A solid reputation, however, is no insulation from the market pressures that every A & D supplier faces: find ways to deliver shorter lead times, lower prices and maintain top quality. Cognizant of what will be required to remain competitive, NOW-Tech staked its future on a $1 million investment in a Makino modular machining center.

"In today’s environment, every customer of ours and every customer of theirs is being driven to reduce their prices," said company President Paul Nowicki. "If you can’t make it for less, someone else will, so there is a lot of pressure on the supply chain. That’s how we justified committing 17 percent of annual revenues to this new solution. It’s a matter of survival."

"With conventional machining systems, there’s no way to beat the escalating time-to-market challenges. Utilizing the standard job shop procedures meant that orders were often started late, new tooling wasn’t always ready on time, setups often took too long and overall machine utilization was too low in spite of a large backlog of orders. And it was difficult to reduce costs and lower prices on typically erratic job-shop orders," Nowicki said.

NOW-Tech’s challenge was that it had been operating two types of machining businesses. One was specialty manual shop services, where highly skilled machinists and model makers produced low-volume parts. The other was CNC job shop services, where complex CNC machining and turning centers were available to run a random sequence of low- to medium-volume jobs which could be repeated every several months.

The problem with specialty manual shop services is that the growth potential is limited. And because of the random nature of the job sequences and mixes in the CNC job shop services, very little dedicated tooling and fixturing can be justified.

Time for a Change

So in order to deliver what customers wanted—shorter lead times, on-time delivery, top quality and lower prices—NOW-Tech determined that it must adopt a new approach to the machining services business.

In his search for that new approach, Nowicki said that his first impression of a modular machining center was that it was more applicable for the automotive industry than an aerospace and defense job shop. "I thought it was too much money and for high-volume production," he said.

But a visit to NOW-Tech by Rich Wills, then chairman of the National Tooling & Machine Association, proved to be instructive. "He was really espousing the benefits of a linear line," Nowicki said. "The more we listened to him and talked about the benefits, we started to see that this may be a good way to go. In looking at what customers want—shorter lead times, lower prices—we analyzed the opportunity of how to accomplish that, which went along lines of families of parts."

By grouping various parts into "technology families" with similar production processes, fixturing and tooling, a completely different approach to machining is possible. That is, utilizing a CNC-based semi-repetitive flow cell rather than the typical job shop functional arrangement of machines. In a flow cell, parts move in a fixed route between dedicated machines, with dedicated tools, fixtures and well-documented procedures for each operation and part. Operators work as a team with well-defined task assignments, but they are also cross-trained to be able to fill in and balance the workload. Single-part flow between operations is possible.

During its research, NOW-Tech management became thoroughly convinced that a modular machining center was the right choice in its strategy to meet market demands, Nowicki said.

With annual revenues at $6 million, NOW-Tech decided that the potential return on investment warranted spending nearly $1 million for a flow cell consisting of two Makino A55 high-speed horizontal machining centers linked by a Makino linear pallet management system. This cell includes 12 pallet stocker stations and two work-setting stations where parts are loaded, unloaded and inspected.

"We have configured each A55 to hold 128 different dedicated tools," Nowicki said. "This provides dedicated tooling for many part families, and it essentially eliminates setup times between parts."

"Even though the flow-cell concept was a big investment for a small shop—about 18 percent of revenues—it was the only way to go," he said. "This was the only approach that would allow us to provide customers with shorter lead times at competitive prices."

Payback on a Big Investment

"When we made the decision that the investment was justified, we really didn’t have any work committed to the cell," Nowicki said. "We made this decision as a strategic move and had enough confidence that we knew we would win work with this concept."

"We had bid on a multi-year contract, but we didn’t know if we had won any of it," he said. "About a month before delivery we found out we had won a portion of it. That was somewhat of a risk, but we felt strongly that this was the way to go."

"The two A55s were delivered two weeks apart, just a few weeks after NOW-Tech’s purchase decision. The entire line was turned on and ready to go in one month, which is phenomenal," Nowicki said. "Some people expressed skepticism about a smooth and quick installation," he said, "but we were making parts really quick. It was a collaborative effort with Makino and our maintenance department. The installation was a real positive for us."

"NOW-Tech’s return on investment is well under way. "The flow cell has allowed us to win a couple of long-term contracts," Nowicki said. "We’ll probably ship $600,000 to $800,000 in revenue a year off that investment."

Cutting Lead Times and Prices

Having a dedicated cell producing similar products has made it possible for NOW-Tech to cut lead time from eight weeks to 10 days.

The key, of course, to accomplishing such dramatic improvements in lead time is the elimination of setup time. "In a typical job shop, with each job you have to do a setup," Nowicki said. "So you have to tear it down, put the new fixtures on, requalify everything and start producing parts. Every time you do a setup, that’s non-value added work. So by having a cell, you don’t have to do setups. Once you set it up on the machine you leave the tooling and fixturing resident in the machine. Since setup is always a big part of the product cost and it’s non-value added, if you can eliminate that you can reduce your cost."

"Depending on the complexity of the part, setup used to take from six to eight hours," he said. "We’ve taken it down to zero. The fact that I have zero setup time, because I can dedicate tooling and leave the jobs set up, means that I have ultimate flexibility."

"Different part numbers can be loaded on different faces of pallet tombstones and can be processed in any sequence under the control of a distributed system management center. Work schedules and priorities can be modified by the lead cell operator directly from theconsole in response to requests from customers. As a result, this means that two parts can be produced as cheaply as 10 because there is no setup time."

"This has reduced our customers’ costs 15 to 25 percent," Nowicki said. "Everybody’s winning. So that’s another way to justify the investment: we get more volume, and as the volume goes up, the amortization and fixed costs go down."

"If you didn’t know all this you might look at it as pretty risky, but once you see the benefits you see how it pays off."

Winning More Work

"This flow cell tends to separate us, because when you look at the competition, there aren’t a lot of job shops that have these," Nowicki said. "One of our current customers, who awarded part of a contract to someone else, has come back to us and said, ‘In the near future you’ll probably get the balance of the contract.’"

"As the cell heads toward capacity, it will become NOW-Tech’s most productive machining center by a substantial margin," he said. And it is a key element in NOW-Tech’s strategy of meeting the future’s increasingly tough demands.

"If we can show our customers that we can give them what they want, then better yet, they will work with us on other projects," Nowicki said. "If I can convince them that I am the supplier that they want to keep, that we can figure out how to do it, then we’ll continue to grow our business."

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