Manufacturing Automation – Develop it In-House

The Manufacturing Process is the only competitive advantage!

Decades ago now, every manufacturing company had an in-house tooling department.?This ranged from a single machinist with tool making capabilities and innate creativity all the way to a fully staffed, large equipment development group that constantly developed and evolved equipment for whatever steps were involved in the manufacturing process.?

A constant, albeit sometimes disorderly pursuit of manufacturing efficiencies through new tooling and methods development. ?It was not uncommon to go into a plant and see three pieces of equipment all performing the same function but each being a generational iteration of the previous and even including upgrades/retrofits on the 1st generation machine that were developed for the 3rd generation machine.?These systems can still be seen working in many US manufacturing plants and in many cases are a marvel to watch in their engineering creativity and subtle electro-mechanical nuance.

These were the days of printed product catalogs with specification sheets that seemed inscrutable and the ease with which we Google a component today or look for a particular machine part on McMaster-Carr was nonexistent.??The process was slow and inefficient and many components were “home grown” and custom machined or fabricated through in-house processes that themselves were proprietary in many cases.?

There were industry commonalities of course but all this effort resulted in proprietary processes as each manufacturer developed their unique manufacturing recipe and in effect created their own intellectual property and proprietary processes which advanced the state of manufacturing competitiveness as well as creating a barrier to entry as whether these were patented or simply “trade secrets”, this dynamic created the competitive advantage!

Over time, these in-house tooling and equipment development groups grew into unwieldy cost centers as they were seldom driven by any ROI calculation but rather, driven by a constant evolution of the process, pouring human and capital resources into that process development.?Even if some kind of “ROI” was calculated, it was a funny calculation and it included zero labor costs as it treated the tooling group's labor as “free”; after all they were on the company payroll anyway!

The most important contribution of these groups was somewhat amorphous as the consistent, incremental, and casual innovations they produced made significant impact without much coordination or tracking but the overall manufacturing process kept getting more efficient and proprietary.?It was working!?

Progressively, trade secrets and methods leaked as outside vendors had increasing access to the process and tooling group engineers migrated between companies within the same industry and the proprietary nature of any process knowledge became common knowledge and pretty much the same way that a particular industry performed certain steps in the process.?The genie was out of the bottle!

While maintaining some of these capabilities and subsuming them into product R&D, for many reasons including outsourcing, off shoring, bloated costs and through cost cutting initiatives, these groups were gradually disbanded and mirrored the general decline of US domestic manufacturing.?Lowering operational costs to be certain but at the same time “throwing the baby out with the bath water”!??Since we were not going to manufacture in-house to begin with, why did we need this “high- cost center” with a bunch of guys sitting around, drinking coffee and walking around a manufacturing floor the was no longer running? the thinking went.

Here's why:

Whereas the in-house tooling and equipment development group was indeed generally overgrown and “wasteful” on the surface, the innovations and process differentiators it produced were not only unique to the in-house process, but they were also the basis of proprietary development of a competitive advantage that can only come from an in-house team that has daily and constant contact with the process. ??Whether that be productivity improvements or underlying process evolution, this type of innovation is not possible through the use of outside consultants or systems integrators since they generally are working to a requirements specification or URS that needs to be generated in-house by those who not only understand and define the current process but most important, are able to envision the next generation process.?The pain points are implicit to the in-house team!

While performing the “execution” steps of new tooling and equipment development is indeed generally more expensive to do in-house vs. outsourcing, the actual innovation of the solution to be executed can only come from the in-house team.??

Otherwise, while the deployment of an industry standard solution may indeed be an improvement, it does little to differentiate the process or give it a unique competitive advantage.?Of course, competitive advantages don’t grow on trees but a single innovation that meets this criterion will more than justify the most bloated of cost centers as by definition, an innovation has a significant “step-function” impact on the process … whether that be:

-?????????a significant cost reduction,

-?????????a significant cycle time improvement

-?????????a significant WIP or materials movement/flow reduction

-?????????a significant reduction in economical lot size resulting on shorter lead times

-?????????a significant human worker interaction with the process reduction that significantly reduces labor content or otherwise reduces costs.

-?????????Or, some other metric that differentiates the company in it’s market and offers a competitive advantage!

What might a New Tooling /Equipment Development group look like?

-?????????Relatively small interdisciplinary group – replete with various experiences

-?????????Not burdened with routine equipment design, build or procurement efforts as those can be well managed by operational teams, (manufacturing, quality, industrial engineering, etc.)

-?????????Diligent and focused but with NO Deadlines!

-?????????Immune to corporate equipment standards, (Hardware types, Software protocols, etc.)

-?????????Tasked at the highest level by process pain points as indicated by cost accounting or strategic company objectives

-?????????As an R&D function, well-funded to “fail”, “fail fast” and “fail often”

This team only needs to have a “success” every couple of years and that “success” is defined by a paradigm shifting outcome that significantly disrupts the manufacturing process with a high impact step function!

In Summary:

While returning to the days of a large and overgrown in-house machine design, tooling and equipment development group is generally not justified today, given the large number of third party systems integrators and machine builders and the myriad of standard solutions available, if a manufacturer is interested in true and unique process innovation that provides a competitive advantage in it’s market, it should build and properly fund an in-house tooling and equipment development capability!

Not tasked with generating the User Requirements Specifications used to develop, build and procure “meat and potatoes” automation working with systems integrators and machine builders, this group needs it’s own development capabilities ranging from prototyping all the way to building iterative versions of innovative equipment and tooling with the goal of not only meeting some productivity or other objective metric but also creating unique IP that can serve as a barrier to entry and create a competitive advantage for the company.

The Manufacturing Process is the only competitive advantage!

What has your experience been with in-house tooling and equipment development groups??

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