The fabricated metals industry operates with a low margin in a highly competitive market and material availability, production schedules and workforce skills must align to meet customer expectations. The consequences of global supply chain disruption, labor shortages, rising costs, regional instabilities and general uncertainty continue to challenge the fabricated metal and manufacturing industry in general.
The shift from oversupply to the current worldwide shortage has impacted raw materials, inbound logistics, the factory floor, and the outbound warehouse. SYSPRO research revealed that 82% of fabricated metal businesses have experienced supply chain and material handling disruptions, further eating into diminishing margins. Facing these challenges only 12% of businesses had systems that provided external collaboration support and 18% had systems that assisted in product design and order configuration.
With the volatile markets, offshore price cutting and increasing customer demands for quality, speed and customization, metal fabricators have had to become more innovative and adopt technology solutions to maintain competitive advantage. This blog looks at some of the challenges facing the fabricated metal industry and solutions to assist manufacturers to adapt to market demands and continue to thrive:
1. Challenge: The supply of raw materials and achieving optimum inventory levels
With costs of raw materials at a premium and deliveries sometimes out weeks due to supply chain disruptions, this poses a major problem for fabricators and their customers. The industry is regulated by the London Metals Exchange which is the centre for the trading of industrial materials, and this impacts pricing of metals worldwide. The industry has also relied on Asia, as China is the mass producer of steel, however dealing with agents who subcontract to multiple suppliers has led to inconsistencies in quality and cost. Without the proper procurement, receipt and storage of the materials needed to carry out the business activity it is impossible for the metal fabricator to begin the manufacturing process or market its products.
Solution: End-to-end supply chain visibility
The shifts in supply and demand mean manufacturers need to become adept in mitigating the financial risks associated with raw materials pricing in terms of their volatility. Investing in an ERP solution will assist fabricated metal manufacturers with end-to-end visibility across the supply chain. This enables you to fulfill current and forecasted order schedules as you will be notified by the ERP system when you are running low on stock and of the material prices increases across multiple sites and locations. The collaboration with suppliers, customers and markets on a single interface will give you a proper understanding of raw material delays, inbound costs and ensure accurate quoting and estimation.
2. Challenge: Meeting unique customer requirements
One of the most unique challenges facing fabricated metal manufacturers is the need to accommodate different customer preferences. For example, a custom manufacturer may need a metal fabrication supplier to take on a design-to-order project. This means the fabricator needs to have a flexible process that allows for accurate cost estimates and frequent changes to design – often right in the middle of production. The business needs to be able to handle complex customer requests as efficiently and effectively as possible to stay ahead of competition.
Solution: Custom capabilities
Within your ERP system product configurator tools can be used to maximize customer service and operational efficiency. The fabricator can differentiate their product offerings through the customization of the product to meet unique customer expectations. An ERP system built for metal fabricators should provide the ability to integrate data from a CAD system with the rest of the production process like scheduling and Bill of Materials (BOM). An ERP system that is in sync with CAD software can instantly take design changes as seen in CAD drawing and translate them across the entire process making it easy to get accurate cost estimates for quotes, procure the necessary materials and schedule production. This removes the time-consuming and sometimes inefficient need for metal fabricators to interpret and assess the viability of the customer’s request and produce a product specification, thereby accelerating the design process.
3. Challenge: Skills gap on the factory floor
The metal fabrication industry faces challenges in finding and keeping qualified welders, finishers, and assemblers. The technique for performing the tasks requires extensive skills and training. Highly efficient workers enable the industry to produce the highest possible volumes of their product without reducing quality and optimizing time, money, and materials.
Solution: Technology investments and long-term skills training programmes
ERP software can be used to monitor labor efficiencies to avoid bottlenecks and ensure maximum output. For example, MOM (Manufacturing Operations Management) within your ERP system can be used for viewing end-to-end manufacturing processes like quality, labor and machine productivity. This is used to monitor the allocation of resources and adjust the workload to meet production demands.
To address the skills challenge metal fabrication companies should implement extensive training and development programmes. Investing in technology solutions like ERP is an expensive exercise and by not investing resources into training and education, manufacturers will not obtain the return on investment.
It is vital for fabricators to understand that to optimize plant production in order to mass-produce customized parts without increasing costs and boosting productivity they should consider investing in the right emerging technologies to stay ahead in this increasingly competitive market.