Do you have what it takes?
Executive Editor Derek Korn (far right) with representatives from 2016 Top Shops Winner Donson Machine
Top Shops: Providing Direction, Gaging Performance
Modern Machine Shop's Top Shops Program is more than just an honor—it’s a pathway to excellence. The annual benchmarking program is an opportunity to guide your shop’s improvement efforts and gage where you rank among industry-leading machining businesses. How might your business stack up?
From a Brand 90 Years in the Making. As we commemorate Modern Machine Shop’s 90th anniversary, we thought we’d celebrate one of the more recent initiatives we’re most proud of—the Modern Machine Shop Top Shops program.
Started in 2011, Top Shops is a benchmarking program that identifies the shopfloor practices and operational and business metrics that define world-class competitiveness in discrete parts manufacturing. Companies ranging from mom-and-pop shops to large, captive operations can compare their performance against leading businesses and consider what changes they might make to emulate those top performers.
Applied Engineering employees with the fully machined Top Shops logo.
Hundreds of shops respond to our annual survey and answer questions about different aspects of their businesses. The responses give us insight into the technologies, processes and tactics that leading companies use. We tally the responses to select questions and use the scores to determine the top 20 percent of shops, which we call the “Top Shops” benchmarking group.
Four shops are recognized in our Honors Program, one shop for each category the survey covers: Machining Technology, Shopfloor Practices, Business Strategies and Human Resources. These shops are vetted by Executive Editor Derek Korn and profiled in Modern Machine Shop magazine.
What's the deal with benchmarking?
A common goal for Top Shops' machining technology is reducing setups. An increasing number of Top Shops (32 percent in 2017 versus 19 percent in 2016) are using multifunction CNC Swiss-type lathes for this purpose. These machines can also reduce secondary operations and work-in-process to produce complete, complex parts.
In addition, more than half of Top Shops use horizontal machining centers, which are easier to automate, more productive and more efficient than the vertical machines that are more likely to be used by other shops. HMCs can increase spindle uptime thanks to a dual-pallet design that enables a new job to be set up on one pallet while machining is performed on the other pallet.
Top Shops are also more likely to use other equipment and strategies that reduce setups, including five-axis machines (which are often used for five-axis positioning instead of full contouring) and advanced operations such as hard milling, hard turning and high-speed machining.
Leading shops use tooling and workholding strategies that match their more advanced machines, like high-pressure coolant on five-axis machines and tombstones on horizontals. Quick-change devices, multiple-workpiece fixturing, vacuum chucks and unattended machining also help Top Shops maximize spindle utilization.
Sensing a trend. The percentage of Top Shops using additive manufacturing/3D printing equipment increased significantly. In 2017, 37 percent reported having this equipment compared to 19 percent the year before. Virtually all shops use this capability for prototyping, but 74 percent also 3D print their own tooling and fixturing.
The 2017 Top Shops honoree for machining technology is XL Machine.
What made the Three Rivers, Michigan shop stand out was its impressive lineup of more than 75 CNC machines, which includes HMCs, five-axis machines and a universal grinding machine. It uses this technology to manufacture prototypes, tooling, low- to medium-volume production runs and specialty production runs.
Many of the machines are equipped with additional features like touch probes, tool setting probes, quick-change fixturing, magnetic chucks, high-pressure through-tool coolant delivery and collision avoidance systems.
The shop says its success is the result of its ability to invest in new technologies, and that its capabilities help distinguish it from the competition.
What’s the next big thing for machine shops?
In this video from a panel discussion at the 2017 Top Shops Conference, honorees share which technologies have the biggest potential to impact machine shops.
Shopfloor Practices and Performance
Top Shops are doing more of what they’re getting paid to do: cutting metal.
In 2017, the number of Top Shops using enterprise resource planning (ERP) software increased significantly. In the past, it has ranged from 50 to 60 percent, but the number rose to 83 percent in 2017. ERP provides a number of benefits, including estimating production time/cost, job scheduling, in-process job tracking, logging each step in a part’s progress and offering a view of resources used on prior jobs, which can be helpful in planning new work.
The use of machine-tending robots among Top Shops steadily increased over the first three years we offered the survey, but has seemed to plateau in recent years. In 2017, 26 percent of Top Shops reported using robots.
Many shops start their lean manufacturing journey by implementing 5S workplace organization tactics. In 2017, 54 percent of Top Shops cited using this practice compared to 46 percent of other shops. Higher-performing shops also implement more lean initiatives, such as value-stream mapping and cellular manufacturing.
These tactics enable Top Shops to keep their machines running more than other shops.
Top Shops also turn jobs faster than other shops. Their order lead time (receipt of order to order delivery) is 20 days compared to 25 days for other shops, and they report having a higher on-time delivery rate of 95 versus 90 percent. Higher finished product first-pass quality yields also mean that Top Shops deliver faster than other shops.
Sensing a trend. In each of our seven surveys, a higher percentage of Top Shops reported having quality certifications, such as ISO, AS and NADCAP. This year was the highest report at 68 percent, compared to only 49 percent of other shops.
The 2017 Top Shops honoree for shopfloor practices is Richards Industries.
What sets the Cincinnati, Ohio industrial valve manufacturer apart are the lean strategies it has implemented, which improve flow and throughput.
The company is moving away from multitasking-type machines in some places and is instead creating lean cells with multiple machines to increase production.
Richards Industries is also in the early stages of implementing a machine monitoring system to track and record machine tool performance. Early results are encouraging: machine uptime has increased, a pallet-changing system is getting more usage, CNC programs are running more effectively and setups have been streamlined.
How do Top Shops deal with the “Big Brother” feeling that comes with machine monitoring?
Machine monitoring has huge potential to improve a shop, but it can be a struggle for employees to adjust to the feeling of being watched. Bill Metz touched on how Richards Industries addresses this at the 2017 Top Shops Conference.
Top Shops are rewarded
for their larger investments.
Top Shops consistently invest more in new equipment than other shops. In 2016, their median investment in capital equipment was $388,500 versus $150,000 for other shops. This investment in new technology is one reason why they achieved a higher growth rate of 9 percent than other shops at 1.5 percent.
Because of these investments, Top Shops were able to achieve higher sales per machine in 2017, reporting a median value of $300,000 versus $160,000 for other shops.
Top Shops also get more value out of their shop floor employees. In 2016, their median sales per employee was $180,000 compared to $141,000 for other shops.
Top Shops use their greater investments in people and equipment efficiently, creating new processes that improve their financial performance.
In every survey, Top Shops have reported a higher profit margin, which is the most significant indicator of overall business health. Top Shops reported a profit margin of 15 percent compared to 8 percent for other shops.
Sensing a trend. An increasing number of leading shops say social media is an effective sales and marketing tool. In 2017, 37 percent of Top Shops affirm this compared to 24 percent of other shops. The most common platforms include Facebook, LinkedIn and Twitter, with interest in Instagram growing.
The 2017 Top Shops honoree for business strategies is Land Sea Air Manufacturing.
What stood out about the Maryland contract shop was that it’s part of the Maryland Manufacturers Co-Op, a group of businesses from different industries that share customers, information, resources and technology. The co-op’s customers selection a preferred prime, and the other manufacturers form the supply chain.
The partnership lowers the total cost to customers and increases profitability for member companies, resulting in more than $2 million of additional revenue in 18 months for its member companies.
Cooperating with the Competition
Carl Livesay discusses how the Maryland Manufacturers Co-Op helps Land Sea Air Manufacturing work with its competitors at the 2017 Top Shops Conference.
Per the 2017 survey, although the hourly pay offered to shop floor employees by Top Shops and other shops has historically been similar, this year’s Top Shops pay a dollar more per hour for operators and setup personnel ($19) and $2 more per hour for CAM programmers ($28). That said, leading shops are more likely to offer other benefits to entice and retain good employees.
Show me the money. One benefit more commonly offered by Top Shops is a profit-sharing plan. Both companies and employees can benefit from these programs because they spur the workforce to improve efficiencies, thereby improving production rates and profits. Forty-five percent of Top Shops offered this in 2017, compared to 33 percent of other shops.
School is cool. In addition, 56 percent of Top Shops have developed formal, in-house training programs compared to 36 percent for other shops. In some cases a general shop training curriculum is adequate, but customization is necessary for shops with specialized machining and manufacturing processes. This type of training also standardizes processes, eliminating person-to-person variation in the way the tasks are performed.
Sensing a trend. The percentage of Top Shops offering educational reimbursements continues to increase. In 2016, 61 percent of Top Shops offered reimbursements. In 2017, it increased to 78 percent.
The 2017 Top Shops honoree for human resources is MRS Machining.
Part of what sets the Augusta, Wisconsin contract shop’s HR program apart is its work to recruit capable, qualified people to fill its ongoing need for new employees. MRS works with the local high school and technical college to improve skilled trades programs. It also gives annual tours of its shop to groups of students. These efforts have paid off: the average age of its shopfloor employees is 31, while the average years of experience is 9.
For its employees, MRS Machining offers in-house training and ongoing education, along with a range of benefits including a 401(k) plan, paid medical benefits, an apprenticeship program, a formal health and safety program, and a leadership and supervisor program.
How do Top Shops recruit employees?
This blog post outlines some of the creative tactics Matt Guse of MRS Machining uses to prospect new employees.
#Spoileralert: They involve football and eating cheeseburgers.
OK, so how can you become a Top Shop?
First, take the Top Shops survey.
Click here to be added to Modern Machine Shop's digital distribution list and be the first to know when the survey goes live.
The survey asks for equipment, process, human resource and financial information, and also includes a few open-ended questions. We do not ask for specific financial figures, such as gross sales or net income. Instead, we ask you to supply financial measures as percentages, including net income per gross sales, annual sales growth rate and capital equipment expenditure per gross sales. All survey responses remain confidential.
Then, get your customized report.
Whether you are selected as a Top Shop or not, all shops that complete the survey receive a custom report detailing how they rank against other participants.
We have worked closely with our company's Gardner Intelligence group to provide the additional value of custom reports that list and rank your individual responses to the survey’s quantitative questions against other applicable participants. The goal in developing these reports is not just to offer a baseline performance “report card” of sorts, but to help eliminate the need to rely on gut feelings as a method of identifying and prioritizing your shop’s improvement efforts.
The custom reports use scatter plots and box plots to visualize the data set distribution so you can quickly interpret the information. Your value for each question is shown with a red dot that indicates where your response falls in relation to the median, quartiles, and minimum and maximum response values. Your report also will show your overall rank in the survey and, based on your rank for individual questions, will highlight areas where your operation is performing strongly, where it’s on track/on par with others and where there are opportunities for improvement.
MMS Executive Editor Derek Korn moderates a panel on workforce development at the 2017 Top Shops Conference.
Attend the 2018 Top Shops Workshop
This year's workshop will take place Thursday, September 13, 2018 at IMTS – International Manufacturing Technology Show in Chicago.
The Top Shops Workshop will feature other manufacturing professionals sharing tips, tools and technologies they use to benchmark their own businesses, and provide you with information that can help you improve your operation.
The conference will cover topics including:
Advanced Machining Technology
Robots & Automation Data-Driven Manufacturing
Learn more and register at topshopsevent.com
Top Shops Honors Program
Presented by Julia Hider
Written by Derek Korn
Designed by Heather McClain Francis
Video by Austin Grogan
Directed by Kate Hand