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When nesting, does it pay to be the early bird?

When nesting, does it pay to be the early bird?

Not always - especially in the job shop

Country music legend Willie Nelson is credited with saying, “The early bird gets the worm, but the second mouse gets the cheese." It’s unlikely that Willie was reflecting on manufacturing. Regardless, his quote still summarizes perfectly one of the greatest challenges sheet metal fabricators face: When nesting, is it better to be early, or just in time?

Is your company a bird or a mouse? Check the statement from each row that most applies to your company.

We have all been taught that to be early is to be on time. In fact, being on time is likely the most crucial component of any manufacturing business. Stakes are high, and manufacturing companies win loyal customers with their ability to deliver quickly and reliably ahead of their competition.

Being lean is likely the next most critical aspect. Lean businesses reduce waste and thereby cost to win orders with competitive prices. A key lean philosophy is just-in-time (JIT), whereby businesses reduce cost by avoiding the waste associated with overproduction, waiting, and excess inventory all while meeting delivery deadlines. Nesting finds itself at the crux of these two critical business practices.

  Bird   Mouse
1 My company typically designs the products we manufacture. or My company typically receives parts designed by a customer.
2 My company sells multiple quantities of our products (sometimes customized) to multiple costumers. or My company sells small to medium quantities of different parts to each customer.
3 My customers are similar, and many are from the same industry. or My customers are diverse and represent a variety of industries.
4 The price od parts my company manufactures are generally fixed. or Quoting and estimating the cost of a part or job is critical in our competitive market.
5 My company typically has several weeks to meet a manufacturing deadline. or Quick turnaround is crucial for winning an order: the sooner the better at my company.
6 My company cuts sheets from a coil. or My company orders all raw materials from a variety of suppliers.
7 My company stocks multiple grades and sizes of materials that we are sure to use. or My company stocks some standard grades and sizes of materials that we hope to use. We also have leftover quantities of various materials.
  If most of the boxes you checked are in the firts column, your business has demand stability. Nesting early will allow you to purchase and allocate the right material in time to reduce costly inventory.   If you checked more boxes from teh second column, your business probably doesn´t have demand stability. It is important to establish a great supplier relationship for supply stability and to nest as late as possible to optimize material utilization.

When to Nest?

Nesting early does not necessarily mean that parts will be cut early, creating physical part inventory to manage. You can store CNC programs of nests for later use. Once you nest parts, you know the optimized material requirements. Being the early bird (nesting early), you know precise raw material requirements in advance.

With these optimized requirements, you can buy material needed in time for the work to be done, and be selective in shopping for a supplier. Your operation can consume these raw materials right away and eliminate the costs associated with warehousing raw material inventory. Money is then not tied up in stock materials, extensive warehouse space, or inventory management. In this manner, your operation can have the right material at the right time. In other words, you can be lean.

Nesting too early, though, or being the first mouse, can be lethal. The geometry of any part in a nest might change, as could the due date. Say you nest several jobs together, all with a due date three weeks away. Then you get a call from the salesperson; one customer needs his part sooner than expected. So you send that entire nest to the laser or punch. That customer’s part is cut on time, but all those other jobs aren’t needed for several weeks, so they are placed into inventory. The same thing can happen if the due date is postponed. Then, as your cut parts sit in inventory, one customer calls with a design change.

Design changes to a part already cut leads to out-of-process rework. If rework isn’t possible, those parts become scrap. So in essence, parts nested too soon can cause substantial waste as nests must be recalled, parts scrapped or reworked, nests reprogrammed, and CNC files remade.

Nesting too early can also waste material. You might decide to nest parts early on a certain day, because the shop workload seems to be a bit light, and the material yield may be acceptable. By getting a head start on this job, you keep the people and machines on the floor busy. So you cut the job early, and the parts sit in WIP as they wait several days to be formed in the press brake department.

The next day a small order comes in that requires the same material, but with a tight deadline. You have no choice but to buy another batch of the same material. Moreover, the material yield may be very poor.

Had you not nested those parts the previous day, you could have nested both jobs on the same sheet, increasing your yield. You also would have made just one raw material purchase, saving time in your purchasing, accounting, and administration departments. You also may have gotten a discount for purchasing material in bulk. This would have saved not only freight costs, but also your receivers’ time. Waiting to nest all the parts together certainly would have reduced programming time and the time required to load and unload machines.

Of course, nesting too late also can be a problem. You may nest at the last minute to avoid problems from last-minute changes, but this also might delay a material purchase, creating a shortage. Waiting for materials to arrive is wasteful and certainly not lean.

That’s why businesses that nest late usually buffer against a shortage with minimum stock, purchased based on historic estimates or gross part weight. But this requires a certain level of demand certainty for specific parts and material types. If you don’t manage your stock carefully and ensure your operation consumes the buffer stock steadily, that buffer can become an expensive disaster.

Demand Stability

Many manufacturing businesses aspire to be early birds to ensure on-time delivery. But early-bird nesting isn’t for everyone. To nest early and still be lean requires demand stability, where parts ordered are known and the flow of orders for parts is consistent. Demand stability is possible for an original equipment manufacturer (OEM) or an upper-tier supplier whose primary business is making consistent products with only minor variation. The demand stability allows the manufacturer to determine the right number of days to hold demand to nest efficiently, buy the right material, and have it delivered on the right day.

For job shops, though, demand stability is not possible. In fact, demand can fluctuate dramatically, even with blanket orders. Existing orders can change regularly as well. Nesting too early in this environment is the same as being the first mouse and getting caught in the trap. It leads to many small material purchases (sometimes several in the same day for the same material), expediting fees, and, ultimately, a full scrap bin or large variety of small-quantity raw materials stagnating in stock. If you nest early in this environment, you probably will alter that nest to accommodate changes. This can cost a tremendous amount of manual labor and rework.

To be lean and on time, your job shop has to be the second mouse. You need to nest at just the right moment to combine orders and optimize a range of raw materials. And you must place raw material orders at the last safe moment to receive material in time to meet deadlines.

Supply Stability and Demand Visibility

As the second mouse, you also need supply stability, or the ability to receive required raw materials on time readily, consistently, and cost-effectively. For this, you need a great relationship with a reliable vendor. Instead of always shopping around for a closeout from an unknown and potentially unreliable vendor, try reducing the number of vendors you work with and trusting their costs. This saves time and helps build good business relationships.

To know when to nest, you must know if you’re a bird or a mouse, and plan accordingly. With demand stability, nesting early can have great benefits. With supply stability, nesting later becomes practical and offers a tremendous savings.

To build a good supplier relationship, you also need demand visibility, or the ability to see exactly what’s occurring on the factory floor, in real time. No doubt, demand visibility can be challenging. In fact, without effective software tools that present real-time information, visualization is nearly impossible.

An enterprise-level system that shows orders as they are received, and includes part geometry for those orders, allows programmers to consider all required production, without leaving their desks in search of new sales orders and associated part geometry. Having visibility of more demand allows programmers to incorporate more parts and achieve better yield, requiring fewer raw material purchases.

Good to Be the Mouse

A job shop’s highly variable demand makes demand visibility all the more important. Demand visibility allows your business to plan accurately. If you can visualize both demand and WIP, you can accurately predict the next available delivery date.

Job shops don’t have the luxury of demand stability. But with demand visibility and supply stability, your job shop can be the second mouse. You can nest late and still get the cheese.

About Lantek

Lantek is a multinational world leader in the development and marketing of software solutions for the the sheet metal and fabrication industry and machine tools sector. The company’s capacity for innovation and strong commitment to international and emerging markets has led Lantek, founded in 1986 in the Basque Country and with head offices in Vitoria (Alava), to become the global benchmark for the industry with its CAD/CAM/MES/ERP solutions. The company currently has over 12,000 customers in over 100 countries and offices in 15 countries, in addition to an extensive network of distributors across the world. The company’s international business in 2012 has contributed 85% of its turnover.

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or ask for more details at: marketing@lanteksms.com

September 2013
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