Reengineering the Small Factory
An alphabet soup of new manufacturing technologies can give small companies the automation edge. But know what you're getting into before you upgrade
Cook Specialty Co., a $10-million manufacturer of precision metal parts, used to take customers' blueprints and knock out a finished product. No more. Global competition in the early 1980s changed all that. Cook's customers, some of them Fortune 100 companies, began consolidating their supplier base into a handful of companies with the best prices, quality, and delivery record. Tom Panzarella, Cook's president, knew that if he wanted even a chance of maintaining a competitive edge he'd have to overhaul the company's entire manufacturing strategy.
So Panzarella transformed Cook from a job shop to a custom manufacturer. Now instead of just making products, Cook actually designs them with customers. What made the change possible was a technology turnaround that left the plant humming with equipment such as computer numerically controlled (CNC) vertical machining centers and robotics. Today, as Panzarella walks the floor of the 70,000-square-foot factory, the air lightly spiced with oil and welding smoke, he gestures at the machines and operators with pride. "We don't really have a product line," he says. "What we have is expertise in engineering and manufacturing."
It hasn't been easy for smaller companies to lay claim to manufacturing expertise. That's because large companies have traditionally had the automation edge. But now, thanks to the falling costs of hardware and software, their smaller counterparts can steal that edge away. The boost in technological know-how also increases the flexibility long associated with smaller businesses, allowing them to shift strategic gears and to recast production processes faster than ever before.
But going high tech in the world of manufacturing is not for the fainthearted. It's hard enough to sort out the alphabet soup of acronyms -- CIM, MRP, CAD, CAM, CNC, and PLC, to name just a few. Then there's the equipment expense, the training, and the massive labor and process restructurings. Businesses must do some tough soul-searching, too, before jumping into the upgrading fray, to be sure that their problem is really too few machines and not less-than-optimum management of people. (See "Keeping It Simple," [Article link], for a profile of a company that found less is more.)
When automating operations is the right course, however, the benefits can be manifold -- everything from improved quality to streamlined production planning.* * *
Flexible Factories Just ask Tom Panzarella. For Cook Specialty, in rural Green Lane, Penn., sophisticated manufacturing technology has opened the door to an entirely new competitive strategy: "agile" or "flexible" manufacturing -- the ability to produce high-quality customized products quickly for constantly evolving markets.
Over the 21 years Panzarella has been at Cook, he's shifted the company's manufacturing portfolio from basketball hoops and display racks to higher-margin custom-engineered medical instruments and precision metal parts for photocopiers, computers, and automobiles. Because technical innovations for those devices come so fast, almost a third of the products Cook makes each year are new.
The only way to achieve the flexibility required by that ever changing portfolio, says Panzarella, is by avoiding waste at every stage of the manufacturing process. Get the right materials and information to the right place at the right time -- that's Cook's philosophy. It's also the general idea behind computer-integrated manufacturing (CIM). In a nutshell, CIM means combining the various disciplines within a manufacturing operation through automation. For example, CIM enables Cook to swap parts drawings with customers using two computer-aided design (CAD) packages: AutoCAD (from Autodesk, 800-964-6432) and Pro/Engineer (from Parametric Technology, 617-398-5000). That's how Cook recently helped Welch Allyn, a medical-instrument and diagnostic-products manufacturer, develop an improved line of laryngoscopes. Once a design is finalized, it is fed into Cook's computer-aided manufacturing (CAM) package, SmartCAM (from CAMAX Manufacturing Technologies, 800-394-5300), which in turn generates the instructions the CNC machines follow to actually make the product. And though linking technology is important, says Panzarella, connecting people is just as crucial. "Around here," he says, "CIM might just as well stand for 'communication in manufacturing.' "
Having tools to facilitate communication is especially important in a shop like Cook's, where the 120 employees also own the company. At Cook the operators work with minimal supervision in "manufacturing cells," multidisciplinary teams of people and arrangements of equipment that can be quickly reconfigured. Much of the company's communication occurs over the network of more than 30 computer terminals throughout the plant. Operators rely on them to tap into Cook's shop-floor control-and-scheduling package, Symix (from Symix, 614-523-7000), a UNIX-based system that runs on the company's Hewlett-Packard HP9000 minicomputer. "The technology enables them to feel and act like owners of their piece of the production process," says Panzarella.
To track customer information on-line, Cook hired a software developer to write a special application that is integrated with Symix. The software enables operators to trade notes on the status of production jobs and to key in relevant information from their communications with customers. Many operators start their day by logging on to the system to look for "hot" jobs -- those that need immediate attention. "The idea," says Panzarella, "was to bring the voice of the customer right onto the floor, where the people running jobs could hear it directly."
What's saved Cook from the pitfalls that many larger companies encounter when they automate to the hilt is the company's insistence that its technology serve its people, not the other way around. That attitude is reflected in all the company's technology decisions, even buying a new welding robot. Cook bought the most user friendly machine it could find, and then taught its welders how to program and use it. "We'd rather retrain our people to use technology than hire a bunch of textbook-trained CNC experts and try to teach them welding," says Panzarella. "After all, our agility depends at least as much on our employees and processes as it does on our machines."* * *
Building a Better Machine Not every manufacturing company upgrades for strategic reasons. Some, like $5-million BG Fuel Systems, which makes custom carburetors, fuel pumps, and fuel-injection systems, are simply looking to improve quality and productivity. BG Fuel, which is based in Dahlonega, Ga., got what it was after -- boosting sales significantly in the process -- by replacing manual design and manual tooling with CAD/CAM and CNC machines.
A former heavy-truck mechanic and weekend car racer, Barry Grant launched BG Fuel 10 years ago with a $2,000 investment. Working in an unheated shop without running water, Grant and one employee manually measured and removed imperfections in stock Holley carburetors. They sold the finished products to racers looking for an edge from improved flow rates.
But the company's cash flow couldn't keep pace. At one point money was so tight that Grant and his wife rented out their house and moved into the shop for six months. In an attempt to turn the business around, Grant took what he'd read about CNC machines and applied it to his business, figuring that the machines could remove from carburetors variations no wider than a hair. To educate himself further, he started going to machine-shop shows. But despite all the book learning, Grant's initial forays into high-tech manufacturing were just short of disastrous.
Take his first big purchase: a CNC machine he took out a seven-year bank note to buy. The $150,000 unit was supposed to improve precision and productivity, but Grant's wife, Aleta, was skeptical. Her reaction: "It looks like a dumpster." That turned out to be a fairly apt description. Grant had to threaten to have the machine hauled off before the vendor got it to work.
But whatever buyer's remorse Grant had was short-lived. Today he owns four CNC machines (two from Mazak, 606-727-5700, a Mazak Machining Center V515 and a Mazak Mill/Turning Center Superquick Turn 18 MS Mark II; and two from Fadal Engineering, 818-407-1400, a three-axis machining center model VMC 4020 and a five-axis machining center model VMC 6030 with TR 65), and his company has nearly $1.5 million invested in CNC and CAD/CAM equipment. BG Fuel's employees now use a digital probe to measure carburetor castings. The data are fed directly into the company's CAD system, Pro/Engineer. After a new casting is designed, sans imperfections, an engineer loads the design specs into one of two CAM packages, SurfCAM (from SurfWare, 800-787-3927) or TekSoft (from TekSoft, 602-942-4982), which writes the CNC program. To keep track of its numerous machine-control programs, BG Fuel uses a package called Applied CIM, part of the M-Ware manufacturing execution system from Applied Statistics (612-481-0202). Between machining carburetors -- the system allows the shop's 50 employees to produce 6,000 carburetors a year -- and making fuel pumps and regulators, BG Fuel's CNC machines are running 24 hours a day. Grant's only regret: "We should have brought in the technology sooner," he says. "We would have been that much further ahead."* * *
Taking Control Machine shops aren't the only businesses that can benefit from better shop-floor technology. Consider Seattle-based Pacific Coast Feather Co. (PCF), an $86-million manufacturer of pillows and comforters that was able to pursue a new marketing strategy -- and slash labor costs by about 30% -- by adding new process-control systems to its feather-processing plant, in Marysville, Wash.
The small company had never been able to compete on price with larger manufacturers of down and feather products. So to earn the business of customers such as JC Penney and Kmart, it decided to focus on quality and on customizing its designs for retailers. "The problem was that we couldn't charge any more for those advantages," says Joff Hanauer, vice-president of manufacturing. "We needed them just to get our foot in the door."
One obstacle to the company's pursuit of quality was the relatively crude process control at Marysville. Bales of compressed feathers and down, some of them weighing up to 1,000 pounds, arrive every couple of days from overseas for cleaning and sorting. After being loaded into huge washers and doused with cleaning chemicals, the feathers are washed and dried, and then transferred to 30-foot-high separating machines. There, circulating air blows the lighter down clusters and the heavier feathers into different chambers, from which they are packed into 50-pound bags. The separation process is especially important because low-grade feathers sell for just 50¢ a pound, while top-grade down clusters go for nearly 100 times that.
Until 1992, PCF's German-made Lorch feather-processing machines were mostly controlled by plastic punch cards and timers. Adjusting a machine meant making a whole new card -- a difficult process. By replacing the mechanical controls with programmable logic controllers (PLCs) from Siemens AG of Germany (212-258-4000) and electronic meters, the plant was able to better control cleaning and drying. The old method blindly advanced a load from drying to separating based on time. The PLCs wait until the humidity drops to a specified level before advancing the load.
There is a drawback to PLCs: they must be programmed by experts. Hanauer says PCF solved the problem by installing man-machine interface (MMI) software from Wonderware Corp. (714-727-3200). The software, InTouch, runs on a PC located on the factory floor and connected to the plant's PLCs. It provides on-screen graphical representations of the devices used to control the processing equipment and sets off audio alarms when problems crop up.
Hanauer puts the price of upgrading at close to $150,000. That figure doesn't include the three weeks of downtime it took to install and debug the equipment -- another $100,000 by his estimate. "The capital requirements of this technology aren't huge," Hanauer says, "but deploying it can be costly."
Still, the benefits far outweigh the costs. "Before the PLCs, it was hard to measure the effects of changes in things like temperature or timing," Hanauer notes. "Now we've been able to take out a lot of the sloppiness and to maximize throughput."* * *
Timing Is Everything When technologies like CAD/CAM, CNC, and PLC work, the gains in quality, productivity, and finally, profitability can be astonishing. But sometimes, even when a company has savvy, big bucks, and internal and external expertise, those same systems can trip it up. That was the situation for Orco Block Co., a $15-million concrete-masonry producer in Stanton, Calif., that turned to a manufacturing resource planning (MRPII) system to solve its production-planning problems.
Rick Muth, Orco's president, never expected his cautious investment to end so badly. It all began in 1980, when Muth purchased a custom-written MRPII system that ran on a minicomputer from Prime Computer. The idea was to take some of the drudgery out of scheduling and filling orders for Orco's five production facilities so the company could focus on customer service and product development.
The MRPII system pretty much did what Muth wanted it to: grind out comprehensive production-planning reports. But the hardware -- along with the operating system -- it ran on was another matter. "It was a dinosaur," Muth says. "We knew we had to move to a standardized computer and operating system." So in late 1993 he hired the local office of Chicago-based Arthur Andersen to survey the market and find the best system for Orco. Months later Andersen presented Orco with several options, and the company selected an MRPII system from a small firm in Minneapolis. It would draw data from an Oracle relational database and run on a Hewlett-Packard HP9000 minicomputer with a UNIX-based operating system.
Muth says the MRPII system looked great during the software vendor's demonstrations. But then came the big day when Orco switched off its old system and cut over to the new. "It was a bomb," says Muth. "We couldn't get many of the reports we had been doing for 14 years, much less attempt many of the new applications." An Andersen spokesman says Orco's problem is typical of small companies that switch or update major systems: "They underestimated the time needed to manage this kind of change," he says. "You either adapt or you opt out."
After numerous attempts to solve the software bugs, Muth decided to abandon the package. He reports that Orco is now trying to resolve the problem with Andersen and recoup some of its investment. In the meantime, the company is evaluating MRPII systems from Computer Associates International (516-342-5224). Muth hopes the new system will have industrial strength, allowing him to get back to managing the business. "I've been spending too much time on technology," says Muth. "It's just the wrong place for me and my company to put our energy at this time."
Muth's experience is instructive: it's not only what companies do to bring technology to the factory floor but when they do it that determines success. If the timing's right, factory automation can be a win for management, employees, and customers. BG Fuel's Grant should know. "There was no way I could lose by making this investment," he says. "Now we can pay our people better, keep prices in line, and produce a better product."* * *
Brian McWilliams (firstname.lastname@example.org) is a freelance writer based in Durham, N.H.
Several state and federal programs provide free or low-cost technical assistance to small and midsize manufacturers. Some good places to start:
Agility Forum, Bethlehem, Penn. (800-9BE-AGILE, http://absu.amef.lehigh.edu). Consulting, training, and education services on agile manufacturing principles from manufacturing experts.
Manufacturing Assistance Program, Oak Ridge, Tenn. (800-356-4USA). Limited free technical assistance from U.S. Department of Energy scientists and engineers.
Manufacturing Extension Partnership, Gaithersburg, Md. (800-MEP-4MFG). A nonprofit network of more than 200 field offices in 42 states and Puerto Rico providing federal, state, and local services.
WHAT'S IN A NAME
Overwhelmed by the myriad applications available for retooling the factory? Here's a brief glossary to help you sort them out:
Computer-integrated manufacturing (CIM). Applying information technology to production processes and organizational structure to streamline operations. Often focused on integrating systems and processes distributed across a company, such as order entry, scheduling, and production.
Computer-aided design (CAD). High-performance design workstations that enable designers to manipulate parts diagrams and simulate operations, among other things. Can be linked to computer-aided manufacturing systems.
Computer-aided manufacturing (CAM). Systems designed to facilitate manufacturing, including computer numerical control (CNC), robotics, materials requirement planning (MRP), and process control.
Computer numerical control (CNC). A means of operating production machines (most commonly punch presses and machining equipment) by numerical-control instructions generated by CAD/CAM or from a programmable logic controller (PLC).
Programmable logic controller (PLC). A simple computer capable of coding, storing, and downloading numerical-control instructions to multiple machines without the use of tapes or punch-card readers.
Materials requirement planning (MRP). Planning system for production operations that includes scheduling, materials billing, and inventory management.
Manufacturing resource planning (MRPII). A more recent, expanded approach to MRP that also considers issues such as purchasing and forecasting.