No one knows the trials and tribulations of the manufacturing industry better than those who own or manage job shops within that sector. During our DISCOVER 2021 event, we hosted the Job Shop/Profit Shop panel discussion to address some of the current challenges that today’s small to medium-sized shops face and gain insight into how these enduring shops ensure their continued success.
Our panel included three shop leaders who run representative high-mix, low-volume production job shops: Peter Phillips, president of D.P. Tool in Avon, NY; AJ Schaeper, president of Tomak Precision Machining in Lebanon, OH; and Courtney Silver, president of Ketchie Inc. in Concord, NC. During the discussion, these knowledgeable people addressed everything from how to navigate current disruptions in today’s business landscape and diversify core competencies to the best ways to deal with supply chain disruptions, workforce development and the incorporation of new, alternative technologies.
Over the years, shops have worked their ways through a long list of industry cycles and disruptions – most recently, the COVID-19 pandemic – that alter the business landscape. With that said, the panelists were asked how they see business changing as the country hopes to emerge from the pandemic. All three agreed that the business environment will require shops to continue substituting capital for labor and doing more with less, which calls for an increase in Multi-Tasking equipment and automation.
Additionally, all three observed that shops must take a hard, critical look at the jobs they quote, who their customers are and what their current capabilities enable them to do. A shop may be attached to long-established customer relationships and want to quote every possible job. But in reality, every shop must be smart and position itself for growth without overtaxing its current capacity.
According to the panelists, the solution is to base all work decisions on the individual jobs that a shop can complete and to avoid over promising and under delivering. “Shops need to balance accepting work that’s right for them and serving current customers,” said Phillips, “while also remaining able to take advantage of new opportunities and/or to diversify.”
On that note, the panel was asked how to specialize in one industry segment and still mitigate the risk of too much dependency on any one sector or customer. One answer offered was to pursue other customers within the same segment. For example, instead of allowing one customer to make up 50% percent or more of incoming work, diversify with six new customers that each make up no more than 20% of business.
The panel also offered a word of warning. A shop either jumps into a new market/new customers with both feet or not at all. “Diversification doesn't happen overnight,” pointed out Silver, “so shops need to have their technical resources in place to delve into the new venture and be prepared for a bit of a lag in business.”
Diversification is challenging enough, and as today’s shops strive to broaden their options, they also face supply chain problems. When asked how they deal with these types of disruptions, the panelists all agreed that a shop must plan ahead and maintain some inventory to avoid being caught short.
Contrary to the just-in-time (JIT) manufacturing strategies that have been drilled into our heads for decades, managing inventory is critical, especially when dealing with long lead time items. Another option is to stipulate that the customer purchase the necessary materials prior to the start of the job, which pushes the wait time to their side of the process. “Either way,” Schaeper stressed, “shops must communicate with customers – who, nine times out of ten, are willing to work with the shop to resolve timing and job delivery when supply chain disruptions enter the picture.”
With labor shortages continuing to plague today’s job shops, the panel addressed the challenge of attracting and retaining the workforce of tomorrow. Among the solutions that topped the list were better benefits packages, employee engagement and networking. For today’s job seekers, a shop’s biggest selling point is the benefits it offers, and small shops especially need to ensure that their benefits packages can compete with what's offered at the shop down the street.
Networking and maintaining strong relationships with local trade schools and community colleges – helping them with curriculum development and offering internships to their students – can reap huge benefits in terms of workforce development. Shops should also be active on advisory boards and career centers as they strive to expose young individuals to manufacturing at a much earlier age. But most importantly, shops must do all they can to sell the excitement and rewards of manufacturing careers to parents and school guidance counselors as well as to the students themselves.
What also attracts new employees and keeps current workers engaged is a business strategy that invests in some type of new, alternative or different technology every four to five years. The key, according to the panelists, is to stay technologically current in the marketplace to keep pricing competitive and attract new customers. New machines and technology also give potential and existing employees the sense that your shop is dynamic, forward thinking and growing.
To hear more from the panelists, watch the Mazak DISCOVER 2021 Job Shop Panel discussion in its entirety at Mazak TV.