Viewpoints: A Changing Business Model
In the machine-tool business and all its related technologies, customers make choices every day. They are bombarded by many competing messages and claims regarding product, service, support, commitment, and philosophy. There are also many new and continuing problems to solve: material prices, discount demands, the search for qualified employees and the related costs to keep them.
More than a decade ago, our company realized that while its machine-tool technology was advancing at a fast pace, some customers lacked the technical skills required to specify, purchase, implement, and support new, productive technologies. This situation was caused by a combination of factors including downsizing, lack of manufacturing educational opportunities, and fewer qualified workers entering the manufacturing workforce. In 1996, we responded by opening our National Technology Center in Kentucky for the purpose of collaborating with customers and qualified suppliers to develop competitive processes, and the organization has been evolving ever since.
The Technology Center concept has grown to include six centers in the US and Mexico, plus two new centers due to open this year in Hartford, CT and Cambridge, Ontario, Canada. A Technology Center is an opportunity to solve an array of customer manufacturing challenges. Each contains machine tools with the latest CNC controls, information technology, application engineers, and machine configurations. More importantly, every center is strategically located to be close to a particular industry and the manufacturers that serve it, such as aerospace in California, heavy equipment and construction in Chicago, and energy in Houston.
Having a Technology Center within a region also allows us to position field service technicians close to customers. Local field service management can form personal relationships with customers, while coordinating the entire effort electronically with our Kentucky headquarters.
In each Technology Center, we can study the customer’s parts, recommend a process strategy, bring in cutting tool experts to provide turnkey tooling, design part-holding fixtures, and prove the final result through computer simulations and final cutting of the part. Additional value-added services can include in-process or off-line gaging, automated material handling, and integration of robot-based machine tending and secondary operations like deburring. Customers can use any portion of our value-added services, or order a completely installed turnkey manufacturing cell. We can really say that the process of selling and servicing equipment has evolved into a more solutions-based model.
While applications engineering is a large service component that adds value, it shows up in many other ways as well. It used to be that manufacturers held an inventory of spare parts for the machine tools they employed—and had the trained maintenance personnel they needed to repair the machine. Naturally, customers resented paying to own and store these parts, so over time we developed a central parts operation that ships parts for any of our machines—97% of the parts orders are shipped on the same day. Recently we invested $2 million in a high-capacity, high-speed Automatic Storage and Retrieval System (AS/RS) to continue to improve the capacity—and reduce the lead time—of our repair part response.
On the maintenance front, many plants today have fewer qualified associates to keep equipment running. We’ve responded by developing strategic turnkey maintenance/repair services for larger plants that include performance guarantees on uptime to ensure machine spindle utilization. To satisfy the occasional need to move machinery within plants or between plants, we created a service that takes the responsibility for preparation, shipping, installation, and re-calibration of any of our machine tools.
Our business model and organization has changed. It’s no longer viable for us to be only sellers of machine tools. A more integrated solutions-based approach is required. And more change will come as we continue to adapt to the realities faced by our customers. Our company was founded as a manufacturing company, and our mission is to help customers around the world stay competitive. Providing value-added services allows us to understand our customers’ challenges in greater depth, and provide new technologies and solutions for the future.
This article was first published in the May 2006 edition of Manufacturing Engineering magazine.