material, parts, and WIP so that it can't easily be separated from the parts by a gust of wind or an honest mistake of setting a paper traveler in the wrong spot. If tags get damaged they can be recreated easily.
4. It's easy to split a job with a digital router. Just make a new tag or print a new label. All the other corresponding work instructions and inspection reports are always online for anyone to find.
5. Everything is in one place. There are not multiple different places to look for things with potentially conflicting information.

 

Obstacles:

The biggest obstacle to going paperless is the fear of change. It’s human nature to resist change, especially when it’s such a dramatic change. People are uncertain about how it will work, and how their job will change. We’ve seen that time and time again when employees are first introduced to a paperless environment. Almost without fail, the clear and obvious benefits start to reveal themselves quickly and people realize how much they’ve suffered from the waste they didn’t realize for so many years.

The second biggest obstacle to going paperless is the actual technology used to make the transition. Until recently there hasn’t been a practical way to easily manage the data needed to run a dynamic job shop environment, with less labor investment, without paper.

 

How ProShop Can Help!

With ProShop ERP, we’ve been running paperless and highly effective job shops for over 20 years. We have helped hundreds of other manufacturing companies become more efficient, save cost, save trees, take their company through a true digital transformation, and reach the pinnacle of going paperless. We’d encourage you to watch the accompanying video and reach out to us if this sounds like an interesting consideration for your shop.

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Author: Paul Van Metre

[/vc_column_text][vc_column_text]As I write this post, the Coronavirus is sweeping the world. Schools, borders, events, gatherings and workplaces are being closed at a rapid pace. It’s an uncertain and ever changing situation. Some of the concerns I’ve heard shop owners share this week include how to best keep their employees safe, and mitigate the risks to their business as this pandemic unfolds.

For companies who primarily do “digital” work, like Microsoft, who recently asked employees to work from home, the impact is significant, but manageable. For manufacturing companies, this is a less feasible scenario. In a machine shop for example, you still need people to run the machines, inspect parts and ship product. You need to quote new jobs, and keep your business running.

For companies with a traditional installed client/server ERP system, this is particularly difficult. For some, it may be possible to have office workers work from home and connect remotely using VPN and RDP (Remote Desktop Protocol). But that isn’t typically practical as most don’t have the IT infrastructure in place, or installed software on remote computers from home. There is also the issue of the paper-based workflow being an obstacle. Job travelers need to be printed, and people within the office often don’t know they have something to work on until the traveler is placed on their desk. Hardly compatible with a work-from-home situation. And managing the on-premise infrastructure is another obstacle. If your server goes down or needs maintenance, it will require your IT staff, or remote IT provider to address it.

I have the unique vantage point to see many different shops before they implement ProShop ERP. I spoke with a shop owner last week who uses an installed ERP system. His estimator had been home sick with a common cold, so they had not been estimating jobs for nearly a week since the estimator could not connect to their ERP system. This will lead to a drop off of new orders within the next week or two, and a drop off of shipments and revenue several weeks later.

Fortunately, users of ProShop ERP, with its built-in digital workflows, have the added benefit of minimizing negative impact from a “social distancing” event, or any need for remote work, for that matter. Here are just a few ways ProShop makes a difference.

1. Office workers can work from home. ProShop is available from any internet connected device. Estimators, sales people, order entry and admin staff, purchasing, planners and project managers can all work just as effectively from home. They can access everything just as they could from the office.
2. Everyone knows what to do. ProShop’s built-in dashboards, automatic alert systems, and work queues ensure that everyone knows what work activities and jobs are the highest priority at all times. There is no need for paper documents to “alert” people that there is something that needs to be done.
3. No IT infrastructure to manage. With our ITAR compliant cloud service, dealing with local servers is no longer a necessary evil. We host on AWS and the AWS GovCloud which offer a 99.99% uptime guarantee.
4. Internal Messaging System. ProShop has an internal messaging system which ties directly into every module. It eliminates the need for personal company email accounts for any employee who doesn’t communicate with clients or vendors. You can send individual, group, or full company messages within ProShop, and tie them directly back to any page in ProShop. So it’s a great tool for company announcements, communicating about specific jobs, or any other communication need. For most clients it becomes the primary communication tool in their company.
5. Did we already say paperless? ProShop eliminates the use of job travelers to communicate where a job is at, and what is happening next. Office and shop employees access ProShop from a web enabled device. Because ProShop also manages work instructions, cutting tool lists, inspection plans, and much more, it also eliminates the need for any sort of document package to travel with the parts. All of these reference materials can be created and/or embedded directly inside of ProShop and updated from anywhere. It’s entirely possible to quote, win, enter and process a new job without printing a single piece of paper, with a remotely distributed team. This is not a work-around, this is the normal daily workflow within ProShop. If a customer calls about the status of a job, it can be looked up and provided while that person is on the phone.

When trying to contain the spread of diseases like COVID-19, or even just the common seasonal flu, the advice from experts says, more social distancing that is implemented, the better off your company will be. If office workers can get their jobs done from home, the company is better off. Out in the shop, there are greater distances between employees, and there is likely less of a chance of spreading an illness from one employee to another. And because there is no job traveler to contend with in ProShop, the only thing moving around the shop is the parts themselves and using gloves and other precautions to keep parts washed and clean is easy. Even last-minute customer changes, triggered by a remote office employee, will instantly propagate throughout the system without a need to reprint any job information.

One of the biggest unknowns with this new situation is how it will affect the economy, and your order book. It’s entirely possible that a recession will follow and shops will be looking to cut costs, get more work done with fewer staff, and ultimately look to find new customers to replace those who have canceled orders or are just ordering less in general. ProShop can help here too. Our clients report an average throughput improvement of 20-35% on the factory floor, with the same number of staff. And they can often reduce overhead hours by a significant percentage as well. We’ve had customers with just as little as 4-10 office staff be able to reduce overhead functions by 1-2 full time people by either redirecting them to more value added roles, or allowing attrition to reduce overhead costs. Here is a case study of a 35 person shop who freed up 3 full time overhead staff with a move to ProShop.

When it comes to adding new customers to backfill work, ProShop becomes one of the most effective sales tools a shop has. Watch this short video of a shop in Chicago who has to pry their customers away from the conference room after giving them a ProShop demo. Buyers and audit teams are “blown away” by the capability in ProShop.

This article from Modern Machine Shop outlines another ProShop customer who won a considerable statement of work with a customer as a result of their ProShop implementation. And consider how much more confidence a customer will have in your company when you show them how you can manage their work when your team can work remotely during unusual times like this.

With our proven 9 step implementation process being entirely performed remotely, you and your team don’t need to travel, or have our team visit to be up and running on ProShop in just a few short weeks. Watch this video to see how a client discusses just how fast and easy the implementation process was.

Can an ERP system like ProShop help give your shop a competitive edge over your competitor in the best of times? Absolutely. And it can become a crucial tool during challenging times like the one we face today. If your company is considering how to handle this current situation while still maintaining a high level of efficiency, we’d love to discuss how ProShop can help. Contact us or book a demo today. Thank you. Be safe. And good luck out there![/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_single_image image="5574" img_size="full" alignment="center" onclick="custom_link" link="https://pages.services/adionsystems.com/erp-buyers-guide/?ts=1592939305780"][/vc_column][/vc_row]

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Author: Paul Van Metre

[/vc_column_text][vc_single_image image="4240" img_size="full"][vc_column_text]Written By: Colin Gilchrist, Applications Engineer, Selway Machine Tool Company

The following story is based on an experience I had giving advice to a client last year before I joined Selway Machine Tool Company as an Applications Engineer. I wanted to share some of the insights that I’ve learned about data, and how important data has become to manufacturing companies. I hope to help you learn about the concept of Product Data Management, help you identify what kind of PDM is currently in use at your company, and hopefully present a compelling story about a shop who solved many of their own data issues by implementing ProShop ERP.

Data.

Data has become an integral part of the lifeblood for almost every company on the planet by 2020. Imagine your manufacturing company as a human body. Like a body; your company is made up of many systems.

You would be forgiven for thinking that the lifeblood of your company is made solely of money; it is an easy assumption to make. In our imagining, money is more like food to your business. Following this analogy along, money - like food in your body - allows your business to grow. But like food, the money your company makes is also consumed: some money flows to you, some flows to your employees, and money also flows out to your vendors/suppliers. Your company is seeking out money - without cashflow; no business can survive - but money doesn’t ‘flow through your business’ directly.

Here is what I mean by that; although you pay your workers a wage, you do not give them instructions written on money. Nor do you load paper bills into a machine to make parts. What does flow through your company, at every level; is information. Data is another term for this information, and data is tied to everything that flows through your business. Records are kept of all kinds of things, and the best systems allow you to tie that data together to drive good decision making. Good internal communication and access to accurate and timely data, allows everyone in the company to make the best decisions possible.

Data in the context of this discussion then; is simply digital information, and data is the lifeblood of your business. For a great many businesses; this information flow (or the lack of it), governs how much more money you can earn.

The Data Revolt!

I can see it now; every manager, shop owner, programmer, and machinist – all collectively rolling their eyes at me in unison – every single one of them convinced that Material and Machines are the lifeblood of their businesses, and convinced that I am misguided in my zeal to put data on a pedestal…

It is true that material also flows through your shop – in fact – the material and the information are intrinsically linked together. In other words; there is information that is tied to each batch of raw material at the start of the job. Although this step (receiving material) may be the start of the ‘part flow through the shop’, it is not the true beginning – or birth – of that job. The true start of that job may be a conversation, a napkin sketch, or a large RFQ (Request for Quote) package with hundreds of pages that form an assembly you are asked to submit a bid on.

My point is that data is there at the start of every job. That data must now be reviewed by at least one person - and often a team of people - in your company. After review and internal approval is given, a quotation or estimate must be generated and sent to the customer. There is typically more digital communication, which ultimately culminates in your customer finally placing an order. Once an order is placed, you may get started by simply ordering material. (In very small shops; you might be tasked with doing every step of the whole process yourself). But that information; what kind of material, what size/shape, how many, and how soon, all needs to be passed on to the material vendor. That information must be communicated somehow (email, fax, U.S. Mail, etc.). Sure, it can be as simple as a phone call, but in-person phone conversations are hard to track. E-mail chains provide a powerful bit of evidence when a disagreement arises, or there are problems with an incoming material order.

For many larger companies, there are many steps to go through before you eventually place the order for material. Often there will be a Production Planning meeting, where an Operations Plan is developed. Tooling and/or Fixtures need to be engineered, machined, and/or purchased. Time needs to be allocated in the Production Schedule for the existing machines, or a new machine solution might need to be purchased. All of these steps require the exchange of information. The end result is typically the generation of a Job Order, which then is used to plan and execute the machining of this job. In many shops the information that is recorded for a job is done manually.

As a Job progresses through your shop, the amount of data stored increases at each step of the journey. As a new operation is completed on the job, and an operator signs-off on each manufacturing operation, that ‘part data record’ is continually growing. The amount of information that is tied to an individual part grow almost exponentially, with part/process complexity. As the size of an assembly grows; so too do the individual data records for each part, process, and sub-assembly. Many shops still record this “Part Data” manually. They are stamping, signing, and dating every operation and step in the Job Order/Manufacturing Plan.

How many of you have scrapped a part due to one of these factors?

• Wrong Material (Bad/No Cert, Bad Traveler)
• Wrong Tool (bad setup sheet)
• Wrong Holder (bad setup sheet or holder not available, substitution made without notice)
• Bad NC Program (wrong Revision, wrong Pallet, wrong station)
• Bad Setup (Work Offset Location)
• Bad Tool Offset (Tool Length Offset, Cutter Radius Compensation)
• Bad Probe Calibration

1. Q) What is the Root Cause of all of those problems?
2. A) Poor communication. The data was input incorrectly, was missing, or in the worst cases – the data was simply ignored or overlooked.

Consider what steps have to take place, in the average aerospace company, in order to turn a “block of raw metal”, into “finished aerospace component of low complexity”. Let’s take a quick mental journey through the process of winning the bid on our fictional aerospace component. We’ll call this fictional part “Support Flange 0123-45-6789-001 REV C”.

Your company has been asked by New Space Ventures (NSV) to bid on the delivery of 4 of these critical Support Flanges for their new project. NSV has prepared a Request for Quote (RFQ) for your company, but before they will consider receiving your quotation for these parts, they wish for your company to sign a Non-Disclosure Agreement (NDA). Signing this NDA is a typical starting point - in the process of bidding - for the contract to supply parts, and involves the transfer of data back-and-forth between companies. Skipping ahead, let’s say that your processes and prices quoted were accepted by NSV for the delivery of these 4 Support Flanges. Moreover, you’ve planned the process and the material has just showed up in your receiving department. Along with that raw material, your team has been hard at work in the background, preparing the manufacturing processes to physically make this part. Tools and/or Holders have been specified, and multiple manufacturing fixtures have been built. CNC Programs have been developed for specific machines, and plans have been drawn up on how to schedule the flow of these parts through your shop. All of these steps are crucial to the pieces of metal being transformed into parts, but the result of sometimes months of effort, is only binary digital data at Bodybuilding and gymnastics - equipment and apparatus germany service provider stuttgart, freiburg and baden-württemberg company avana usa mere de famille grave prize in dp pour son casting - bodybuilding de. this stage. The visual results of all this work can be hard to see until after the cutting begins.

As these “raw material blanks” begin their physical journey through your shop, there is data that must be captured at each step of the process. During Incoming Receiving, someone should be in charge of checking the material (for size and type), and recording the material certifications (for traceability and Product-Lifecycle-Management-Purposes). At every stage of the manufacturing process; data is being both recorded and used to remove material to leave a “finished part behind”. A CNC Program instructs the machine on “which tool to use, and how to move that tool”, in order to remove material only where it isn’t needed. When done within the tolerance limits that were specified by the customer; we may have produced parts that meet the demands of the original RFQ. However, we must also be able to verify that our parts have been produced correctly, which requires us to perform our own “Setup Inspection, In-Process Inspection, and Final Inspection Sequence”, before we can ship our parts to the customer. Our “Part and Lifecycle Data” responsibilities often don’t end, even after we have shipped “good parts” to NSV. Many manufacturing quality systems specify the length of time that a manufacturer must maintain Manufacturing and Quality Data Records after the parts have been delivered. This time-frame can been years - or even decades (in the case of military, jet engine, or space parts) – and should help to frame how the management of data often comes far before, and far after, your parts have been cut, measured, and shipped to the customer.

The Question…

My discovery of ProShop actually happened by chance. I had a customer ask me to help them find a Software Developer who specializes in the VBA Interface (Visual Basic for Applications) for Microsoft Excel. When I asked them “why they would need an Excel specialist”, I was told it was “to help manage their ‘reporting data’ that was being generated from their current ERP system”. I was a bit intrigued with this, so I decided to probe a little further. I won’t quote the full back-and-forth of the discussion here, as there were several intertwined topics that were discussed, with multiple potential solutions to each topic.

The real problem: too much data and too many systems

In a nutshell, the customer was generating a report that would list all of the “in-process jobs” that were currently active in the shop. The issue was the difficulty in sorting through over 2,500 ‘active jobs’, and being able to gauge and sort the status of those jobs. He said “for example, I want to run a report to tell me; here are the jobs are due in the next 30 days. Or here are the jobs more than 2 weeks late”. He was frustrated that he was forced to generate this massive report for “every active job” in the company. He was becoming quickly overwhelmed without the ability to filter and sort that data into something useful. While it was possible to use the sorting and filtering tools inside Excel itself, a custom query had to be created and ran for each different type of ‘report’ that the owner wanted to see. Moreover, the report was essentially ‘static’. The process of “dumping a new daily report” took several minutes. And that was in addition to any ‘report filtering’ that may need to be run (custom programming), in order to be able to visualize the data more easily.

It turns out that many ERP systems are great at generating huge amounts of data. Mountains, and mountains of data are generated by most small-to-medium-sized businesses every day. However, most existing ERP systems on the market are not necessarily setup very well to help the average user “make sense of the data that is generated”. That may seem like a weird concept to consider at first. Why wouldn’t these ERP systems make it easy to “do something with the data”, once it has been entered into the system? Shouldn’t this be easy to do out-of-the-box?

It turns out that usually isn’t the case. Although most ERP systems have provisions for creating things like Work Orders, Operations Lists, Job Travelers, BOM’s (Bill-of-Materials), Estimates, and Invoices, things like “data reports” are usually an afterthought, and typically require someone to do bit of custom programming to manipulate the data into a report which “makes sense” to whomever requested the report. What isn’t built into these ERP systems is the ability to ‘Visualize the Data’. Data Visualization is the ability to transform numbers in rows and columns into charts and graphs which help us to spot trends, make comparisons, and identify problems, quickly. The ‘quickly’ part is the most essential aspect of good Data Visualization, and I think ProShop was built with this functionality in mind. There are many different modules in ProShop that not only allow communication; but actively encourage it!

Reporting, Messaging, and Data Visualization all seem like one of those ‘no-brainer’ things that should be easy to pull off. Like it should be “at the touch of a button”. The more I looked into “how do I organize and filter the ERP data”, the more roadblocks I kept running into.

Many manufacturers are attempting to tie their Industry 4.0 data collection to their shop’s ERP systems, with varying degrees of success. I had an experience recently which led me to discover the PDM capabilities of ProShop ERP, from Adion Systems, and how this software can do so much more than just ‘Enterprise Resource Planning’. The PDM Tools available in ProShop allow you to tie all of your shop’s data together, into a single database, accessible through a simple-to-use web browser interface.

 

The Eureka Moment

One night while I was doing some research for ‘writing a query to mine the ERP database’, I gave a friend of mine a call. I wanted both to pick his brain a little and to vent about how frustrating this ERP nightmare was.

His response; “dude, why don’t you tell him to dump that P.O.S. ERP system, and just get ProShop?” was a light in the dark. I think he could tell by my hesitation that I was unfamiliar with ProShop, which is why I wasn’t sharing his enthusiasm.

“Ugh, not another ERP System! They are all terr…” I began.

“No.” He cut me off abruptly before I could finish my rant.

“ProShop is way different. It is entirely web-based. All users in the company access the same dataset, 100% of the time. It is always live”. I pondered where he was going with this.

“Since all the modules share the same internal database, all the functionality you are talking about to gather and format data is already built into ProShop. I think my favorite thing is how your company communications are also built into the interface. I’ve completely dropped email for all internal communications at our company. The chats in ProShop are logged, and searchable!”. I could tell his excitement was growing. I was reluctantly coming around to at least consider seeing what ProShop was capable of.

I started researching ProShop, and reached out to another user who had recently switched over to ProShop so I could pick his brain. As it turns out; all of the reporting tools that I had struggled to integrated into Excel were already available in ProShop. It was a eureka moment for me, as I discovered that ProShop would not only solve the ‘reporting problem’, but it also solved about a dozen other inter-company issues. These other issues would not have been solved by running a custom report, built by another ‘contractor’, on the existing dataset coming out of their old ERP system.

Reporting was just the tip of the iceberg

Although the issue I was trying to solve was specifically; ‘how can we make sense of the ongoing work that is currently flowing through the shop’, it turns out that switching ERP Systems to ProShop ERP, gained the customer far more than just the ‘data visualization and reporting’ that was the original challenge to overcome. When we tallied up the total, ProShop ERP was used to replace four additional ‘Software Systems’ (each with their own maintenance fee), about a two dozen different ‘custom scripts’ that were used across different business systems (accounting, payroll, estimates, invoicing, time tracking, scheduling, quality, purchasing, programming, shipping, and receiving), and the customer was finally able to completely eliminate the generation of new paper documents for all shop processes. By implementing ProShop across the company, it gave the owner much better capabilities to mine the data the company was already generating. Plus, it gave the company the ability to filter data access much more carefully, along with automating and linking together the locations where this part data was stored. In the end, the answer to my customer’s original question: “How do I spot jobs that are late, or due in a certain time-period”, was a somewhat unorthodox approach in some ways. Rather than just answering them - “make an incremental change by generating a custom report” – my solution was to take a look at their entire system and recognizing that a fundamental change in system architecture was my suggestion. Admittedly, there were significant costs involved in making the decision to switch off multiple separate software systems, and implement a system-wide solution like ProShop ERP. I am happy to report that my customer is now able to ask and answer a huge range of questions, and get the answers extremely quickly, which was the original problem that I was asked to solve. In addition, their entire company is now embracing the full range of digital record-keeping and is now communicating internally using the ProShop integrated chat feature.

What is Product Data Management and why should you care?

PDM stands for Product Data Management. PDM is the 'architecture of the data storage system'. Typically, in small-to-medium-sized shops, the structure of this data storage system is: 'create a series of customer-job-part-revision folders, and put the customer data there’. This simple “manually created and maintained” folder-architecture is often just designated to take place in the ‘root of a shared network folder’. Often this uses ‘UNC File Path Naming’. UNC stands for Universal Naming Convention, and is used on your network to define ‘Server Names’ or ‘Server Address Letters’. This will often be referred to colloquially as the “S Drive” or the “T Drive”, or whatever “Alpha-Character is designated to store our critical data, based on some random assignment by our IT person”. This convention may allow your users to “more easily access a particular server”, but it can also often lead to “server address conflicts” down the road.

I would term the state of this PDM as “Unmanaged PDM” or “User-Managed PDM”. This data structure is rarely planned for growth, and all the processes rely on humans following some homegrown process of manually creating nested folders. These processes are ripe for typing errors, people not aware or not caring about following protocol, and simply nothing that truly tracks the location of the data being stored. PDM, in a nutshell then, is the organization, storage, and retrieval of any data that might be tied to a manufacturing process. ProShop essentially gives you a built-in PDM system, since you can store all your CAM Files, Setup Documents, Tool Data, and any other data that needs to be tied to a step in your process of making a part.

Moreover, the process of creating folders, updating file locations, and "looking for where I saved that file", is all non-value-added work. At the end of the time spent, we haven't recorded any metrics about the data being stored. A PDM system also controls, who has access to specific data, who is allowed to edit or update the data, and it keeps a history of revisions, so you can call up a 'specific revision', either for comparison purposes, or to be able to produce 'a part at any specific revision level required'.

ProShop uses a “template-based approach” to allow your IT Department to designate “the permissions which are assigned to folders as they are created. This approach greatly simplifies the process of adding a “new job” to ProShop, as the permissions for read/write/modify access are inherited by the folders from the templates. What does this do for you? It allows you to really “lock down” the access to different parts of the ProShop system, based on what type of user is logged onto the system. The hardest thing I think for people to realize about ProShop is that “everyone in your company should be a ProShop user”. Why is that? Because ProShop includes tools which benefit everyone in the company, and these tools facilitate better communication and decision making. It does this by managing the “PDM Data”, which is tied to every job which flows through your shop.

The reality for most shops is this: you are already doing some form of PDM today, as-in “right now as we speak”. The problem is that this is typically just Unmanaged PDM or User-Managed PDM. All that means is that your company uses a “manual process” to create a “data structure” (folder path on a server), where the “data for a given job is stored”. Because this is a “manual process”, it is ripe for human errors to occur. ProShop eliminates much of these manual processes, and replaces those manual processes with automated systems for managing the storage, access, and retrieval of data by authorized users.

For more information about ProShop ERP, you can visit their website link below, or give ProShop a call at 360-515-7576.

www.proshoperp.com

By Colin Gilchrist, Applications Engineer, Selway Machine Tool Company

As an Applications Engineer for Selway (SMTC), I am responsible for pre-and-post sales technical support, answering CNC Applications related questions for our customers, and teaching both onsite and classroom-based training classes for CNC machining, at our machine showroom in Auburn, WA.

SMTC is a Haas Factory Outlet (HFO), and offers sales and service for several different Machine Tool Builders, including: Haas, Matsuura, Hwacheon, Eurotech, Quantum, Mitutoyo, C.R. Onsrud, Fuji, Acer, Clausing, Brenton USA, Marvel, Fastems Factory Automation, Hydmech, Toshiba Machine, Toyoda, and HP 3D Printing Solutions. Selway also offers full machine-tending and lights-out automation solutions, through our subsidiary Trinity Robotics Automation.

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Author: Paul Van Metre

[/vc_column_text][vc_single_image image="4072" img_size="full" alignment="center"][vc_column_text]Work instructions are the heart of running a shop, but they can also be a two-edged sword. A client once told me his team pulled printed work instructions from a toolbox. They proceeded to create an entire batch of parts with the wrong specifications. This honest mistake cost them thousands of dollars in scrap parts, plus getting behind schedule. Unfortunately, this is not uncommon. 

Striving for efficiency, shop owners have tried different approaches but employees get frustrated when they feel their inputs don’t change the processes. They are the ones who know the operations from the day-to-day experience. One of the most important characteristics of lean manufacturing is the employees’ engagement in efforts leading to continuous improvement. With visual digital work instructions, they’re involved in the process. They can give feedback and add media-rich content to enhance the work instructions. A recent client reported increasing their employee retention after implementing visual digital work instructions because they were no longer frustrated that their input wasn't being utilized to improve the process. By being able to upload photos and details to the work instructions, they were able to significantly improve the job for the next run and feel ownership of that process.

Shops have an amazing opportunity to reduce their team’s learning curve and reaction time with visual work instructions. Digital transformation has taken old school visual work instructions (VWI) in the form of printed diagrams to the next level with the rise of digital work instructions (DWI) which are cloud-based and can be accessed from any device. 

These are 12 benefits of introducing visual digital work instructions (VDWI) to your shop. 

1. Reduce Tribal Knowledge

Communication is a crucial part of every process. It can become a bottleneck with the presence of tribal knowledge. Visual digital work instructions teach employees everything they need to perform their job. With careful documentation, you get instructions from every department in the shop. VDWI help with skill-building but also in gathering shop intelligence. 

Not all knowledge resides in the work instructions. The retiring workforce has countless years of experience you can't afford to lose. Transferring your best practices to new employees reduces the likelihood of your shop suffering a brain drain. 

Communication between each area of production must be clear. By reducing tribal knowledge, everyone speaks the same language. It also applies to people who aren't native English speakers. The visuals and media-rich instructions enhance their learning process so they perform their job properly. 

2. Manage Evergreen Knowledge

Physical work instructions were useful before the digital era. But paper documents were often lost. The advance in technology and increased demand for perfection make paper-based training more obsolete than ever. Becoming paperless will allow you to better classify information. You can find it quickly, instead of searching through all the archives. This also makes it accessible and backed up in case of disaster. If the facilities suffer from a catastrophic event, you can build it back up in less time. For the same reason, you can open other facilities quicker and easier. 

Everything you add to the system stays there. The work instructions are always updated. So there's less risk of working with old information. All employees are on the same page. Whenever they perform new jobs, they have the resources to carry them out. If you have more than one facility, the same work instructions are available in each shop. That's how you maintain quality between shops and get the same results. It's about controlling the process and the product regardless of the team you build for each shop. 

You have remote control over the digital work instructions. Creating, editing and approving organizing information is possible from anywhere in the shop(or the world).

Centralizing data makes it scalable. Expansion doesn't have to be such a burden anymore. The best practices from one part number can be quickly transferred to similar ones.

3. Simplify Complex Tasks

Training gets easier and faster with visual work instructions. The goal is to help everyone in the shop execute their high-skilled jobs more effectively. New employees and temps can slow down production and delivery. They need to have the knowledge, visuals and best practices in order to absorb and comprehend the information. There's nothing better than media-rich learning materials to help them master their job roles in less time. 

It's even more efficient when standardization is the core principle of your shop. The digital work instructions contain what every employee should know to work in any department including setup/training modules, blueprints, specs, and other job-related documents. By using paperless manufacturing as a primary tool to run the shop floor, everything gets standardized. You can track the performance to act immediately if anomalies are present in the process. This characteristic lets you scale your business much more easily. 

4. Reduce the Learning Curve 

According to Edgar Dale's Cone of Experience, we remember:

10% of what we read. No wonder why so many human mistakes are present. 

20% of the things we hear. Trying to remember oral instructions may lead to wrong interpretations and underperformance.

30% of what we see. Space and location support new neural pathways created in the brain. Monotonous designs and text documents are more difficult to remember. 

70% of what we say. Explaining to others requires understanding the concepts and procedures. Memory and logic combine to retain the information in the brain for longer. 

90% of what we say and do. That's why people say "we learn by doing." Dedicated continuous improvement and mastery. 

Visual digital work instructions nail all 5 of these points. It's effective for training employees in a shorter period of time, and the LMS (Learning Management System) allows employees to perform the job as they learn. 

5. Speed Up Training & Process Development

Trying to explain how each operation works using only text is a difficult task. Especially when the reader needs creativity to imagine every moving piece. It's a real challenge for manufacturers, because every detail missed, ends up costing you more. Imagine setting up a machine, or putting together a complex assembly without any diagram to follow. It's a nightmare. 

Its advantage over written documents is its resourcefulness. Videos, audio, images, drawings, you name it. Use all the tools that are available to ensure the information is fully grasped. People memorize concepts and algorithms by using all of their senses to capture every detail. Don't waste your time describing long work instructions. Create videos, images, and text to break it down. Smaller chunks of information are easier to digest. The faster your employees learn, the cheaper the training costs. 

What employees learn determines how they operate. The effectiveness and efficiency of each procedure produce specific results that feed data back into the system, generating new insights. It influences your team’s decisions to improve based on reports. In other words, the quality of the output depends on the quality of the input. 

6. Accelerate Decision-Making

Lack of communication, organization, and coordination delay decision-making. Instructions have to be clear. Knowing exactly what to do and how to do it reduces friction and increases the productive hours of employees so there's less risk of missing a deadline or producing below the quality standard. 

The demand for making a high number of complex decisions can, unfortunately, slow the shop down. Between the process of analyzing and taking action, there is potential for saving time and money. Standardizing helps you run the business in a predictable way. It tackles possible problems before they even come up. Whenever they happen, your team is ready to solve them. 

7. Improve Adaptability

On-the-job training plays a significant role in the skills new employees develop. The environment and the shop's resources are useful tools to carry out mission-critical activities. The main disadvantage of this method is the opportunity cost. The time and skills of seniors shift onto teaching rather than producing. Their effectiveness decreases so temps and trainees can follow their pace. Visual digital work instructions allow employees to practice what they learn and reduce dependency on co-workers.

This leads to smooth job rotation within the shop floor. Employees develop the skills required to perform different jobs effectively. The personnel adapts to the needs of the shop. With VDWI, increasing or decreasing the workforce will reduce its impact on productivity. If employees lack the skills, they can learn as needed. Digital work instructions also empower you with the ability to track the skill set of each employee and their performance in each department. 

8. Move From Information Silos to Networks

By becoming paperless, nothing gets lost and data collection helps you analyze results faster. Visual work instructions make continuous improvement easier, which makes the job more efficient. The work instructions are at your fingertips, whenever you need them. Facilitating access digitally reduces the response time toward problems in the shop. 

Location doesn't limit access to the work instructions. You can seamlessly move from one department to another. As long as you have a computer or tablet, you can continue right where you left off. Remote access gives you the flexibility to tackle any challenge you encounter. 

9. 360º Feedback

Employees have a greater commitment when they influence their own experience. As they are users of the system, they can share their observations. By taking employees into consideration, their purpose and commitment align with the business. 

360º Feedback means that everyone can share viewpoints.  Employees rate the quality of the content, images, and video. The software tracks its progress and helps you identify bottlenecks. This is internal crowdsourcing. The information contained in the VDWI depend on feedback from the workforce. 

Opening the doors to listen to employees' opinions leads to continuous improvement. Processes can become more efficient if team members focus on doing their job the best they can. By improving the content of the instructions, skill-building will be faster and easier. 

10. Achieve Higher Quality Output in Less Time

The quality of training affects the quality of the output. Precision is key in manufacturing. Every process has its own standard.  Every product goes through a rigorous inspection before sending it to customers and it highly depends on people's ability to adhere to strict standards such as ISO, and AS. Following the maintenance and operational procedures keep the shop running at peak levels. 

Precision is difficult to achieve when training resources rely on text only. Digital work instructions give trainees access to visual demos on how to perform the jobs. They need to rely less on assumptions because they know exactly what it looks like to do the job. This reduces mistakes before they happen. 

11. Increase Profits and Improve On-Time Performance

Preventing mistakes saves time and money. Providing appropriate and timely training tackles inefficiencies at their roots. Shops cannot rely on remedies to fix problems. If there's a bottleneck in the production line, it affects every department. Detecting and solving them quickly helps on-time performance.

With digital work instructions, you can communicate project details and approve work instructions made by others from anywhere in the shop. You can also give access to your employees at any time, without stopping production. This leads to on and off-the-job training. Trainees learn visually how to carry out the activities around the floor. They show up and practice what they learned. This shortens the learning curve and makes training easier to remember. Shifting from learning to doing helps build skills faster and more accurately.

12. Get a Headstart With ProShop

Migrating to digital work instructions seems difficult. It takes time to digitize your shop's intelligence, management, and training. Lucky for you, ProShop is the go-to software when it comes to visual digital work instructions. We get you up and running quickly. Schedule a demo and we’ll show you exactly how ProShop boosts your performance. 

Shops typically replace 3 to 5 software systems with ProShop for its media-rich system. Our modules are the most complete in the market. Instead of relying on multiple platforms that don’t integrate with each other, you can centralize it with ProShop’s all in one digital manufacturing ecosystem (DME) which combines ERP, MES, QMS, CMMS, TMS, and LMS into a single system. 

The detailed instructions and learning resources take your shop’s performance to the next level. From estimating, quoting and job costing to set up production and quality control. Improve standardization, achieve higher precision, and become 100% paperless with ProShop. 

It was designed over the course of 20+ years of building and running our own CNC machine shop. We built the software to solve the problems our own machine shop struggled with. The software is developed by shop owners for shop owners. The heart of our previous CNC machine shop became the brain of our digital manufacturing ecosystem. In our passion to improve manufacturing, ProShop helps manage your work instructions for a machine shop, fab shop, or assembly department better than any other shop management software. 

Are you ready to upgrade your shop? 

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Author: Paul Van Metre

[/vc_column_text][vc_column_text]Discrete manufacturers are too often lumped in with process manufacturers, but you know that your operations are different and require separate support systems. Thankfully, many manufacturing ERPs are now designed specifically with discrete in mind.

When you’re looking through these systems, it can be a little tough to choose which is the best fit for your operations. To get started, it’s best to consider four of the biggest decision questions for your software selection. 

Guarantee the essentials

Discrete manufacturers can benefit from an ERP, but it must cover some of the basics. While the full list depends on your operations, there are a few uniform requirements. 

First and often most important is support for the tracking technology you use, most often RFID and barcode scanners. These tools ensure you have accurate counts for all aspects of your operation and make your ERP better at demand planning as well as order management. 

Other must-haves include material requirements planning modules that support multiple functions. An MRP tool within an ERP allows you to control inventory and understand lead times, keeping you lean while ensuring you don’t run out of materials. Plus, everything can be accounted for more easily.

Many discrete manufacturers will also look for product lifecycle tools as a baseline because the nature of your goods includes a defined lifecycle. 

Sort by your industry

ERP systems are often designed with certain customers in mind, and you want to find one where you’re the right fit. Narrow your potential list of vendors and platforms by your specific industry so that you get the right quality controls and regulatory support you need.

There are ERPs designed for discreet operations serving the automotive, medical, aerospace, and other industries that all come with unique requirements. If you don’t get something that supports the data or reports that you need, especially when it comes to audits, when you’ll have to spend time and money building out that functionality yourself.

Specialize for your products

After you’ve narrowed down by your industry, considering the products you create and the new designs you might have in the future. Be sure to include the tools that you’ll need to generate new products too.

Get an ERP that covers both CAD and CAM links, but also ask your engineers for other requirements that they have. You might find some needs around your production schedules or support for managing the transition of product design to prototyping and development.

If you’re in an industry like aerospace, where rapid prototyping is becoming the norm, get the functionality that allows you to be a leader, not just a follower.

Address your pain points

The final selection criteria we’re going to mention are your problem areas. Those places causing pain that you need to solve, not just support. Start with a look at your methodology and processes and then see where they lead to issues on your floor.

Look for issues around flexibility, making the best use of your data, addressing vendor changes, or just daily struggles with a poorly designed existing dashboard.

If you’re choosing an ERP to introduction efficiency, reduce legacy systems, or one of the many other common issues, then make sure the vendor can show you how its functionality specifically speaks to those problem areas. It’s your best bet to make a smart choice.

 

Written BODYBUILDING MOTIVATION - Train Hard Or Go Home cialis and women your diet guide for bodybuilding competition prep by: Geoff Whiting[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_single_image image="5574" img_size="full" alignment="center" onclick="custom_link" link="https://pages.services/adionsystems.com/erp-buyers-guide/?ts=1592939305780"][/vc_column][/vc_row]

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Author: Paul Van Metre

[/vc_column_text][vc_column_text]When people hear the term "paperless," they typically associate the elimination of this office resource as an act that helps the environment. And while this is true, adopting a paperless manufacturing solution can do so much more. In addition to promoting a more sustainable business, going paperless can decrease operating costs, enhance productivity and help a shop floor work smarter (and not necessarily harder).

In fact, of all the ways that manufacturing companies might look to cut costs, there’s often one easy, untapped avenue staring them right between the eyes: go paperless. That’s right, by going paperless, shops can eliminate a decent portion of their overhead costs, enhance their productivity and even help out the environment and meet any sustainability goals that they’ve established in the meantime. While this may seem like a difficult challenge, the concept of a paperless manufacturing system is fairly simple to implement. Rather than relying on paper, manufacturers just need to switch up their operations to rely on captured data, cloud computing, and other paperless manufacturing tools that enhance collaboration and productivity. Yes, there’s an upfront cost with implementing paperless manufacturing systems, but the payoff is more than worth it in the long run.

In this post, we’ll go into further detail about the benefits of upgrading your shop floor with the right paperless manufacturing software and why it pays to establish a true paperless manufacturing environment. Here’s a look at 16 reasons why you should be taking the steps to do this today:

17 Reasons to Upgrade Your Shop Floor to Paperless Manufacturing

Want to know how taking your operations paperless can work in your favor? Here are 17 reasons:

1. Reduce Machine Down Time & Improve Scheduling

How well do you know the status of your jobs? Are you able to transition seamlessly between departments when operations are completed or are your machines sitting idle for extended periods of time between runs? If you have orders to produce, it's essential to optimize them in a way where they can be produced with maximum efficiency. When you’re not making chips, you’re missing out on revenue— and this happens more often than you'd like to think on a shop floor. Going paperless and adopting the right digital solution with shop floor scheduling can streamline workflow, and ensure you order enough tooling on time for each job so that the efficiency of your machines on the shop floor is maximized. This equates to less downtime and more productivity.

2. Improve Lead Times & Win More Jobs

In business, time is money. Just as your manufacturing business strives to meet production deadlines so your customers can achieve fast time to market, it’s imperative to quote jobs fast and accurately when you’re trying to earn business with new or existing customers. That’s another big benefit of going paperless, as it allows you to quote jobs in a more timely manner and then send proposals and estimates over to prospective customers with greater urgency. Instead of focusing on just one or two quotes at a time, going paperless enables you to focus on multiple quotes at once due to a more streamlined platform. Ultimately, going paperless should enable you to earn more work, which will essentially make your shop more profitable. Think of the right software as the key to improving lead times, and winning more work.

3. Lower the Cost of Quality Control

In the end, it’s going to be the quality of the product that you make on the shop floor, and the speed at which you deliver that retains customers and helps your manufacturing company earn new business. But what’s the best way to measure quality? Answer: With accurate data and information — and receiving it in a timely manner. Case in point: If there’s an issue with a part or with a shipment, you don’t want to be scrambling trying to figure out what went wrong and where it went wrong. No, you want the answer immediately so that you can come up with a solution to the problem. In a paperless operation, quality issues can be detected sooner — sometimes even automatically — so that out of tolerance parts don't get shipped. Issues are bound to happen, but it’s often how quickly they’re caught that can be the difference between a crisis averted, or a lost contract. In this regard, a paperless system can absolutely play a significant role in reducing the cost of quality control in a manufacturing operation.

4. Reduce Paper and Office Supply Costs

It’s said that the average company is spending anywhere from 1 to 3 percent of its entire annual revenue on printing costs. Furthermore, the average business spends upwards of $20 a month on filling, $1,500 a year on filing cabinets and the average filing cabinet takes up 9 square feet of space. While these office supply costs may seem like a drop in the bucket, consider the cost of printing ink, equipment maintenance, and machine downtime as well. When you consider all time and expenses, things add up. Like we noted in the intro, going paperless isn’t just good for the environment, it can also help increase your company’s bottom line — not to mention the space that any filing cabinets would take up within your facility.

5. Enhance Security and Compliance

We already mentioned how much money the typical business spends on filing costs each year when it comes to the organization and safe storage of paper. But as is the case with anything that’s physically stored, it’s also easier to access — and certainly, every business has confidential information and data that they don’t just want anyone to be able to access. In addition to not taking up any physical space, digital information is stored securely and can only be accessed via password. What's great about a paperless manufacturing system is that a company can control who has access to what information. While there’s always the threat of a data breach, storing confidential information in this manner is generally much more secure, less at risk from property damage, and more compliant with industry and government regulations that need to be met for legal purposes.

6. Track Progress and Performance More Accurately & Effectively

Paperless shop floors are great because they provide real-time data. And while we’ve already mentioned that benefit, one of the keys to being able to access this up-to-the-second data anytime you like is that it better enables companies to track progress and shop performance. With this data handy, businesses can more quickly adapt to changes or make adjustments to better ensure success. If a material shortage is detected, more can quickly be ordered with little to no business interruption. If changes come in, they can be processed and implemented immediately. Tapping into the right digital platform certainly beats sifting through stacks of paper to analyze performance and then making any necessary adjustments.

7. Keep More Complete and Accurate Records

Think about this for a second: You’re updating inventory or inputting data about a work order, or a shop process. What do you think is the better method for doing so? By hand on physical paper, where the process can be tedious and prone to human error? Or inputting numbers into a spreadsheet or software program, which is fast, reduces the chances of error, and is able to keep complete, time-stamped records on entire jobs updated and accurate in real-time? The answer is obvious — it’s another big win for a paperless environment.

8. Improve Communication and Encourage Better Teamwork

When jobs go bad, it's often the result of a communication mishap. And while digital solutions like email have helped enhance communication in manufacturing, a paperless manufacturing system that has a messaging feature built into it is beneficial for several reasons. One benefit is that all messages are attached to specific orders or part runs, so there's no toggling between digital platforms to acquire information. Software messaging features can also send automated alerts, push data updates and document approvals. In addition to keeping team members up to speed with each job, all communication is stored right there within the system.

9. Train New Employees Faster & Acclimate Existing Employees To New Departments More Effectively

If a paper-based office seems tedious, just imagine how much time is spent training transitioning employees or new hires to do their jobs correctly. Employee turnover is a reality of any shop doing business today, and when it comes to getting new hires up to speed or getting transitioning employees acclimated with their new role, any shop can benefit from a digital learning environment. While there’s a learning curve associated with anything, a digital ecosystem can help offer that simplified approach, which will translate to fewer man hours lost to training employees and workers that learn their new roles faster, each of which benefits the bottom line. A good digital solution will also offer training modules and instruction via video, photos, tests and other interactive means to reinforce learning and ensure rapid employee development.

10. Get Jobs Into Production Faster

It’s important to plan the work and then work the plan when it comes to producing a single work order or a batch of work orders on the shop floor, and going paperless can help you do this more efficiently and effectively. Forget about manual planning and searching stacks of paper for the right documents. With a paperless shop floor, you can find what you’re looking for easily in the database. It allows you to better streamline planning and green-light work orders for production sooner. A good digital solution can also track work orders to better enable planning and product delivery.

11. Reduce Set-Up Times By Calibrating Machines Faster

Today’s digital software doesn’t just provide the blueprint for how to manage product orders, it can also help streamline the production of said orders. Much of the software available today can actually integrate with CNC machines, helping improving machine setup times by integrating tool management and calibration of the machines. Additionally, software modules are able to help with tracking equipment status in real-time, managing and tracking maintenance, and helping shop floor employees work more proactively.

12. Reduce Scrap Parts & Improve Profitability

Much like how going paperless can help lower costs associated with quality control, it can also be a major improvement to overall quality control in a manufacturing setting. Because of the influx of data that is collected, automation is a major benefit of any digital environment. And what’s nice about real-time data collection is that errors or issues can be caught and then preventative and corrective action reports can be automatically put in place. In the end, any manufacturing company can reduce product recalls, scrap parts and improve shop profitability.

13. Improve Shop-Wide Accountability

Mistakes are bound to happen in any business environment, but it goes without saying that addressing and learning from these mistakes is imperative to moving any company forward. That’s one other big benefit of moving away from paper and toward a digitized system — it can easily tell management who made changes to what and when they did it. The time stamps can be a great teaching tool for newer or inexperienced workers on what they should do and what they should not do. For more experienced workers, the archiving ability of digital software can help hold them accountable by automatically issuing NCR's (non-conformance reports), CAR's (corrective action reports), and PAR's (preventative action reports) to ensure that employees are performing their jobs adequately.

14. Become More Eco-Friendly and Improve Public Image

A greater number of companies are publishing short- and long-term sustainability goals, largely due to the public’s demand to acquire products from and do business with more environmentally-conscious companies. In fact, more than half of all consumers report their desire for the manufacturing industry and individual manufacturers to act in more environmentally-responsible ways. In this regard, going paperless can truly be a win-win-win scenario. You win by saving money and increasing productivity. You win by doing good for the environment. And, last but not least, you win by improving your public image as a result.

15. Pinpoint Manufacturing Bottlenecks Faster

This benefit ties into the whole aspect of lowering the cost of manufacturing and improving overall quality control. Like we noted in previous points on those benefits when you’re working in a digital environment, there are so many data points being recorded at a time. This data can be more easily managed to identify small issues before they become major ones. There are a lot of things that need to happen before an order goes into the manufacturing phase of product development. Built-in dashboards help monitor manufacturing activity and drive decision-making on the shop floor. One great feature to note is an "inspection" dashboard that paperless manufacturing software solutions offer, which permits shops to more promptly take action when any issues are identified.

16. Reduce Tribal Knowledge

Tribal knowledge is identified as any information that’s not commonly known. In a company, there may be a certain unwritten way of doing things that all employees are expected to abide by – yet no real roadmap of how to get there and how to do it. A good digital solution can help provide a training ecosystem for new hires, current employees and anyone else who is involved in the process. Visual work instructions including text, photos, and videos help employees to hit set-up and run goals and helps to reduce tribal knowledge on the shop floor. And if anyone needs assistance beyond what a fellow team member can offer, there’s always the group messaging system to get help from management.

17. Use your Paperless System as a Sales Tool

Your customers understand the risks and waste associated with a paper based system. They’ve seen it in other shops and have been on the receiving end of those problems. A paperless management system with robust business processes will wow the auditors and procurement teams at your customers. Showing them how you can easily manage their changes, flowdowns, and new revisions will provide them with a high level of confidence in your ability to be a high performing supplier. That confidence will result in more orders and revenue for your shop. A certain win for the paperless shop floor. 

Upgrade Your Shop Floor To ProShop Paperless Manufacturing

During the 17 years we spent running our own CNC machine shop, we've taken the mistakes we’ve made, and the challenges we faced and built our own software to solve those problems for our shop and yours.    

If you're ready to upgrade your shop to paperless manufacturing and solve all of the problems mentioned in this article signup for a free demo of ProShop. [/vc_column_text][vc_btn title="SIGN UP FOR OUR OVERVIEW WEBINAR" style="custom" custom_background="#f98e2b" custom_text="#ffffff" align="left" i_icon_fontawesome="fa fa-arrow-circle-right" css_animation="fadeInRightBig" add_icon="true" link="url:http%3A%2F%2Fproshop.com%2Fweekly-demo%2F|title:ProShop%20Overview%20Webinar|target:%20_blank|" css=".vc_custom_1568393702118{margin-bottom: 15px !important;}"][vc_column_text]

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Author: Paul Van Metre

[/vc_column_text][vc_column_text]Ouch! Missing the mark on time estimates hurts. So fix it.

Estimating accurately and pricing work right is critical to the success of every shop. Many shops don’t put enough focus on accurate time estimates and send targets that are too low to the shop. This leads to problems with trust between office and shop floor employees which can lead to poor performance. By fixing estimating problems, shops can improve trust, performance and profitability.

Estimating in job shops can run the gamut from a quick swag to a detailed breakdown of each operation and tool. In smaller shops, the estimating process is often done by the owner. In larger shops it’s often done by a person or team of people in the sales/estimating department. From glancing at the drawing and/or model and ball parking “That’s a $56 part!”, all the way to building a program to define cycle time down to the second, there are many ways to determine a price. The differences in industry vary widely and we’ve seen hundreds of shops do both extremes and everything in-between. It takes a different approach when quoting a quantity of 1 piece that is needed ASAP, vs. 100,000 pieces per year for a 5-year contract. There are too many variables to suggest that there is one correct answer in how to bid jobs and how much time to invest in the estimating process.

It's important to establish a competitive price, but just as important is establishing accurate setup and run times which will be used on the shop router. Many estimators will adjust the times to get a price that they think will win the job (I’ll admit, I’ve done it myself plenty of times). They know a setup will take 3 hours, but they put in just 1 hour into the estimate. They justify it by saying “The client isn’t willing to pay us the true amount of time it will take.” Perhaps they’re bidding a large contract and they plan to make it up on future orders.

Part of establishing accurate targets is the need to differentiate between recurring and non-recurring time. Examples of non-recurring time include:

• Time to perform detailed manufacturing planning
• Time to design and document an inspection plan
• Time to program the machines to make the part
• Time to make a fixture or jig
• Time to prove out a new program that’s never been run before
• Time to do a thorough inspection to ensure the program is correct
• Time to prepare a full First Article Inspection Report (FAIR) to deliver to the client

Many ERP systems have no ability to track these categories separately from the recurring time:

• Time to process a repeat order through engineering and planning
• Time to set up a job with proven and documented processes/programs
• Time to process each piece
• Time to inspect the parts and prepare a document package

When there isn’t a focus on estimating accurate times, either because time is used to adjust price, or because there isn’t an ability to differentiate non-recurring times, this can result in a number of undesirable consequences including:

• The schedule for how long the project will take the first time is inaccurate, so jobs will often be late
• Workers aren’t really sure how long they are supposed to have for their work, so they have nothing to shoot for and the job takes longer than it should
• Employees are resentful of being given a time target that is unrealistically low

I believe that the last problem is the most cancerous to an organization. When the shop floor employees are given unrealistic time targets, not only do they resent the fact that they aren’t given enough time for their work, but they may come to believe that the people developing the times don’t know what they’re doing. A culture of mistrust and animosity can develop between the shop floor and the office, and eventually the shop employees will discount any targets given by the office. At best they will roll their eyes every time a new job hits the shop with unrealistic times, and at worst they will stop trying to meet the targets and work will take longer all the time. This downward spiral of trust and performance is very damaging to the culture and profitability of a company. Employees are also more likely to leave companies who they don’t trust. After all, they know that they will be judged on how well they perform against the targets that are set for them when it comes to raises, bonuses, and promotions in the company. Most shops I talk with admit this dynamic exists in their companies.

By separating out time estimating from pricing, and focusing on accurate estimates, this relationship can be repaired and a culture of accuracy and trust can be built. The first step is to stop using time as a lever for manipulating price. Focus on establishing the MOST ACCURATE time estimate you can (given the amount of time you have to spend on the quote). If you think it will take 3 hours to set up a machine, then put 3 hours in the estimate. If that makes the price higher than you’d like to charge for the job, then adjust your profit margin down, or reduce the hourly rate you’re using for your calculations of price. The reality is that if you are estimating fewer hours than it will actually take, what you are doing is accepting a job with a lower (or negative) profit margin. This may be an entirely reasonable decision to make. If you have open capacity in your shop, then it’s better to run something at a lower margin than have machines sit idle (unless your gross margin is negative). If you expect lower margins on the first order, and higher margins in the future, then that could be a great decision as well. Be realistic about how much time the job will take. Don’t skimp on the time and believe that low targets are an incentive to work faster. They aren’t!

By honestly discussing the problem, and working together to dial in the accuracy of estimates over time, the company can rebuild trust, and even become more aware of the types of work it is good at. Invite feedback and open dialog on any future inaccuracies. Sometimes there is a genuine difference of opinions on how long a task will take, on the scope of work, interpretation about the details, or ideas about how to approach the job.

With an open channel of communication between the sales/estimating team and the team executing the jobs, and a respectful culture of trying to achieve clarity, understanding and learning from mistakes, all companies can develop that important trust, and focus on continuously improving their process for estimating and pricing their jobs. This is an idea that everybody can get behind and will result in more accurate estimates, higher levels of trust, and even helping focus on the right types of jobs that your company can successfully execute.

How can ProShop help with this?

Having run our own CNC machine shop for 17 years, we’ve learned a ton from our own estimating mistakes, and we built that learning into the estimating features within ProShop’s estimating module. Here are a few very specific examples of the tools we built to solve the problems discussed above.

1. Recurring vs. Non-Recurring (NR) times: In the estimating module, every operation has fields for:
   1.  Setup time (that you charge for)
   2. NR setup time (that you charge for)
   3. Additional Non-Recurring Setup time (that you aren’t charging for. We call it Adder time.)
   4. Cycle time (automated time)
   5. Load/unload time (manual time)
   6. Inspection time (not a per piece amount of time, but a single recurring total to verify the setup - that you charge for)
   7. NR Inspection time (additional time needed on the first run - that you charge for)
   8. Minutes per part - (The total time between cycles including automated time and manual load/unload - that you charge for)
   9. (We also have fields for NR material and hardware costs for each operation. These are not times, but dollars.)

The Adder category is to acknowledge any time you know it will take the first time you do the job that you aren’t going to charge your customer for. Maybe you’re deciding to eat all the startup costs on a huge contract because you believe your client isn’t willing to pay all those startup costs. All shops deal with this issue and it’s important to not sweep it under the rug. ProShop allows you to be very precise about this.

None of these fields are mandatory, but all can be very important. This allows you to estimate as accurately as possible by modeling the time requirements for any possible scenario you can imagine. And when you use our powerful template system, you can create super accurate estimates very quickly.

When you estimate accurate times, the result may be a price you’re not happy with. That’s when it’s time to lower or raise the price by adjusting margin or rates to achieve the price you want to charge. By manipulating these numbers, you have the ability to determine what price you want to charge and see what that means for the profitability or margin you may expect on the job. By allowing this level of control we are taking the important step to separate out our decisions about price from the process of estimating time.

When you’re ready to convert that estimate into a quote, options exist to quote a separate NRE charge, or amortize those costs into the unit price. Just choose the format you’d like to use for the quote. Regardless of how you choose to format your quote, when the job is won, ProShop will copy the estimated target times over into the part module which are the basis for the Work Order time targets. Any non-recurring and adder time will only be included on run #1, and will automatically be removed on run #2 and thereafter. This allows the schedule to be as accurate as possible so you can see the real time commitments.

Most importantly, our tools allow shops to build accurate estimates, therefore building trust between the office and the shop employees and improving performance and profitability.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_single_image image="5577" img_size="full" onclick="custom_link" link="https://proshoperp.com/roi-calculator/"][/vc_column][/vc_row]