The metalworking industry has undergone a number of innovations in recent decades. Many companies knew how to take advantage of this but a few missed the boat and had to close their doors. Its a shame, but there is nothing to do about it. This is typical of an industry that used to consist mainly of pure crafts and has now been under pressure for so long.
Unfortunately for some, the innovation will continue. Others can benefit from this on a large scale. What awaits the metalworking industry in the near future, how can you anticipate this, how do you stay ahead of the competition and how important will the original metalworking craft remain?
From low mix and high volume to high mix and low volume
Long before the advent of the digital age, people often went to the local entrepreneur for metalworking. One entrepreneur was good with sheet metal and the other with welding or pipes. You knew that and if you needed multiple operations, you went to different companies.
The estimation process was simple and fast. The metalworker estimated the required kilograms of metal and calculated the number of man hours, which together gave an estimate of the costs. Often with the announcement that more or less work could be charged.
Price pressure due to competition was often not an issue. Not a fast delivery time either. The work had to be done and the local reputation secured the customer’s favor. It was a time when the metalworking industry delivered a low mix and high volume of operations, but then about 30 years ago that changed quickly.
The combination of digitization and better and more affordable machines resulted in a shift towards a high mix of operations and a low volume. Metalworking companies bought more different machines to offer the customer a total package, which had major consequences for supply and demand in the market.
The diversity in offer results in much more complex quotations
Suddenly it was no longer the local reputation, but the diversity in offer that caused the contract’s awarding factor. Because why would you visit 5 companies, if you could also go to 1 metalworking company? The trend was set and soon the entire market had to follow suit.
Digitization within the metalworking industry caused the next revolution in supply and demand. Although 2D drawings are still used today, a 3D CAD model has become the norm. Metalworking machines are digitally controlled on the basis of these files and knowledge of the operation of these machines is often more important than knowledge of materials and operations.
An additional advantage for the customer is that he can now request a quotation from various parties. Based on price and lead time, the order is awarded to 1 party and the other parties have done a lot of estimations and preparation work for nothing.
The expansion of the metalworking supply was also driven by growing demand. This is usually a positive development, but if on average only 1 in 5 requests leads to an order, this is accompanied by a high workload in the department where quotations are made. If you are unlucky, enough quotations are sent in a week, but there are too few orders, which means that the production line comes to a standstill.
Another disadvantage of the expansion of the metalworking range is that it is quite a challenge to keep all metalworking machines in continuous production. Complex and sometimes expensive ERP implementations help to optimize the production process, but do little to prevent funneling. The bottleneck is and remains the processing of complex requests for quotations and the necessary work preparation.
For most metalworking companies, the difference between making a profit or a loss is how quickly the company is able to prepare a competitive quotation. Then it is about the production efficiency and reliability of delivery. If one of these three is not optimal, red numbers are lurking and the competitor takes off with the profit.
3D models are simultaneously a blessing and a curse
With the advent of 3D CAD models, manufacturers of metalworking machines were forced to control them with CAM systems. This is ideal, because this means that a very large part of the processing takes place fully automatically. But there is also a negative side to this. Each supplier has its own CAM system and if you have a wide variety of products, you are also forced to work with different CAM systems. That should not be a problem, provided the supplied 3D files could be read in full. Unfortunately, this is exactly where the shoe pinches, but there is more to it.
The designer of a 3D file gives all kinds of characteristics to the design. Such as type of material, color, thickness, finish, etc. But once ready, the file is converted to a universal Step format so that any 3D package can read this file. The problem is that with the conversion of this rich file, all the characteristics are lost. A major problem for which the industry still has no solution after decades.
As an estimator and work planner you have to manually enter the characteristics to know what the intention is. This is, of course, very time-consuming and sometimes complex. Sales, which is responsible for processing quotations, sometimes need very specific and often technical knowledge that should actually be used on the production floor.
How do you maintain a competitive advantage within the metal industry
Most of the metalworking companies that still exist have managed to adapt well to the rapid developments of recent decades. But that doesn’t mean they have or can maintain a competitive advantage. Because you cannot simply win the battle for the customer in the future by expanding the machine park.
More machines mean even more complexity in the quotation process and work preparation. In the near future, metalworking companies can only survive if they respond smartly to three crucial aspects.
- Speed of processing quotation requests
- Speed and efficiency of production and delivery
- Investing in platform technology
Speed of processing quotation requests
In the ideal world, as a metalworking company, you would like to be able to read in any 3D file, after which a specified estimation will automatically roll out. If necessary, you as sales make a few manual adjustments and after a final check, you send the quotation, including delivery times, to the customer.
In this way, it is no longer the art to process all quotation requests, but to get enough quotation requests. Because with this you keep the production line running at full speed and you can shift the focus to expanding the range.
This ideal world already exists in the form of the Quotation Factory. This smart metalworking estimation software has exactly the right intelligence under the hood to almost completely automate the quotation process. Including delivery times and prices from suppliers.
Speed and efficiency of production and delivery
The speed and reliability of delivery and the efficiency of production and logistics will be crucial in the near future. Expensive metalworking machines must run at a minimum of 90% capacity, but must also not be overloaded, which jeopardizes the delivery time. In addition, smarter logistics can make the difference between a competitive quote or a quote that you price out of the market yourself.
This is a logistical challenge to which many metalworking companies are not yet responding sufficiently. Not in the last record because they are still playing around with the preliminary phase. What is needed here is smarter and automated work preparation and planning tools. The complexity due to the number of machines and operations will only increase and that means that work preparation and planning can no longer be done by people.
Although smart ERP systems sometimes take advantage of this, they unfortunately still fall short. That’s because they are essentially not designed to work with 3D files, specific CAM systems and suppliers. Something that is crucial to estimate processing time, capacity and total lead time.
The Quotation Factory software can also offer a solution here. The link with the ERP system and the various CAM systems gives the metalworking company insight and control over the entire process. Including the required processing time, capacity and the total lead time of the entire production.
Investing in platform technology
Digitization has resulted in sleepless nights for many metalworking companies and has not only yielded benefits. But this may be the case in the near future.
Within the metalworking industry there has been talk for some time about the factory where the lights are out. The work floor is automated in such a way that almost no human hands are involved anymore. But the next step is that the lights can also be switched off in the sales department by using platform technology. This paints the following picture of the future:
Customers request their quote online and receive their quotation, including lead times and delivery date, without human intervention. All metalworking machines are connected to the Internet and have become IOT (Internet Of Things) devices. With all the associated benefits.
As a result, metalworking can be accommodated with machines that still have capacity somewhere in the country. The entire chain is connected, making delivery problems a thing of the past. Even if one machine is defective, another machine effortlessly takes over, so that just-in-time delivery can be 100% guaranteed.
The front door of the metalworking company is no longer a physical door, but the platform on which the customer makes his request. The employees will focus on supporting the customer and can use their specific expertise for innovations instead of routine work. This shifts the distinguishing power and competitive advantage from having the largest supply, to offering craftsmanship and artisanal skills. The rest is due to the platform technology and perhaps that is exactly what the metal industry needs.
The Quotation Factory believes that it is not a question of whether these developments will take place, but when they will take place. For that reason, it has developed a platform that is already taking the first steps in this direction. Namely a customer portal where customers can already request their own quotations, which are prepared for most standard operations without human intervention.
This is just the beginning and intelligence of this portal is getting smarter every day. Ultimately, this will lead to a new revolution within the metal industry. But until then, it is up to the current players in the market to anticipate this.