The metal fabrication industry has faced a great deal of changes over the past 15 years, pressuring organizations to modernize everything from their back-office IT systems to the equipment on the shop floor. This has combined with growing domestic competition as more projects are moved overseas, leaving North American fabricators to fight over a smaller base of prospective clients. As the industry has moved to focus on low-cost providers, fabricators find themselves needing to reduce expenses without sacrificing quality, particularly after the economic downturn of 2008 put an emphasis on eliminating waste and maximizing efficiency.
These factors add up to create an operational climate in which the inefficiencies and technological limitations of years past cannot be tolerated in the metal fabrication sector. If fabricators want to keep up with the competition, they must find ways to work faster and at lower costs without letting quality slip. Achieving this goal is possible, and it begins by taking a close look at overarching business strategies.
Know thyself: Success begins with self-awareness
Metal fabricators need to get lean, and doing so begins with a careful analysis process in which an organization intentionally assesses its core business strategies. This self-evaluation should leave you with some ideas of how you need to improve as an organization. A few questions fabricators should ask themselves include:
Who are our customers?
Bringing in new customers is expensive and significant effort is needed to target the right markets when expanding sales efforts. Furthermore, focusing on the core requirements and needs of existing clients makes it much easier to create a customer-centric experience.
Understanding who your customers are helps you improve existing relationships and maximize the value of your sales efforts.
Within the process of analyzing your customer base, you should also work to identify which of your customers are genuinely profitable and if you have an opportunity to expand to new markets to reach a wider base of prospective clients.
How can you reduce costs without sacrificing quality?
This is a big question, but it is vital to take a close look at your operations and identify unnecessary costs. The key here is to not go crazy and just slash expenses wherever you can. Instead, you must focus on business stability and product quality.
Think about your core values as an organization and the type of work environment you want to create. You should also consider the customer experience. With these issues as your lens, analyze your capabilities and look for opportunities to cut expenses. You may have technological limitations that are creating unwieldy processes or waste in the supply chain, for example. These sorts of issues can be addressed through strategic investments that drive value creation and help you maintain, or even improve, product quality.
Is your product line getting the job done?
Products that aren't making you money can quickly end up sucking profits away from your business. Similarly, items that aren't generating interest from customers just sit in the background, not getting produced but taking up space within your internal systems and processes. Trimming the fat from your metal fabrication business is easier when you don't have unnecessary products messing up your workflows.
How do you stand out from competitors?
You won't be able to stand out from competitors if there is nothing unique about your business. Location isn't enough to set you apart either, as an increasingly digital world makes it easier for organizations to work with geographically diverse suppliers. As such, you need to look at what makes you special - do you have the best experts working on the shop floor or a streamlined supply network?
Do you have what you need to meet operational demands?
Technology and skills are central to your ability to meet customer demands. You need to understand what assets you have and which you need to invest in to ensure your business is capable of keeping pace with industry requirements.
Answering these questions gives you a starting point as you work to identify what your organization needs to keep up with an increasingly challenging market.
Emerging challenges in the metal fabrication sector
Understanding how your business functions is the first step in establishing a sustainable model for success. From there, you can look closely at the challenges emerging in the industry and identify how you need to change to keep up with customer demands. Some of the major issues facing metal fabricators are:
- Rigorous regulatory compliance standards from both government bodies and customers.
- Fluctuations in commodity pricing.
- Shifting customer expectations for price and quality.
- Legacy IT hardware and software that limits business agility.
- A need to provide more precise estimates to customers.
- Demand for new skills in the workforce as emerging technologies take hold in the sector.
- Outdated shop equipment.
These challenges may be daunting, but the industry is changing to keep up.
Information technology is playing a growing role in the metal fabrication sector.
Technology plays central role in overcoming metal fabrication industry challenges
You won't find a silver bullet to solve all of your operational woes, but the right technologies are emerging to help metal fabricators stay ahead in an increasingly competitive market. Generally speaking, these advances come in two forms:
OT is loosely defined as technology systems that are unique to an industry's specific operational demands. In metal fabrication, this means your core machinery. Solutions that cut with greater precision and reduce waste are becoming popular across the sector. Tools that drive efficiency through new techniques are also rising, allowing fewer workers to get more done.
OT systems may be expensive, but they can drive long-term value creation. However, they won't help if your processes aren't optimized around their capabilities. This is where IT comes into play.
IT systems can gather data from throughout your organization and house them in secure systems where they can be accessed by different types of applications and support all of your workflows. In particular, enterprise resource planning systems are gaining momentum as an invaluable all-purpose tool for metal fabricators. ERP software features modules that cover different parts of your business. As elements like customer relationship management, business intelligence and others are interconnected in the ERP platform, they can share data in real time to drive productivity improvements and efficiency gains.
OT advances are laying the foundation for major gains in the metal fabrication sector, and IT solutions like ERP provide a layer of data-driven intelligence that organizations need to get the most out of their investments. When combined, these advances can give fabricators greater insights into how they operate and more flexibility to stay ahead in a changing industry.