As service centers take on more value-added processing, their operations are becoming considerably more complex. Software vendors offer a variety of products to help manage processing for maximum profitability.

By Tim Triplett,
Editor-in-Chief

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• Software Vendors

Over the past 10 years, fabricators and OEMs have outsourced more finishing and first-step manufacturing operations to service centers, who have responded by expanding their processing capabilities. During this same period, many service centers have grown into much larger companies with multiple facilities.

With this growth in both operational complexity and size, many service centers are finding that their existing information systems do not provide the support they need for scheduling, control and costing of processing services.

Leading software vendors report a new wave of technology investment by the service center industry, driven partly by recent industry prosperity, but also by the realization that companies need a better handle on their true costs to ensure their profitability.

Vendors estimate that 80 to 90 percent of scheduling and costing in the service center market is still done manually on paper. “Generally speaking, the steel industry is lacking in keeping up with technology and utilizing the tools that are out there,” says George Walton, president and CEO of 4GL Solutions Ltd., Markham, Ontario. 4GL markets its Steel Manager III MRP system primarily to steel plate processors.

“In the service center industry, internal costing didn’t used to be that big a deal because there was plenty of margin in the resale of the material. Now that a lot of companies, particularly in the automotive industry, have instituted master coil programs [where the end-user buys mill direct], the service center is basically the processing arm,” says Doug Baldwin, president of Integrated Steel Management Inc., Mississauga, Ontario, which offers the Steel Service Center Manager enterprise system.

Service centers traditionally have just used standard costs for processing, based on weight and grade. “For years, many of these companies treated the processing side as a service, while they focused on making money off the buying and selling of steel. That is changing. Services have become a major profit center,” says Tim Holman, director of sales and customer relations at Bayern Software, Phoenix, Ariz., which recently introduced a new Steel Plus Labor Tracking program.

Though there are differences in each company’s approach, the 10 software vendors interviewed by Metal Center News all seem to share a fairly common vision of how service center systems should work.

Deep inside each program is a set of algorithms that calculates a job’s cost based on a set of user-defined variables. When a salesperson is taking an order and keys in the customer specifications, the system quickly generates a quote that covers the service center’s costs and desired margin.

Some systems even identify the best piece of material in inventory for the job based on its dimensions, as well as the most appropriate piece of equipment for the task, be it slitting, sawing or burning.

Axis Computer Systems Inc., Marlborough, Mass., claims the new “Dynamic Order Fulfillment” capability in its Axiom software streamlines order processing and product management by automatically generating sales order and work order details based on the specific attributes (such as grade, specification, size, shape, finishing, etc.) of an ordered product without requiring individual pre-defined product codes, process routings, pricing or descriptions for every possible variation.

Ron Greco, director of sales at Axis, says an entire family of products or processing capabilities can be programmed with DOF using a combination of user-defined tables, templates and rules that represent the company’s capabilities and knowledge in a manner that is natural and easy to understand.

The hallmark of the latest generation of processing systems is a computer interface on the shop floor. With a simple touch screen near each work center, machine operators can view the list of jobs awaiting them, immediately see any scheduling changes made during the course of the day, and provide feedback on each job as it progresses down the line.

The growth of wireless technology has made it cheaper and easier to install portable workstations on the shop floor, notes Brian David, president of Compusource Corp., La Palma, Calif. Compusource offers the Metal Center Management System.

“It’s the nature of the service center business that priorities change all the time. Trying to communicate that to the operators gets very complicated if you are doing it the manual way,” says Peter Doucet, vice president of consulting at Invera Corp., Newtown Square, Pa., which offers the Stratix system. “[Using Stratix], if the scheduler determines one order is hotter than another, he switches it online and the operators can see the change on their screen immediately. The scheduler is able to communicate with the shop floor people in a more real-time fashion on the sequence of the jobs.”

There are two components to the costing of processing jobs, Doucet continues. The system needs to be able to estimate the cost of a job so sales can quote the right price, and it needs to track the actual costs of production to compare back to the original quote.

To quote a plate burning job, for example, most systems needs to recognize how many lineal inches must be cut, how many pierces will be needed for multiple cutouts, which machine must be used and its speed, etc. In the background, the system factors in all these variables, multiples the processing time by an hourly rate—added to the cost of the material and the desired profit margin—to produce the sales quote.

On the production side, using a shop floor workstation, the machine operator keys in the start time and end time of each job, and the system records the actual processing time. Comparing the estimate to the actual for any variances allows the service center to adjust its rates and quotes.

Most systems allow service center management to customize the rules that make up the formula for tracking processing time. The potential variables can range from a handful to hundreds.

A system might even be set up to factor in the number of teeth and the sharpness of a saw blade, which affects the speed of a saw. But software experts warn against making a system unnecessarily complex.

Some systems have built-in logic to help determine which material in inventory is best suited for a particular order. For example, ERP-Plus software from Verticent, Tampa, Fla., includes a “metals optimizer” that compares a sales order to the dimensions of material in inventory and recommends which piece to use to get the best yield. The optimizer tells the operator how to lay out multiple orders on the sheet to produce the least scrap.

“We actually schedule the utilization of the inventory as well as the utilization of the equipment to optimize both plant capacity and raw materials,” says Todd Ouellette, industry manager at Verticent.

The QE system (for Quote Everything) from FastCAM USA in Chicago is designed for users specializing in heavy plate fabrication, structural steel fabrication and plate processing. It also shows the best way to nest linear construction components, as well as plate, to optimize the cutting of the material with the least amount of waste.

“A processor who puts a large sheet of thick plate on a burner wants to be able to nest as many jobs as possible so he has less handling of material that must be returned to stock,” says Mark Fagan, international sales manager at FastCAM.

Tracking of remnants returned to stock has always been problematic for service centers. Various software products handle remnants in various ways.

“Many companies lose the remnant; they don’t even know it exists after it is returned to stock,” says Ouellette. Verticent’s system forecasts each remnant so that the sales department knows the remnant will be created even before the product has been cut. That way salespeople can sell the remnants even as they are being created, Ouellette says.

Remnants that go back into stock don’t retain their original value because their use is limited. Some systems help devalue that remnant and charge the difference to the cost of the job that made it, says Doug Nation, president of Business Automation Inc., China Grove, N.C., which offers the Metal-Pro system. “So the finished good that goes out the door does not just carry the material and inbound freight cost, it has the processing cost, plus the scrap cost, plus the devalue of leftover material.”

Similarly, Verticent’s system offers “down-costing” of remnants for inventory valuation purposes, because there is less probability that a remnant will be sold soon, and it may have to be discounted to move it off the shelf. “The original piece might have cost 40 cents a pound, but the remnant goes back into inventory at 20 cents a pound. That other 20 cents has been down-costed against the finished goods that were produced. Writing down the value of remnants as they are produced gives the service center a more accurate picture of the value of its inventory at any point in time,” Ouellette explains.

No system claims to take the place of the human being responsible for scheduling all the processing jobs, but they all provide better information so the scheduler can make more informed decisions. The scheduler may direct a job to a specific machine because of its current setup, the tolerance required by the customer, or even the experience and talent of the operator. The scheduler may organize jobs by width, length, gauge, customer type, ship date or carrier. All such information is easily retrievable from most software products.

While these systems help schedule jobs most efficiently and work in the background to gather cost information, they are equally valuable from a customer service standpoint, software vendors emphasize.

“The big beef you get from the salespeople is that they have no idea when their order will get cut,” Ouellette says. “They tell customers it will ship in the next 24 hours, but from the time they print out the work order and give it to the scheduling department, it’s a hope and a prayer.”

With computer screens in both the sales office and on the shop floor, orders don’t just disappear into a black hole. If the scheduler moves a rush job to the top of the sequence, the machine operator sees he should tackle it next, and the sales order is automatically updated with the new completion date. Any time the phone rings, the salesperson can click on an order and see its progress, responding to customer inquiries immediately.

Some software programs are designed to handle processing jobs that require multiple steps. “If a part must be flame cut from plate, then beveled, before packing and shipment, you don’t want a two-day gap between when the job comes off the flame cutter and can be scheduled on the beveler,” notes Walton at 4GL.

Different systems have different reporting capabilities. Most can generate reports customized by job type, by machine, by shift, even by operator to help management identify the source of bottlenecks. If a report reveals a substantial variance between the time estimated for a job, and the actual time it took to complete, the plant manager can communicate with the operator to identify the holdup. Did the machine break down or was it the operator who took too many breaks?

Baldwin recalls one ISMI customer who discovered that his night shift was much more efficient than his day shift. Did that mean the night crew worked harder? No, the data showed that the night workers didn’t have to wait as long for crane time. During the day, the cranes are used both for outbound shipments and moving material to and from the processing lines. Since orders are not shipped out at night, management found it more efficient to handle the many short-run jobs at night and leave the longer runs for the daytime when the cranes do double duty.

Recognizing that an employee may work on multiple jobs at the same time, Bayern’s Steel Plus Labor Tracking system will allocate the loaded labor rate proportionally across all the orders, Horton notes.

Software vendors make use of bar-code technology to varying degrees. Enmark Inc., Ann Arbor, Mich., is a big proponent of bar-coding.

Enmark’s Pro-Flo (for Production Flow) module, which works in conjunction with its Command Center and Eniteo enterprise systems, uses bar codes to track work in process on the shop floor, explains Jerry Krivda, manager of customer support.

Pro-Flo produces bar-code labels, which are applied to the individual mults as they come off the slitter. As they move down to the packaging line for shipment, workers scan and weigh the mults, creating the finished goods information that feeds back to the system. The system applies a standard cost to the processed material when the work order is finished and the master tag is scanned, making adjustments for scrap loss and remnants put back into stock. This provides real-time production updates for customer service reps and eliminates a lot of redundancy and inaccuracy, Krivda says.

Surprisingly, workers on the shop floor are usually the first to embrace such new technology. Most resistance often comes from the sales office. “It’s the inside salespeople who have been using their old green screen software for 10 or 15 years who don’t want to change,” observes one vendor. “They don’t understand what they are missing.”