Stacking Up for the Bottom Line: How CNC Subcontractors Can Modernize Their Software Workflow to Increase Profitability16 August 2023
On-premise installations, license keys on dongles and RS-232 cables to transfer g-code to machines. While many modern CNC machinists have moved beyond these technologies, so many of the innovations of the 80s and 90s still have prevalence in the contemporary machine shop. These breakthroughs allowed huge productivity gains for machinists, providing a significant competitive advantage. However, in many instances, these same environments that were once ripe for innovation have stagnated on their legacy platforms. This article identifies accessible, proven innovations shaping the future of the machine shop and driving enormous monetary benefit to the top and bottom line.
The Paradigm Shift from On-premise to SaaS
Software as a Service (SaaS), has revolutionized industries. Instant utilization, free trials and browser-based access have allowed new technologies to spread quickly and pivot control and power to the user, with a commercial model underpinned by the customer’s success and derived value, and thus their willingness to renew. Historically, CAM software was hosted on local servers, requiring heavy investment in IT infrastructure, maintenance, and cyclical upgrades. However, the transition to cloud solutions symbolizes a broader trend of machine shops prioritizing scalability, accessibility, collaboration and innovation which have made the embracement of SaaS an obvious choice.
This shift is perhaps best exemplified by Autodesk Fusion 360, a manufacturing SaaS application, specializing in CAD and CAM capability. It includes all the tools that you need to go from design to production, seamlessly, and is hastening the movement towards cloud-based manufacturing software platforms. Files can be accessed and altered from around the world, reducing the reliance on a traditional base and allowing businesses to harness collaboration between departments and between customer and manufacturer regardless of location. The breadth of customers using Fusion 360, with well over five million global users, demonstrates a ubiquity in the increasing digitization of the manufacturing sphere.
The collaborative nature of Fusion 360 and the emphasis on data management ensures all communication occurs on one platform, reducing the likelihood of misinformation and simplifying the process for businesses and clients alike. There is also the advantage of increased traceability and the ability to identify how best to optimize results. Compared to legacy systems, the integrability of Fusion360 is a key component of the SaaS ecosystem
Manufacturing SaaS is expected to be worth $19.7 billion in 2026, and the transformation from on-premise to cloud-based solutions is evident in the M&A strategy of the leading manufacturing software conglomerates. Boston behemoth PTC Inc., the cradle of the MEDDICC sales methodology that helped inspire the growth journeys of software sales organizations worldwide, built their multi-billion dollar company around their desktop-based CREO application. However, in 2019, PTC’s $470m acquisition of OnShape represented their recognition of the growing cloud-CAD market, and the urgent need to have a proven, market-ready solution.
With the rise of remote working, the requirement to connected decentralized R&D departments and gain competitive advantage in a manufacturing space where the rate of innovation is ever-increasing, the transition to a SaaS-based toolset that facilitates these key deliverables, is rapidly becoming a non-negotiable for manufacturers.
Reaping Benefits from MES & Integrated Production Planning
In line with the movement towards automation and embracing of Industry 4.0, Manufacturing Execution Systems (MES) are no longer a luxury but a necessity for forward-thinking CNC subcontractors. These solutions facilitate real-time machine and shop floor monitoring, improved production scheduling, and quality assurance, thereby enabling machine shops to operate at peak efficiency.
Strategically implemented MES solutions can provide a wealth of benefits to CNC machine shops, some of which we have outlined above. As well as reducing manual data implementation pressures and corresponding opportunity costs, Manufacturing Execution Systems encourage enhanced reporting, and improve all-round production scheduling and execution. Of the 70% of respondents to Deloitte’s 2020 Study of Manufacturers who stated that they had implemented new software production systems, 23% were focussed on optimizing factory synchronization via greater production scheduling and execution.
Production planning is imperative to drive growth, as it eliminates avoidable disruption and waste, enabling more efficient production processes. Typically, when contract manufacturers wish to expand their throughput and revenue, the obvious answer is to increase resources – capital machinery or workforce; MES is the latest addition to this notion. However, the rewards are achieved with less, enhancing the productivity of the existing resources, with greater real-time visibility, machine utilization and capacity maximization.
Furthermore, integrated production planning that synchronizes inventory, procurement, production, and distribution channels results in significant cost savings. The efficiencies realized through these integrated systems directly impact the bottom line, with McKinsey estimating a 15-20% potential cost reduction in production and delivery cycles.
However, McKinsey warns of the dangers of piecemeal MES implementation, warning against viewing MES solutions and other software as merely theoretical exercises. In doing so, businesses run the risk of a detached chain of command, with an inability to reap the rewards MES software is tailored to generate. Instead, MES software and the embracing of Industry relies upon a concerted strategy – whereby the benefits of digitisation can be easily identified, exploited and exponentialized.
As such, MES software is prepared and tailored to make concerted differences to production, scale and traceability in CNC machine shops. These changes have the capacity to save on overheads, increase revenue and ensure CNC machining remains a premier manufacturing option. Are you ready to ensure CNC machining maximizes its digital potential?
Investment in Technology: A Pillar for Future Growth
Investing in technology is not just about buying new tools; it’s about adopting a mindset of continuous improvement and innovation. As CNC subcontractors are pressured by globalization, rapid technological changes, and increased customer expectations, standing still is not an option.
Gartner’s research shows that companies prioritizing technology investments in manufacturing environments witnessed a 25% increase in productivity and a 30% reduction in operational costs. Deloitte and McKinsey further support these findings, emphasizing that firms focusing on digital transformation are better poised to respond to market changes, tap into new revenue streams, and maintain a competitive edge.
The fourth industrial revolution (IR4) presents unprecedented opportunities for CNC subcontractors. By transitioning from legacy systems to modern SaaS platforms, leveraging e-commerce, and adopting integrated technologies like MES, these businesses can drastically improve their profitability.
The investments made today in technology will shape the future of the machine shop, ensuring they remain agile, efficient, and competitive in a rapidly evolving market.
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