Spencer Dick, founder and president of TigerStop, discusses managing material use with optimization software

January 2012 - FFJournal: How can companies better manage their inventories and material use?

Dick: Fabricators and manufacturers have customers who want to lighten their inventories. Instead of cutting four sizes in large quantities, many are cutting 50 different-size pieces in small quantities. The utility of the material needs to be maximized to fit such rapidly changing orders. Optimization software is a solution for this type of dynamic environment.

Many companies do not realize a lot of the material they buy comes with defects. Damages are common with material in an industrial environment. But dynamic optimization software will allow companies to enter the defect or unusable area and then cut around it and still achieve the best utility possible. Instead of sending the entire piece back to the supplier, the manufacturer is sending back only a small section. This eliminates handling errors, labor and shipping costs. Many suppliers like this process because it removes the hassle of regrinding or scrapping material.

Optimization and lean manufacturing can be used by anyone from those making U.S. military vessels to gate builders who are welding and fabricating. We’ve been involved with optimization software for 16 years, and we’ve been using it mostly for customers who have defects in material. But companies can retrofit an optimization system to almost any existing cut-off equipment, which broadens the customer base.

The software has the ability to eliminate setting stops, miscuts and rework. Most systems also can print user-configurable labels that can contain pertinent job information such as the length of the part, the job number and the profile. This then gets the right parts to the right people on the plant floor.

Q: What benefits could a facility achieve by evaluating its usable stock?

Optimization software was created to help companies maximize their material utility and save time and material by calculating the maximum yield of useable stock. Many companies are realizing the benefits of lean manufacturing.

I was in a plant one day and I looked down and saw a lot of dumpsters on the plant floor. I was watching a cutting operation. He was throwing a lot of waste in those dumpsters. When I talked to the plant manager, we figured out he wasn’t getting as much money back on his recycled material as he thought he was. He was buying material by the foot but selling it back by the pound, a system many don’t realize can be very costly for a business. While he was making $40,000 on his scrap, he was actually throwing away in excess of $100,000 of material.

With the right optimization software, he would be able to reduce his scrap by one-third to one-half. When we ran the numbers, the plant manager realized he was throwing away a dollar to make 30 cents. By doing the conversion and looking at what the plant manager had paid for all that material, it made him look at the scrap bin as a real cost, not a profit center.

Q: Why should a company invest in optimization software?

Well-integrated optimization systems coupled with lean manufacturing can provide companies with a tremendous opportunity. Companies can achieve savings in raw materials and also can improve labor costs, increase capacity and reduce rework. Companies also can take variation out of the process and change setups rapidly with highly flexible, smaller equipment.

All of this amounts to a fast return on investment. The downside is the initial set up of the equipment: Linking bills of materials to the system and training the operator will require more time than continuing to use existing methods. Designating one individual to see a project through is essential to the successful implementation of optimization on the plant floor. But once implemented properly with trained operators, cut-off optimization can be a powerful tool in a competitive environment. FFJ

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