Growth is important for any modern machine shop. But making improvements or investments without clear, strategic thinking behind them can be a real waste of time and resources.
How can NTMA members ensure that shop upgrades optimize productivity and efficiency? We have some helpful tips to guide you toward evolving your shop effectively.
How to Know When It’s Time to Offer a New Service
It’s easy to get wrapped up in the excitement of what your shop can offer, but it’s just as important to be strategic about when to expand your offerings.
Here are a few ways to determine if the timing is right to offer a new service:
- Look at your no-quote data. How many projects were you unable to take on in the past year because you didn’t have the machines, resources, or skills to complete them? If there are obvious patterns or the same service keeps coming up, it may be time to consider adding it to your repertoire.
- Assess what services you’re outsourcing. There’s nothing wrong with outsourcing to trusted partners as part of your business model. But if you’re consistently subcontracting millions of dollars worth of one specific service, that’s a sign that there’s a concrete market for you to provide that service yourself—and you already have proof of a return on investment.
- Consider the competitive advantage. Reinvesting in the same services over and over again—like upgrading a lathe or mill to the next model—may not be enough to keep you competitive in today’s market. Ask yourself how your next investment will differentiate you from competitors. Maybe you still buy a new mill, but you enhance it with another service or offering that will increase capacity or draw in more customers.
Beyond Machines and Capabilities: Alternative Ways to Improve Efficiency and Productivity at Your Shop
When we talk about offering new services at a modern machine shop, shop owners’ first instinct is to focus primarily on equipment and capabilities. While there are many advantages to adding a new machining capability, we encourage you to think even bigger.
Here are six alternative ways to improve efficiency and productivity at your shop:
1. Certifications. Investing time and effort into getting your shop certified is a good growth strategy. Certifications like ISO 9001:2015, ITAR, and AS9100 will allow you to expand your offerings and appeal to certain industries like aerospace and defense that have stringent requirements.
2. Quoting software. Software investments, specifically in the area of quoting, can be a huge boost to your shop’s efficiency. Digital quoting software not only streamlines the process on your end, but also improves the customer experience.
3. Finishing services. Bringing a simple and low-risk finishing service like powder coating in-house might be the right move for your shop to help shorten the supply chain and improve revenue streams.
4. Extra shifts. Adding a second or third shift at your shop will increase your capacity and help you meet growing demand. If you’ve been declining projects because you don’t have the time or manpower, another shift can bridge the gap between where you are and where you want to be.
5. Automation. Automation is all about finding ways to do more with the resources that you have. Invest in automated equipment like multi-spindle or multi-purpose machines to free up your workers to perform other, less tedious tasks. Get a robotic arm that can load heavy equipment to expedite this process and conserve your workers’ physical energy. There are so many opportunities to consider.
6. Shipping and other logistics. Bringing shipping in-house is a great way to minimize the disruptions often caused by third-party shipping services, from mishandled parts to costly delays. No one will take better care of your parts in transit than you will.
Financial Considerations for Adding a New Service
The thought of making a new investment can be overwhelming, especially for small shops that may not have a Chief Financial Officer to rely on.
When you’re considering adding services, it’s important to focus on the return on investment. Comparing outsourcing and no-quote figures to what you could earn with a new service or offering is one credible way to make this calculation—but there are other resources available.
NTMA’s affinity partner, EBITDA, can help your shop grow effectively by assessing where you are now and where you need to be. NTMA members can enjoy a discount on these services, however they’re available to anybody who needs them.
Join NTMA today for access to the best resources on how to run a machine shop.