Modern Machine Shop

FEB 2018

Modern Machine Shop is focused on all aspects of metalworking technology - Providing the new product technologies; process solutions; supplier listings; business management; networking; and event information that companies need to be competitive.

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Page 21 of 147

ONE-OFF MMS FEBRUARY 2018 20 Derek Korn EXECUTIVE EDITOR @MMS_Derek Building Relationships in Emerging Markets The article starting on page 76 describes J&R Machine's method of capturing and using machine-monitoring data to calculate what it calls its productivity index, a ratio of a machine's run hours to its operator's payroll hours that helps guide a variety of important business decisions. As helpful as that is, the Shawano, Wisconsin, contract shop also benefits from standardization, as the story explains. For example, J&R Machine doesn't pursue all types of jobs. Rather, it focuses on complex, turned parts less than 10 inches in diameter and shorter than 20-inches long. It also has standardized the type (and specific models) of equipment it will purchase for that work moving forward (only live-tool turning centers and horizontal machining centers). Standardization of the type of work it pursues helps J&R Machine's sales and marketing team target the most appropriate new business oppor- tunities—especially in emerging energy markets —because it knows exactly what types of parts are in the shop's wheelhouse. In fact, Parker Tumanic, vice president, says identifying opportunities in emerging mar- kets is another important part of the company's business plan. Profit margins for legacy-type parts are typically low because these jobs are generally awarded based on price alone. Conversely, J&R Machine searches for customers that buy on value, not price, which is typical when new products for new applications are still in the design stage. To that end, Mr. Tumanic explains, once key players in a new market have been identified and approached, it's important to work to build a rela- tionship with their product-development engi- neers. Although initially he and his team might be communicating with a potential new customer's purchasing agent, they more than likely will be introduced to the company's engineering group, because the parts being designed might never have been made before, and there are often ques- tions as to how best to manufacture them. That's where J&R Machine's design for manu- facturability (DFM) experience comes into play, which can result in a win-win-win for the shop, its customer and its customer's product-develop- ment engineers. In one example, a part initially required significant, time-consuming CMM mea- surement routines. The shop suggested it could make a simple fit/function gage to minimize CMM inspection, and the engineers appreciated and accepted that idea. They then demonstrated to the company's purchasing department how much money that change saved in the overall pro- duction process. Helpful suggestions like these help establish and then build relationships with a new customer's engineers. Mr. Tumanic says there's no need to pick up numerous customers in an emerging market right away. Initially winning just one or two might be enough, given the higher profit margins com- pared to a shop's existing work. The key is to con- tinuously monitor the profit margins of current jobs while keeping an eye on emerging markets that might offer more profitable opportunities and help boost the shop's bottom line. Parts for products in emerging markets can offer higher profit margins than those for legacy applications. The key is to get in tight with the product-development engineers in those emerging markets. TOP SHOPS WINNER J&R Machine was the 2014 Top Shops Honors Program winner in the shopfloor practices category. This year's benchmarking survey is now online. Participate, and perhaps you can be an Honors Program winner, too.

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