Page 44 - MetalForming September 2013

Adopt Leading Technology Strategies
Are You Keeping Pace with Change?
To keep up with change, the strategic business questions each metalformer now must ask itself include:
• Are we selling into the right geographic and vertical markets?
• How do we alter our cost structure to be competitive and profitable?
• Do we have the right workforce from a skills and culture perspective?
• Can we sell into new markets?
• How do we differentiate ourselves?
• Do we really know which customers are truly profitable?
• Do we need to rationalize our products and services? Should we eliminate some low performers?
• What should we be doing to bring in results similar to those experienced by industry leaders?
product lines or enter new markets. This type of change may require retraining of the workforce, investment in new equipment and tooling and new information systems. Yet, it is exactly this type of change that metalformers must embrace to become more dynam- ic and responsive enterprises.
Here we describe several strategies that metalformers should adopt as they look to embrace such change.
Increase scale—The largest metal- formers have the advantage of scale. They can focus specific plants and equipment on larger amounts of simi- lar work. They can use second and third shifts with the same physical plant and equipment and achieve a cost advan- tage from spreading their fixed costs over a large number of projects. Scale is driving mergers and acquisitions in this industry. Your firm must decide if it can organically grow the volume of work into its pipeline, or if it needs to acquire sales, customers and backlog via acquisitions.
Expand into new markets—Some metalformers may elect to move into new or adjacent vertical markets to expand sales or chase more profitable work. Companies that previously spe- cialized in one industry (automotive for example) may find new market opportunities in other sectors (such as aerospace). Multiple industries served by metalformers, such as auto- motive, heavy equipment and con- struction, seek suppliers in tune with their needs who can deliver quality products. Other metalformers may decide to expand into new regions— local firms will become regional, regional suppliers will become nation- al players and national players will go global. Each of these transitions carries with it unique challenges, but if growth is desired, these challenges must be met.
Increase productivity—Newer machine tools are driving much of the productivity gains seen in the metal- forming industry. These tools permit more work to be done by fewer people and with greater accuracy. Better design tools reduce scrap. Productivity bene-
fits drop straight to the bottom line. The challenge many firms face is how to finance these capital acquisitions. Strengthening credit/banking rela- tionships is a must for metalformers. Productivity improvements can occur in other ways, too—this is where new ERP technology comes into play. IT personnel consumed with patching, maintaining and upgrading older on- premise software can be freed up to work on more strategic applications and projects should the firm switch to low capital-intensive, multitenant cloud services and software.
Increase customer insight to focus on the best customers—Rarely do all customers have the same support costs, sales costs, etc. Businesses with poor, nonintegrated systems cannot determine their true, fully loaded costs for each customer. To experience long- term success, metalformers must cap- ture all costs and revenues pertaining to every customer over time. Lifetime customer value and profitability can be a hard metric to calculate, but it will help managers decide which cus- tomers to cull from the herd. Let your competitors serve the pariahs of your industry.
Benchmark and Refresh
Simply adopting one or more of the above strategies will not cut it. Suc- cessful metalformers will benchmark their competitors, refresh their tech- nology tools and invest in skills train-
ing, among other directives. Benchmarking—You may have
some notion of how well your com- petitors operate, but a thorough bench- marking of your operations might unveil some major surprises. In a con- solidating industry, your firm cannot afford to be inefficient in any aspect of its operations. Benchmark your pro- duction processes, IT operations, accounting and HR processes, sales and other aspects of the business. Any process area not in the first or second quartile of performance becomes an immediate area of concern.
Refresh technology—Shop-floor technology continues to evolve, par- ticularly tools that integrate with design technologies and other equipment. In addition to the technologies used inhouse, metalformers also must track the technology evolution impacting their suppliers and customers.
• Do you possess the collaboration tools that make your firm easier to work with and partner with key customers?
• Are your estimating and quoting tools providing a competitive advantage? • Do you make it easy for buyers to know what kinds of equipment you pos- sess and what kinds of products your
firm is especially suited to produce?
• Does your technology eliminate virtually all paper flowing between your firm and its suppliers, buyers, employ-
ees and others?
Reassess your human capital—
Skills shortfalls are common in the
42 MetalForming/September 2013
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