It all started with a resignation.
The shop had been an NTMA member for more than 25 years, yet I’d just received word that they were terminating their membership. I texted my friend at the company, which had recently been acquired by a larger manufacturer.
“What’s happening?” I asked. “I hate the thought of losing you after so many years with NTMA.”
Subsequent conversations with the shop’s new leadership eventually revealed what had occurred. A new accountant in the finance department had been tasked with trimming the shop’s budget and, upon seeing an unfamiliar line item on the spreadsheet, made a unilateral decision to cut it completely.
That decision was eventually reversed. The new leadership team recognized the value NTMA provided for the company and chose to retain their membership. But the lesson stuck with me.
How many decisions at other modern machine shops are made in a vacuum? And what is the impact of this siloed decision-making?
Cutting Costs? Consider More than the Numbers
Every business wants to keep costs low and profits high. But this lofty goal isn’t accomplished behind an office door. To intelligently identify areas of waste and opportunities to save, manufacturing leaders must exit the office and get out onto the shop floor.
How and where you invest your money is about so much more than the actual dollar amount. But you’ll never see the big picture while sitting at a desk.
Many years ago, I was privy to a shop’s lengthy—and successful!—AS9100 certification process. Hoping to win a specific contract, the oil and gas industry manufacturer had invested thousands of dollars and more than a year of work into obtaining this prestigious aerospace certification.
When the contract was awarded to another shop, the CFO made an independent decision to cut costs and let the AS9100 certification lapse. Because this CFO didn’t discuss the matter with anyone else in the company, the shop lost the ability to bid on other aerospace projects that would have recouped their AS9100 investment and established them as a viable partner within a lucrative industry.
But a single, siloed decision derailed everything in an instant.
Years later, the shop made the inevitable decision to begin the certification process all over again. And while they’re now reaping the benefits of AS9100 certification, the sting of that years-ago lapse still lingers.
Developing Helpful Procurement Habits
Finance divisions aren’t the only teams making impactful decisions. Procurement specialists have the critical responsibility of sourcing everything from machines to raw materials, and they’re tasked with selecting the best vendor for each product.
One-off or first-time procurement jobs tend to be the lowest risk since most procurement departments follow a standardized series of steps: identify the material, machine, or tool resources; obtain three or more quotes; then decide which vendor best suits the project.
It’s when purchasing becomes automatic that problems arise. Maybe your procurement team is overburdened or under pressure to make fast decisions, leading them to pick the first available option rather than evaluating all the possibilities. Or, in unfortunate instances, you may have a procurement team member who isn’t motivated to do the extra work necessary to balance cost and quality.
Whatever the case, manufacturers should develop a procurement team that isn’t stuck in a silo.
Does your procurement specialist know what the product is for? Are they aware of how it will be used and whether it’s customer-facing? Have they spoken to your engineers or operators to understand why the product’s requirements are what they are?
These insights not only help procurement divisions make smart buying decisions but also empower healthy cross-departmental communication and establish an attitude of personal investment into each awarded contract or purchase order.
Practicing Purposeful Productivity on the Shop Floor
That sense of personal investment extends to a shop’s programmers and operators as well. Of course, you want your production team to be, well, productive. But insisting blindly on speed for the sake of speed simply creates frustration for your technicians, leading to low morale and retention issues—problems manufacturers truly cannot afford amid a labor shortage.
If you’re the manager who oversees the shop floor, are you also connecting your team to the purpose behind their productivity? What do they know about the customer they’re serving? Have you provided context for the part or product they’re making? Do you, yourself, understand the complexities of the work they’ve been asked to do?
Too often, a machinist is given a blind directive to “complete this milling job in four hours instead of five!” And at $100 per hour for mill time, great: you’ve saved the company $100. Meanwhile, more significant savings opportunities have been overlooked, and bigger-impact earning opportunities have been missed altogether.
After all, what’s the value of saving $100 when you could have earned $1,000 by upselling a value-add service? And the time you spent micromanaging your team could have been used to respond to an RFQ quickly and close a lucrative deal.
I’m often shocked to learn that an NTMA member has neglected to take advantage of the cost reductions available to them through our machine shop organization’s affinity partners and industry partners. Those savings easily outweigh the $100 you just shaved off of your overhead by breathing down your machinist’s neck.
Silos Are Simple, Safe, and Seriously Bad for Business
There’s no denying the simplicity of leaving individual teams to their independent tasks. But the sense of “safety” we feel by sticking to our silos is misleading. Siloed decision-making isn’t safe. It’s easy.
Doing the same thing over and over again is easy. Leaving all the spending decisions to your finance department is easy. Using the same vendors without reevaluating your options is easy. And it’s easy to repeat the same demands to your team, day after day. “Work harder! Produce faster! Save more!”
But these easy initiatives don’t reveal the whole story.
I’ve served the manufacturing industry for many decades now, and this is the best advice I know for anyone who truly wants to learn how to run a machine shop:
Manufacturing leaders must adopt a balanced approach, one that’s both objective and intuitive. One that incorporates hard data and emotional intelligence.
A holistic approach invites cross-departmental discussions and taps into the hidden wisdom that even your most introverted workers certainly hold.
Pay attention to the experiences your people are having.
And intentionally shatter your shop’s silos wherever you find them.
That is how you’ll save money, how you’ll earn business, and how your shop will find lasting success: today, tomorrow, and far, far into the future.