Customer input influences metal manufacturer’s growth

Figure 1: Artisan Industries Inc. didn’t jump into laser cutting right away when the company was founded 15 years ago. However, once a customer prompted it to consider laser cutting parts, the company has been an avid user of the cutting technology, particularly as it tackled thicker fabricating jobs in later years.

“Why do customers buy from you and not someone else?” That’s a question that industry consultant Dick Kallage posed in his May 2013 Improvement Insights column. The answer is important for all fabricators because it provides them with a vision for what they are and can be. Business goals, sales and marketing efforts, and shop floor improvement plans all can be influenced by the answer to that very simple question.

When asked that question, Jeff Berkes, president, Artisan Industries Inc., Streetsboro, Ohio, gave it some thought and responded that in some ways the company’s approach to customer relationship management hasn’t changed much from the early days when he and his two partners founded the company 15 years ago. Customer responsiveness has grown more important over the past several years.

“It’s listening to our customers and being able to support them in their value stream and being able to change as their demands change,” Berkes said.

It sounds like a simple strategy, but execution of it requires faith in the customer’s business plan and the financial wherewithal to invest in manufacturing technology and talent. Berkes admitted that it hasn’t always been a smooth ride as the company reached peak revenue earnings of $30 million in the late 2000s with the help of plenty of defense-related work, diversified the company business after the reduction in military jobs, added a third manufacturing location in Florida, and grew its workforce to about 100 employees. But Artisan’s commitment to the customer has served it well. Listen to the story.

Laser-like Focus

Growing up, Berkes really had no interest being in the metal manufacturing business. He went to school with the intent of studying architecture with the future goal of getting into property development.

But plans have a way of changing much like anything else. So when Berkes had an opportunity to step into the metal manufacturing industry, that’s what he did.

He went to work for his father, Jim Berkes, and some other partners in 1993 as a plant manager of a 15,000-sq.-ft. facility in the Cleveland area that was set up to make retractable cargo restraint systems. Jim Berkes, who also was running his own stamping operation, Artisan Tool and Die, developed the restraint system at the request of an automotive customer that was interested in cutting down the waste associated with shipping. The cargo restraint system, still made by Artisan today, can be used repeatedly, unlike boxes or shrink wrap.

The new manufacturing endeavor was much like Jim Berkes’ metal forming operation. Unlike other area stampers, Artisan Tool and Die didn’t just bang out thousands of washers a day. The company concentrated on the tougher jobs, such as deep drawing, that the larger houses in the Cleveland area showed no interest in doing. The shop was set up to tackle those more difficult metal forming challenges, employing 10 journeyman toolmakers and supplementing the ranks with a formal apprenticeship program. It was a problem solver.

Jeff Berkes may have lacked the formal metal manufacturing experience of his dad, but he had a similar desire to solve problems. That led him to follow up his interest in the latest CNC technology of the time. What if the new company were able to produce parts without the need to develop tooling for a stamping press?

Berkes said he had seen the emergence of laser cutting technology as a major disruption to the traditional way of metal manufacturing. Tradition dictated that new projects required tooling, failure mode analysis, production of samples, prototype tweaking, and ultimately commencement of production parts six months later. The laser cutting method required a CAD file that could be translated into an NC program to cut the part, and that scenario could play out in a matter of minutes, with production and delivery of parts following soon thereafter. He saw the technology as a game-changer.

Figure 2: Artisan currently runs two shifts at its Streetsboro, Ohio, facility. An automated material storage and retrieval tower connected to its new Mitsubishi eX series laser cutting machines allows it to run an unattended third shift when needed. It also has an older tower attached to two LV series laser cutting machines that allows for similar unattended processing.

This new manufacturing endeavor set up to make retractable cargo restraint systems was about to be unrestrained by traditional technology. It needed laser cutting technology.

Berkes reached out to nearby fabricating companies to ask for their opinion on laser cutting, and he was invited into their shops. In both shops he saw Mitsubishi laser cutting equipment.

Shortly thereafter he headed to Chicago to the Mitsubishi showroom, where he enrolled in Laser Cutting 101. He was the first company representative to bask under the laser light.

“I was fired up about being exposed to CNC technology as opposed to going down the path of toolmaking and stamping,” he said.

The company purchased the first of what would eventually be a dozen laser cutting machines (see Figure 1) from Mitsubishi. That first laser, however, stayed with the company when the Berkes family and another partner left to form Artisan Industries in 1998.

Artisan purchased new Mitsubishi laser cutting equipment and began competing with the company it left behind. It not only had the luxury of the restraining belt product line to act as a solid foundation for the new manufacturing entity, but it also had a very large customer that stayed with them even as they formed a new business.

This Tier 1 supplier to Caterpillar had approached Artisan management—while they were at the other company—to gauge its interest in laser cutting engine gaskets. Previously these parts might have been stamped, but this Tier 1 supplier knew that having a supply chain partner that could respond to changes in part design without the worry of developing new tooling was a valuable asset.

Berkes said that Artisan became one of the first area fabricators at that time to laser-cut these types of parts. The engine gasket blanks were cut on the lasers, and then the blanks were fed to the stamping presses to complete high-tolerance secondary operations. The investment in laser cutting technology was paying for itself right from the start.

Today Artisan Industries has two 4.5-kW eX CO2 cutting machines attached to a 16-shelf raw material storage tower (see Figure 2), with room to add another CO2 or fiber laser, if necessary. A stand-alone 6-kW NX laser cutting machine is located strategically in the 75,000-sq.-ft. facility so that two more lasers and a tower can be added to it within the current shop floor layout should business continue to grow. The shop also has another automated setup in which a 9-year-old tower feeds two 3.5-kW LV series lasers.

“When we put in the three new Mitsubishi laser cutting machines, we took five centers offline, and now we are doing more work with three work centers,” Berkes said.

Figure 3: With the transition from five-day to daily production schedules, shop floor employees have been able to focus on completing the day’s work, not trying to squeeze in work scheduled for later in the week. This allows them to accommodate unscheduled jobs that inevitably work their way into the week’s production schedule.

Artisan also happens to still be cutting parts for that Tier 1 supplier to Caterpillar as well. That customer’s request for laser-cut parts has proven to be a profitable move for the fabricator.

Armoring Up

For Artisan, the laser cutting business grew slowly over the years with the addition of automated storage and retrieval towers and modern equipment. That type of growth is more manageable and doesn’t overly stress a workforce. Unfortunately, all new opportunities aren’t chosen; sometimes they just show up on the doorstep.

In the late 2000s, as metal fabricators across the U.S. were cutting armor plate for U.S. military vehicles being shipped to Iraq and Afghanistan, Artisan received an invitation to contribute to the cause. A northern Ohio fabricator went out of business, and Artisan officials became aware of the financial failure. The armored vehicle manufacturer that had relied on that defunct fabricator was looking for a company to step in and fill that gap, which Artisan ultimately did. It absorbed the business and several employees from the closed northern Ohio fabricator into its Streetsboro shop and 65,000-sq.-ft. Cuyahoga Heights, Ohio, stamping facility. (Artisan Industries added stamping expertise in 2006 when it purchased Jim Berkes’ Artisan Tool and Die.)

“We were pumping armor for a couple of years straight,” Berkes said. “Forming, warming, cutting, finishing, and machining it. That was our insulation [from the last economic downturn].

“The only reason we were able to do that was that the customer had confidence, we had capacity, of course, and we had the financial wherewithal to go out and secure the materials and deliver the products,” he added.

Being there to take on the new defense-related business proved to be a financial windfall for Artisan as it posted record revenues in 2008-2010. During this time, the fabricator really had a chance to cut its teeth as a fabricator of thick materials. Even today a majority of the metal thicknesses processed at the Streetsboro facility are from 0.25 in. to 1 in. But that customer commitment came with risk, too, because during that time defense work represented as much as 85 percent of Artisan’s fabricating business. Just like in any business, sometimes a shop can be too closely linked with one company or industrial segment, and any sort of downturn can be detrimental to all because there is no diversified customer base to act as a counterbalance.

Since then Artisan has been able to develop new jobs in industries outside of defense. Today defense represents only 5 percent of the fabricator’s overall business.

“We were fortunate when things got tough for many because we were very strong in our business, and our model allowed us to move to the commercial side to the defense side and back to the commercial side,” Berkes said. “We were blessed.”

Expanding With Customers

Around the time that Artisan was in the midst of its armor manufacturing buildup, the company’s management team had a meeting with a longtime customer that was interested in having Artisan become a more valuable contributor to its supply chain. The catch was that Artisan would have to do so from Florida, where the customer had its headquarters. If it chose not to set up shop in Florida, Artisan risked losing the business.

Buoyed by the success of the defense work, the metal fabricator opened a Florida facility five years ago. It started as a strategic part supplier, but now it is the largest sheet metal supplier to the power transmission customer, delivering finished metal cabinets on a daily basis.

Figure 4: Not too many job shops have a laser cutting machine that can handle parts as large as 12 ft. wide by 75 ft. long, but with its Tanaka LMXR II laser, Artisan can tackle large jobs that others might have to turn away.

With that working relationship firmly established, Berkes said the 35,000-sq.-ft. shop in Sanford, Fla., now is working to diversify its customer base. Currently most of the shop’s work centers around fabricating parts 0.16 in. and thinner.

Keeping up With the Business

Supplying parts to new industry segments, adding technology and even a new facility, evolving from a parts supplier to a component builder—all put stress on an organization. Artisan was no different.

As the metal fabricator grew over the years, the pace and variability of manufacturing increased. “Drop-in” is not a term used to describe a type of order that disrupts the day’s production schedule; it is the nature of business now, according to Berkes. Customers don’t want to carry inventory, so they now rely on their suppliers, such as Artisan, to be able to supply parts at a moment’s notice.

“Our speed—our transactional speed—was something that we had not anticipated,” Berkes said. “But the reason that I’m in this building today is a story of a customer across the street showing up in a full-sized van filled with raw material and saying that I need 50 of these widgets by tomorrow and us saying that we’ll have them for you tomorrow. It’s been that type of history.”

In this case, one customer isn’t demanding quick response to a request for quote and part delivery. Everyone wants that level of service. The problem is that quick-turnaround jobs can disrupt scheduled production plans, and even with flexibility built into a schedule, too many interruptions can translate into a difficult work environment.

Berkes called these types of changes and interruptions to the fabricating activities “stress in process.” To take care of these new and unscheduled jobs, Artisan reserves “ghost hours”—or time left open for unscheduled work—for equipment. This open capacity, which is based somewhat on historical production data, gives current customers the ability to change or add production requests and sales the chance to pull in “hot” work that normally might not be accommodated.

Although Artisan has been using this approach for several years now, it has begun releasing production schedules on a daily basis only over the past year. Production scheduling had revolved around a five-day bucket before the change, and the shop floor employees struggled to deal with all of the changes that occurred throughout the week. Berkes said that 40 percent of the time the original schedule changed because of production changes or new work.

“A lot of our guys are so passionate about what it is that they do. But we were putting the bricks on their backs, and they were bending,” Berkes said. “So we took the bricks off their backs and gave them less. Now we do more with less.”

The production plans, or “dispatch reports” as Artisan calls them, are prepared the evening before the first shift shows up for work. The 24-hour window gives the two shifts an idea of what is expected and the comfort of knowing that everyone can manage what is unexpected for the day. Berkes said the new production arrangement has raised morale and reduced work-in-process that lined the floor (see Figure 3) because employees are fabricating parts only for that day, not for a future delivery date that used to be indicated on the five-day production schedule.

What Else Is on the Customer’s Mind?

Berkes is confident that the fabricating technology Artisan has in place—and the plan to add more perhaps—has put the company in a very competitive spot. It has the ability to add capacity quickly (see Figure 4). With offline programming, it can turn drawings into parts in a matter of minutes, even as production is in full swing on the shop floor. It has equipment that runs much more efficiently; for example, the eX laser cutting machines have faster cutting heads and can change gases 60 percent faster than older-generation machines.

But that doesn’t mean customers are satisfied with where Artisan is positioned. They want the fabricator to grow with them, which is perhaps the greatest sign of faith in a supply chain partner. It also involves a great deal of responsibility.

Customers don’t want to have multiple vendors if the situation doesn’t require it, and they want to have completed components delivered to them. So in two years, Artisan will have a powder coating line installed to deliver finished metal parts to those customers.

Customers also want supply chain partners that can react quickly and intelligently to market demands. So Artisan is exploring options for an enterprise resource planning software upgrade that will give it the ability to support the volume increases and quality expectations that come with growing the business.

Customers want Artisan to take on more work, so it has to figure out a way to energize a successful manufacturing culture that built a $30 million enterprise into one that can support double that annual revenue over the next five years.

“The challenge that we have is acknowledging that we have been doing some things well in the market to grow, compete, and maintain profitability, but also realizing that we have to do a lot differently to be able to be in this position 15 years from today,” Berkes said. “And people don’t understand that because they look at the leveling of the playing field, and the competitors that have closed their doors. Complacency is not a friend of anyone.

“That’s my No. 1 challenge from an ownership perspective: From the top down, embracing the desire to become a lean enterprise,” he added. “Those practices and disciplines are not active at Artisan today, but we have performed at a level that encourages us that as we add that methodology to our business, we don’t know what the end will look like. And that’s kind of fun.”

Twenty years ago, a company was formed to produce a cargo restraining belt that could eliminate waste associated with traditional approaches to shipping parts. In 2013 Artisan is still focused on eliminating waste, and it’s more than willing to listen to its customers for ideas. Such relationships have proven to be good business for all involved.