The Automation Trap: Why Automating Chaos Won’t Save You, Ep #18

[0:00] Nick Goellner: Owners and leaders try to like hoard information protected. Like if my team knew about this, they’d be too stressed out. Instead of being a little bit vulnerable, inviting them in and saying, Hey, here’s where we’re at today. Let’s all work together collectively to get to a better place because we’re all gonna win if we do that.

[0:20] Mike Payne: All shop owners listen up here. I think all of us know we are in one of the most in capital intensive businesses. There is, and margins are tight and we’re, we’re always fighting issues. And then when we make money, what do we do with it? Stock market’s up and down all over the place. Well, I get asked a lot about where can I invest my money?

[0:40] I’m a firm believer as business owners, you’ve gotta invest in yourself first. You need to reinvest capital into yourself. So the number one thing that I’ve done in this industry investing. Was ProShop, ERP. We’ve been using ProShop since 2018, and my payback literally was within weeks with their per user based pricing.

[1:00] I knew when I made the decision I only needed to save my workers roughly one hour per month. We saw within the first week we were saving multiple hours per day. That type of ROI just doesn’t come along very often. Outside of that, the real value has been able to quickly implement best practices across my entire shop.

[1:30] From the time we get an order to the time we ship it. Scaling my business with confidence, being able to go out and know that I can deliver on my promise to deliver quality parts to my customer, and then gaining insights into every job, employee machine, and every process in our business to really drive efficiency and look for opportunities for improvement.

[1:50] That’s where the real value in your business drives. So visit pro shop erp.com. Book a demo and start realizing ROI today, that’s ProShop erp.com.

[2:00] Narrator: Talent is scarce experience, even more so driving a cost in sleepless nights. You may even think to yourself, can I do this? But this new era brings new technology and a different perspective on your operations.

[2:20] What you will hear will turn on a light bulb in your mind so you can turn out the lights in your shop. Get ready to sleep soundly while your shop never stops. Get ready for making chips. Lights out with your hosts. Nick Goner, Caleb Merck and David Buick.

[2:50] Nick Goellner: So, no Dave? No Dave. Today. He’s just moving his home. Dave, we hope things are going well in Canada as you move from one frigid tundra to the next or whatever it’s like up there. Yeah, we’re bringing in another guy who’s no stranger to making chips. Eric Neic. Good buddy of ours. Colleague. Work holding expert.

He is gonna come help us break down this story. Eric, welcome to Lights Out

[3:10] Eric Nekich: Gentlemen. How are you? Great to be back on. Thanks for having me. Also want to point out, I have no marital strife, so Nick, none.

Nick Goellner: Wow. Not at all.

Eric Nekich: No.

[3:20] Nick Goellner: And the other thing I could tell you about Eric is he is never told a lie.

Eric Nekich: Yes, exactly.

Yeah. No. Can’t believe a three times doing a podcast with you guys. This is amazing.

[3:30] Nick Goellner: I think it’s gonna be a few more. We’ll see. We’ll see how you do today. This is your trial run. This is a run. You have to see if you get into the automation academy, you have to apply. It’s like college.

Eric Nekich: Okay. Alright. Is there like a physical and mental examination for that or, yeah, there’s

[3:40] Nick Goellner: a spiritual examination.

[3:50] Alright then. We’re gonna test you on that. Marital strife. Bs. All right. I know you heard we got a little carried away. We told a big story here, but Caleb, what don’t we talk about on the first time? Just the first kinda intro inaugural Automation Academy episode.

[4:00] Kaleb Mertz: Yeah, so we covered a lot. For listeners, if you didn’t listen to the last episode, go back one.

[4:10] Listen to that. That’s gonna be a really awesome start in getting going into the series. But we covered quite a bit how to compete and to make it in this industry. Like it’s not an option to make some changes in competition domestically and outside of North America. So we covered a lot of that. That looks like.

[4:30] We went in depth on some of those numbers, which was really interesting. Yeah. Just what we need to do. What are the basics that we can start with, right? And we kinda went through a readiness checklist. You could say, what are the things you need to be doing ahead of time before you can really start investing in.

[4:40] Like automation tech, you know, a lot of people just jump in and we’ll hear about that a little bit today in your story.

[4:50] Nick Goellner: Yeah. Larry jumps in here. Yeah, spoiler alert. But yeah, I think the goal, it’s like required reading at Golden Rink. We all have to read this book. The goal, I think what’s awesome about that is it like puts you inside the guy’s life, inside the guy’s story as he learns lean, continuous improvement.

[5:00] And so I thought inspired by that, let’s tell a story of, okay, I agree, right? Automation’s a necessity. For the future long-term competitiveness of really any shop. It’s going that way. Technology’s advancing faster than ever, but it can also be a trap if you don’t think about it the right way, or if you approach it eyes wide open with no clue, like why you’re automating.

[5:30] So without ruining the story, let’s get into it a little bit and we’ll talk about, yeah, the story of Klaus. No spoilers. No spoilers. Klaus and Larry. Okay. So I’m gonna read, I’m gonna do my best to read this. You guys can make fun of me if I suck at it. I called Morgan Freeman, apparently it is like really expensive, so I’m just gonna do it myself All.

[5:50] The automation trap, the morning sun, barely cuts through the grind. Streaked windows of iron clunk, machining a squat, brick building on the edge of an industrial park. Inside the air hums with the low gro of three axis mills, their spindles. Stuttering is operators fumble with heavy, bulky dinosaur vices, clamping one part at a time.

[6:10] Piles of raw material clutter. The shop floor with paper job travelers covered in oil somewhere amongst the pile. And almost finished parts are teetering in stacks waiting for a quality check that is always behind schedule. Earl the disgruntled quality guy grumbles louder than any of the machines. His slow skeptical inspections are bottlenecking the shop, holding back any hope of progress.

[6:30] Gary, the owner stands in the middle of it all. His flannel shirt damp with sweat. His eyes bloodshot from another sleepless night after an argument with his wife Linda, about how even when he is home, he’s never really present. He’s a good man. His heart’s as big as the Midwest, but his shop is bleeding money and his dreams of a thriving business feel like they’re slipping through his calloused fingers.

Come on now. Let’s go. Wow.

[7:00] Eric Nekich: Not bad, huh? You did phenomenal. I almost thought it was Morgan Freeman reading for a moment. There I have

[7:10] Nick Goellner: the deep masculine voice that carries authority. So initial thoughts, gentlemen, as you hear the intro paragraph, what are some of your initial thoughts on Larry’s life? Poor guy.

He’s stressed.

[7:20] Eric Nekich: Well, I won’t go into too much detail ’cause I know you guys did a really great episode on this last week. But those heavy, bulky, dinosaur vice, those are typically the first things we gotta take a hard look at when we’re talking automation. Not only are we limiting the capacity, right, the amount we could be.

[7:30] Machining and, but we’re also, it’s an accessibility play to a certain extent, right? We’re cutting off access to all sides of that part. They’re limiting the different types of materials we could be running. There’s just a number of problems that come along with those traditional clamping fixtures and yeah, we gotta upgrade the work holding people.

[7:50] Nick Goellner: Yeah, I knew you’d go there. It’s like you got a little work holding experience. Caleb, we, uh, at advanced have just started with five axis machining. It’s crazy to say that, but we’ve had. Verticals. We’ve had horizontals and just what, a year ago, a little a year and a half ago, we got our first five axis mill.

[8:10] And is it because we’re doing bliss and turbines or like why did we get it?

[8:20] Kaleb Mertz: Yeah. You can read into this story and it was similar for us, right? It’s like we’re doing multiple operation parts that usually then we would do with three or four setups. Now we’re doing in. One or two. And so that’s something, if you read into this a little bit, you can kind of gain outta that too.

[8:30] All these job packets across the shop floor, multiple parts being moved from machine to machine, saw that processing time in between is a factor and something we mentioned last episode to look into and what that flow is and. Just really a focus on process. Right. It sounds like Gary’s just trying to keep up day to day, right?

Not that there’s a really solid process in place.

[8:50] Nick Goellner: Yeah. The automation trap is like jumping straight into it before you’ve laid out like the prerequisite framework. Automation is not a 1 0 1 class in running a machine shop. It’s advanced. Does anyone want to talk

Eric Nekich: about Gary’s raw material piles littering the shop floor and his oil covered travelers?

[9:10] I know. Here at a ME, we’re a big believer in Lean and it just seems like Gary could use a little help with the five S’s.

[9:20] Nick Goellner: Yeah. Yeah. We talked a long time ago with my brother about how a lot of places stop at three s and they don’t like standardize and sustain. So what you have is like. These aren’t like principles that the shops lives by.

[9:30] So they five s as like cleaning up your room or cleaning up your kitchen, and then they make a huge mess and put everything in different cabinets every single time. And then, so they really don’t standardize and sustain it. And Gary seems like one of those, he’s got piles of stuff everywhere. He probably cleans the shop here and there when it’s time for his ISO audit, but it doesn’t seem like he standardizes or sustains.

He stops at three S’s instead of five.

[9:50] Eric Nekich: And at this point in what we’re talking about, if Gary puts a robot on the floor and supercharges his production, he’s gonna have a lot of piles. Yeah, exactly.

[10:00] Nick Goellner: Exactly. Hey, no spoilers, Eric. Oh, sorry. Sorry.

Eric Nekich: He might not get a robot. I don’t know what’s coming up here.

The first season of the automation trap. Yeah.

[10:10] Nick Goellner: And then I think the other thing to point out is machine shops aren’t made by machines. Okay. They’re made by people. And a great machine shop has great people who have positive energy and Earl. Earl is not happy, man. Earl is disgruntled and you know why people are disgruntled because chaos isn’t kind.

[10:30] We talk about that a lot. Like one of the best things you could do as a leader, we talked about this on machine shop, NBA is have a shop where it’s like organized and people’s missions are clear and their targets are clear and they know what to do. So I think that’s part of why air. Earl is disgruntled.

[10:50] And then also we talk a lot about bottlenecks and we talk about Earl and how frustrated he is that he is the bottleneck, quality’s the bottleneck. And then it reminds me of the conversations we just had with the guys from Hexagon about. Sometimes the reason quality is such a bottleneck is ’cause the programming language doesn’t necessarily talk to everything else in the shop.

[11:10] The robots have a different programming language. The cncs have a different programming language, and then you’ve got the CMM programming language. So it’s really hard to have someone who understands all of it and it’s really hard to integrate. That’s what I’m so excited about with Maestro. So Caleb, I don’t know if you’ve heard Mike and I talk about it, but Maestro’s this newest innovation from Hexagon.

Let’s segue into a little custom segment about exactly what that is. What do you think?

[11:30] Kaleb Mertz: Yeah, I’m pumped to hear about it. That’s awesome.

[11:40] Nick Goellner: Mike, we talk all the time on your show about numbers and all the time on my show about automation and technology, but. As much as I’m talking to you, I don’t ever get to ask you how are you doing with automation at Hill?

[11:50] Mike Payne: I love the direction we’re heading in automation. It’s a constant learning curve for us, and I think the guys really enjoy like the upskilling they’re getting out of the automation.

[12:00] And of course we enjoy the productivity we get outta automation bit. Like right now though, we’re fighting a job. It’s a great job. We’ve run it on our robot before. It’s always difficult to set up and it’s a hard material. It’s got some tight dimensions. The thing we’re always trying to balance is getting our in process checks and all our inspection done automated.

We’ve got this robot running 20 hours a day. Like

Nick Goellner: is this your robo job?

Mike Payne: Yeah.

[12:20] Nick Goellner: Yeah. Okay.

Mike Payne: Yeah. So how do I make sure I don’t come in the morning? And

Nick Goellner: you’ve automated a bunch of scrap.

[12:30] Mike Payne: Yeah, I’ve automated scrap. So what have you seen? You got any input on that?

Nick Goellner: I mean, it’s funny talking more and more to the hexagon guys and I’ve got some thoughts on it.

[12:40] Whoever solves the Inpro inspection and correct the machine puzzle is gonna be a rich man. Yes. Yeah. With rich woman. But we should just call them. They’re always easy to get ahold of. So lemme see if I can get ahold of Sean. Hey, what’s up Sean? Hey Sean. Mike and I were just talking about like, he’s got basically an automated lathe, right, Mike?

[13:00] Yep. And you’re. Loading and unloading slug work, essentially, right? Yep. Yeah. And you got this one job. It’s a little bit more tight tolerance. It’s finicky. And his concern is like, how do I make sure inspection is part of the process here, and I’m not coming in the next day to a big pile of scrap I just produced.

[13:20] So instead of me trying to give him advice, I was like, why don’t we bring in the expert and we called you. I mean, what are your thoughts on that and the role that like Hexagon plays in that?

[13:30] Speaker 6: Yeah, so it’s a solution. It’s a situation we find ourselves in often, so our customers wanna automate. They just struggle with how to connect the dots and how to tie in your CMM and get feedback and so on and so forth.

[13:40] With our latest system, maestro, you know, it’s engineered from the ground up to seamlessly integrate with automation ecosystems that are currently in use out there, like our current system or the previous system. The global S, you could integrate it. But it was a little bit more painful, and a lot of times it involves a third party outfit to try to do that integration.

[14:00] But maestro with its plug and play automation interface, it eliminates the need for additional hardware. It’s all digital components enable real-time data exchange with other production systems, and it really transforms the inspection from an isolated vertical step to an integrated part of manufacturing.

[14:20] Nick Goellner: Yeah. Okay. So instead of, it’s like, all right, all these parts need to go from this department to the other side of the building over in quality or whatever. And then if there’s an issue, we can’t alert the machine to stop making scrap because it’s totally disconnected. They speak different languages, the different programming languages, different processes.

It’s all just part of one workflow.

[14:40] Speaker 6: Yeah. That’s the goal, is to simplify the whole thing. Just allow you to. Set it up as just another step in your manufacturing process of that part. And then once it’s measured, the feedback goes straight to the CNC machine and the next part is made better.

Nick Goellner: Is it actually making the compensation in the machine and fixing that problem?

[15:00] Speaker 6: We have tools to do that. The maestro system itself is not doing that. It’s just providing the measurement of that. Product, but then the results are then fed to another software or another solution that’s gonna give that feedback to the CNC machine to make the corrections.

[15:20] Nick Goellner: So would this maestro solution be basically right next to Mike’s setup then right next to the automated lathe?

Speaker 6: It could

Nick Goellner: be,

[15:30] Speaker 6: yeah. That’s what we’re being requested more and more is to have a CMM working with two or three CNC machines or lathes or whatever, and then a robot just feeding the CMM in the constant feedback loop going on in the background.

[15:40] Mike Payne: That’d be a really incredible solution. That would certainly solve that balance we’re always looking for, right?

Because we need the productivity. We, you know, lights out, but you don’t want a table full of scrap.

[15:50] Speaker 6: That’s the last thing you want is come in and find out you got a bunch of scrap or a bunch of rework and none of it’s cheap. So trying to avoid that as much as route.

[16:00] Nick Goellner: The solution I always talk about on Lights Out is run the finicky stuff during the day when you’ve got your best people there to pay attention to it.

[16:10] But ultimately the goal is to not have to do that even. And if you can have a fully automated closed loop solution where robot pulls the part off the machine. Checks it and either pauses and says, Hey, something’s wrong here. Or ultimately even corrects it with, like you said, some additional pieces in the middle where it’s actually making those offsets or whatever.

[16:30] Man, that’s a game changer because now you can automate anything.

Speaker 6: That’s the goal. Awesome.

[16:40] Nick Goellner: Hey, well thanks for, uh, jumping on and sharing where you’re headed and what Maestro enables for me and Mike. Sure thing. Glad to help. Appreciate it, Sean. Get into the second paragraph. What do you think? Outstanding.

[16:50] Okay. Gary’s mind keeps drifting to Klaus, the golden boy of the local manufacturing scene. His Lean stream precision is the shop of legend. It’s clean, it’s efficient, it’s profitable. They have high margin contracts from aerospace and medical giants, and even recent top shops honors from Modern Machine Shop Magazine.

[17:10] Gary’s been to Lean Streams, tours hosted by the manufacturing Association where Klaus Strides through his shop like a conductor leading a symphony. While his team members proudly lead different parts of the tour with passion, showcasing their roles, modern CNCS per. Monitored by SLE screens, flashing KPIs like OEE and spindle utilization.

[17:30] Robotic machine tool loaders zip around smoothly loading parts with precision while motivated workers smile. Their continuous improvement ideas scrawled out on boards. Their competitive energy is a stark contrast from iron clunks disengaged crew. It’s a world away from iron clunks chaos, and Gary’s NV burns hotter every time he sees it.

[17:50] His own shop’s failures are magnified by Klaus’s success. Man, this is deep Gary’s. This is like the beginning of Gary becoming a psycho. I think you know what I’m saying? He’s a, he’s obsessed with Klaus.

Eric Nekich: I won’t be denied Klaus, or he’s gonna get real weird, quick, these German bastards taking all our jobs.

[18:10] I would like to just remind everybody that this is in fact. Nick’s story. Caleb and I had no part in its creation, genesis, or

[18:20] Nick Goellner: put the disclaimer in there. What are your thoughts after this one? The juxtaposition of a tale of two shops, if you will. We’ve all been in both.

[18:30] Eric Nekich: Yeah. I think what you really capture well here is between that first part of the story and now is even the difference in how the employees tend to conduct themselves, whether they call it morale, call it what you will.

[18:40] And then I’ll just like to point out, you have me at OEE. I’m super invested in this story now. Good.

Nick Goellner: I love it.

Eric Nekich: That’s your love language.

[18:50] Kaleb Mertz: Yeah, I think too, like Nats a just always rip on Gary for this whole story. Let’s give him some props that Gary, hey, his heart is as big as the Midwest, if you remember. Okay. Okay. So in addition to his heart, he went to this event and went and saw what other companies are doing. So I’m just gonna point that out as a big deal because the amount of people I meet in companies that have been there for a long time and have a lot of experience, don’t know what’s.

[19:20] Happening in the rest of the world. Yeah, completely agree. That disconnect is huge. We’ll give ’em props there before we continue.

[19:30] Nick Goellner: Yeah, that’s been the takeaway of a few Making Chips episodes is go out and just get lunch with that shop that you might think is your competitor, that other shop with same types of machines and go just get to know the owner.

You might find you could learn from Klaus.

[19:40] Eric Nekich: That’s amazing and that’s a great observation, Caleb, and I mean, in so many of these scenarios where we see manufacturing challenges, step one is often just being willing to admit maybe I’m not doing this the best and let’s go see what’s on the other side or across the street.

Right?

[19:50] Nick Goellner: Yeah. I think the other difference is I imagine if Gary had to give a tour, he would hope to God that Earl or any of his disgruntled. Team members weren’t talking to the local association ’cause they’re not gonna reflect pride and precision and performance. They’re gonna reflect, I freaking hate this job.

[20:20] I come into work, clock in, clock out, go home and kick my dog. That’s, I think the difference is Klaus gets his team members to lead the tour and that’s what stood out to me. They’re

Kaleb Mertz: not kicking dogs. The other thing is like, what does he notice walking through the shop? It’s a lot of the stuff that everyone would notice.

[20:30] He is talking about the people. He’s talking about certain KPIs on screens that he sees, like especially spindle utilization, which is thrown around a lot. He’s seeing robotic cells. So these are a lot of visual cues, but he doesn’t see everything it took to get to that point or the why behind it. I, we’ll get into more detail of that.

[20:50] Nick Goellner: Yeah, you’re segueing pretty well here. It’s like you’ve read it before, Caleb. I don’t even know. This is the first time I’m hearing this. Yeah, you’re blown away by my writing skills

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[21:40] Nick Goellner: Let’s move on to the next scene. Last month, Gary stood in Lean Stream’s Pristine Shaw Awestruck as Klaus explained how lean processes and smart automation secure their lucrative contracts. This is how we stay competitive.

[21:50] I gotta do a German accent. I was just gonna say, this is where you can be like,

Speaker 6: this is how we stay competitive.

[22:00] Nick Goellner: Klau said in his, you just nailed it. Any German listeners immediately are just gonna be like, Nope, I’m out. This is how we stay Competitive. Klau said is calm but proud. His voice is calm but proud.

[22:10] Gary nodded but inside he was spiraling, crushed by iron clunks reality, low margin jobs for local clients who haggle for discounts and stretch payments to net one 20 terms, leaving his bank account overdrawn. 10 years ago, he sank his savings and a $200,000 loan into buying his boss’s failing shop, dreaming of a legacy, but now a barrage of painful monthly payments.

[22:40] Strain him, his veteran machinists bill. We’ve always done it this way, Washington and Bob, that’ll never work. Williams are stuck in old ways, grumbling through inconsistent setups while younger workers quit. For rivals, making the talent scarce with no budget for monitoring systems to keep score or machinery upgrades to improve the output.

[23:00] Iron clunk, limps along its inefficiencies laid bare by Lean Stream’s Tour and it pushes Gary to a desperate resolve to chase Klaus’s success at at any cost. Well, now we know why. Linda’s mad. Yeah. Yeah. Linda, you gotta take care of Linda. You can’t. Behind every great machine shop is a great woman. I, I think somebody said that.

I think that’s in Proverbs. I believe

[23:20] Kaleb Mertz: that was, that was our grandfather.

Nick Goellner: Yeah,

Kaleb Mertz: yeah, yeah. Exactly. Exactly. Even though he never said that, but he showed it.

[23:30] Nick Goellner: He, yeah, he should have said it. ’cause she was taking care of everything while he worked 90 hours a week.

Eric Nekich: Yeah. So the third scene here, what are your thoughts, Eric?

[23:40] I wanna steal some of Caleb’s thunder from the last scene, which is, I’m starting to align with Gary where he’s seeing, he’s really starting to see that there’s gotta be a better way to do this. And if you just read that last sentence again, he’s ready to resolve and to chase Klaus’s success at any cost.

So he ain’t

Nick Goellner: no quitter. No. And that’s huge.

Eric Nekich: Yeah.

[24:00] Nick Goellner: I think you know the critics. They’re a little too hard on Gary and on the Reddit threads about my story. They need to give Gary a break.

[24:10] Eric Nekich: Yeah, I noticed that on IMDB too. They were really just going after the poor guy.

Nick Goellner: Yeah. How often is this, the story, right?

[24:20] You’ve got somebody who’s. Working for a failing shop. Maybe one of Gary’s employees feels the way Gary felt like I could run this place better if this guy is gonna sell it. I’m gonna put money together and make a play for it. I think I could turn this shop around. And so you see that all the time. We talk about scenarios like that all the time on making ships, and that’s exactly what Gary did.

[24:40] And then it’s okay, everybody’s got a plan. I say you get punched in the face and now it’s your turn to like run this machine shop full of. Disorganization and inefficiencies and disengaged employees. And so yeah, it’s easy until it’s your job to do, right?

[24:50] Eric Nekich: Yeah. And I think that it just speaks to the overall health of a shop anywhere.

[25:00] Whenever you’re in a position where, I’ll even talk to Gary’s veteran machinists, right? When you’re in a position where you’re not using that talent and that experience to work on the business. Mm-hmm. Instead, everybody’s handcuffed to working at the business. But yeah, hats off to Gary for at least at this.

[25:10] Point in the story understanding that he’s in desperate need of change.

Nick Goellner: Yeah. You guys ready to move on? Or any thoughts on the third scene, Caleb?

[25:20] Kaleb Mertz: Yeah, I think the other thing to note here is all shops are not equal in regards to the type of work they take on what they do, what their capabilities are, and this comparison.

[25:30] Might not even be legit. So that’s something too. You have to be careful. Gary’s running more high mix, smaller jobs, and over at Klaus’s shop, they’re likely running a lot more production, right? Bigger jobs, bigger contracts, which a lot of companies wanna get to that point. But how you get through that and how you proceed.

[25:50] Through that. To automate your facility, to improve your facility is very different depending on where you’re starting from. Yeah. Before we move on to the next seed, this is where he should, I wish Gary could listen to our last episode about where we talk about how to get started. Yes.

Nick Goellner: And when you’ve got Bill Washington and Bob Williams, we’ve always done it this way.

[26:10] That’ll never work. It’s tough to make change. So a huge part of this is how do you transpose that grit, that hustle, that I really wanna make this happen, that if we don’t change, we’re screwed mentality into your whole team, and in a way that doesn’t make them full of fear, but. Inspired to create the change.

[26:30] I think certain things that are like, not even close to being discussed here, but do you share your financials? Maybe not. Every detail of your financials, but do you share your, like most important KPIs with your team? Is your business growing? Is your business profitable? Are you profitable? Job to job? Are different types of contracts profitable versus others?

[26:50] What would it take to make them profitable? You know, there’s this quote with no budget for monitoring systems to keep score or machinery gauged upgrades to improve the output. Well, yeah. Monitoring systems are like really micro score keeping and the, and of course we use them and. We recommend them and everything, but they all lead up to these like most important KPIs, which is just the financial he of your business.

[27:20] We talked about that last time too. Are you growing and are you growing profitably? And when you’re investing, is it improving your throughput so you can continue to do that and be sustainable? So I think you get people who are disengaged when they. Have no idea, like what it takes to make the company win.

[27:30] They’re probably underpaid. They don’t know what you have to do as a business to be profitable enough to raise the like kind of general level of pay and compensation for your team. So I think sometimes what happens is when things are tough. Owners and leaders try to like hoard information protected.

[27:50] Like if my team knew about this, they’d be too stressed out. Instead of being a little bit vulnerable, inviting them in and saying, Hey, here’s where we’re at today. Let’s all work together collectively to get to a better place because we’re all gonna win if we do that.

[28:00] Eric Nekich: Yeah, and I think that to your point, most like machinists that I’ve ever met aren’t naive to what’s going on at the company.

[28:10] They see the problems at quality, they see the workload, you know, feast or famine, really. So I mean, most times there’s a general understanding that something could be wrong and that fear of the unknown kind of ties into bigger problems.

Nick Goellner: Yeah, and when there’s not a transparent communication, that’s when all the gossipy stuff starts.

[28:30] You got it. All these side conversations starts. Caleb, you foreshadowed pretty well into the next scene here because just noticing what’s going on at other shops doesn’t mean you can copy and paste to your shop and that it’s gonna create the same result. One of the things about our family business is we’ve created a business system.

[28:50] We call it the Goner Way. It’s inspired by all these other great books and learnings like. One of them being the goal, which is a narrative driven story that teaches lean and the theory of constraints, the Toyota way, EOS, quick response manufacturing, like different philosophies that were like, Hey, that’s really good.

[29:10] But even in the book, the Toyota Way, they say, these are Toyota solutions to Toyota’s problems. There’s principles and themes that you can apply to your business, but you need to develop your own way, your own operating system. So I’m a little worried that Gary is gonna just sit there and think. I’m super obsessed with Klaus.

[29:20] I’m a little jealous. I’m just gonna try to be exactly like him and copy and paste and it’s gonna fix my problems. Let’s, maybe we’re, uh, let’s prime for a knee jerk reaction. Let’s jerk some knees then, Derek. All right. Next scene field by the Lean Stream tourist Sting. Gary Fixates on one number from Klaus’s Screens Spindle utilization.

[29:40] Without a machine monitoring system, he can only guess how poor his spindle utilization is compared to lean stream. But he believes if he can keep the spindles turning, then he’ll keep the profits flowing. If iron clunks Mills could match that by adding automation, he thinks he could land a high volume job to rival Klaus’s contracts and save his shop.

[30:00] Desperate. He scours an online auction spotting a used cobot or a collaborative robot going cheap. It’s a fraction of its original price. It. Gary empties his dwindling savings, betting it’ll transform his three axis mills into high output powerhouses now to win a massive precision parts contract. He bids dangerously low to prove iron clunk can compete with anybody, but the decision feels like a gamble against the looming storm of unpaid loans and Earl’s bottleneck in quality.

[30:30] His heart is pounding with hope, but also with fear. Woo.

Eric Nekich: Oh, Gary. No. Gary. No.

Nick Goellner: Gary. Whatcha doing? You make so many mistakes. Gary,

[30:40] Eric Nekich: I could help you. Caleb’s the expert on this, but I’m just gonna say measure first guys. Yeah.

[30:50] Kaleb Mertz: Yeah. Yeah, that’s like the number one thing is like just jumping into something without knowing your current state.

[31:00] How do you even know that you were successful or by how much you were successful? Or maybe it got worse actually. Yeah. Hopefully that’s not foreshadowing for the story, but

[31:10] Eric Nekich: Well, what about like root cause analysis? How do you get down to those bare bones and make sure you’re even fixing the real problem in the whole process?

Like the story says he gets hyper-focused on one KPI.

[31:20] Nick Goellner: Yeah, and he is obsessed with Klaus, which is just weird, right? So he is doing like his idea of root success analysis with Klaus and trying to think like, oh, what makes this guy successful and how do I apply that to my shop when he probably doesn’t realize Klaus started where he was at one point.

And if you try to copy and paste to a way more advanced situation, you’re gonna be in trouble.

[31:40] Kaleb Mertz: If you guys are good with it, let’s focus on this for just a second. Yeah. So the hyper fixates on spindle utilization, which is very common if anyone tracks anything in most shops that I walk into, it’s that right.

[31:50] Let start with that, which is in itself not a bad thing. Yeah.

[32:00] Nick Goellner: If you’re not making chips, you’re not making money. We say it exactly at the end of every making chips episode, we are the problem.

Kaleb Mertz: Do say that. At some point we did change it. I forgot what episode that was, but we changed it to, if you’re not making the right chips, you’re not making one here.

[32:10] Yeah, yeah. And the reason for that, he did mention OEE earlier in the story, and the reason for that is like spindle utilization is just one part of the overall metric. Right. So I could have great spindle utilization, but I could just run my machine super slow. Mm-hmm. So I could actually make a lot less parts, but have great spin utilization.

[32:30] Yeah. Which is. Obviously defeats the purpose or I can just have really poor quality parts. Like I can have great spindle utilization and even plow through stuff, but if a hundred percent of the parts are bad, I also gain nothing. That’s where like a metric like OEE, and it’s good we’re bringing this up because last episode we got all the way through those initial things to talk through and the one aspect we didn’t get to quite was.

KPIs and what to look at.

[33:00] Nick Goellner: Yeah, we promised we would talk about it in this episode, and what we didn’t promise is that it would be attached to an incredible story written by yours truly, and ai. I think

[33:10] Eric Nekich: going into those KPIs is gonna be great for the audience, but also want to point out that clearly at this point in the story, Gary has decided to try and automate some very, very unreliable processes.

[33:30] Nick Goellner: So let’s break down how spindle utilization can lead you astray. Obviously, unreliable processes lead to chaos, which leads to a lack of standardization, which we talked about on the last time. And thi if things aren’t standard. Caleb, you had a really good nugget in the last episode, like a good way to test if you’re automation ready as to like.

[33:50] Automate while you attend the machines, you just don’t touch it. And every time you have to come in and interrupt it and fix it and guide it, that’s, no one’s gonna be there to do it. Right? So if you’re unreliable, you’re screwed. But also if you’re just cutting chips and not factoring in things like availability, performance, and quality, like the OEE formula, then you might be like, Hey, we’re killing it.

You know? Our machine’s running. All the time, and really you’re

[34:10] Kaleb Mertz: not killing it. Yeah, exactly. Yeah. I, I really would’ve loved to have seen at this point in the story, Gary, go talk with Bill and Bob and whoever else is on his team. Yeah. And instruct them like, Hey, let’s start having this cultural shift of what this could look like to automate, start asking more questions around it and start asking them to be more hands off and very quickly they would see what they need to improve on first before they just.

[34:40] Throw a robot on something. So they would, if they’re machining apart and they get to a point where they have to blow off chips off the tool, right? Yeah. Or obviously they have to intervene every time they’re changing out a part, which is the one portion you got right. With that. A robot could help with that.

[34:50] So just every time that someone has to intervene, you document that and so you can see the amount of unattended time you would get if you, yeah, like three minutes. Yeah. Like, dang it,

[35:00] Nick Goellner: this robot is gonna take forever to pay for itself. And then the other thing is, okay, so he ends up buying a collaborative robot and this is where we want, where we wanna touch on your expertise.

[35:10] What form of automation did you apply? So if we remember, Gary’s got like kind of a mix of work. And he doesn’t have these high volume, lucrative high margin contracts from regulated industries like medical or aerospace. But he sees robots working at Klaus’s shop. So he goes, and, Hey, I need a robot. So how does a collaborative robot potentially limit?

The mix of work you’re able to run.

[35:40] Kaleb Mertz: So in this case, you know where he is like just buying a collaborative robot to load parts. He doesn’t already have those higher volume jobs. So a collaborative robot can be good for the right situation when you truly need it to be collaborative. If you need someone working in that space, or you’re maybe just switching over jobs every.

[36:00] Few months and you have someone that wants to learn how to program a robot, that’s fine. But there’s a few reasons that can be tough. First off, is that like backing up is a robot in that form, even the Right, right solution. So if I’m loading parts versus loading pallets or vices, right? That’s probably like.

[36:10] Backing up the main question. And for someone in his state, like typically we would lead them in a direction of loading pallets, fixturing, or vicis, because it is a higher mix environment and what you’re saving on is a lot of change over time. So if you have a system, whether that’s a. Pallet pool that comes with a machine, which he likely does not have.

[36:40] Or if that’s a retrofit system that attaches to that. Now he can have multiple jobs on there at the same time, running unattended, not day one, but down the road. So something like that would likely be a better fit without knowing every detail of what he’s doing.

Nick Goellner: You’d have about a a hundred more questions before you could apply the perfect solution.

[36:50] But there’s some red flags that pop out right away.

[37:00] Kaleb Mertz: Oh. The only other thing I was gonna say is just ’cause we’re touching on it, and this could be for a whole nother episode after this series, the whole collaborative narrative, the cobot is actually not a real thing. If you look at safety standards and everything, it doesn’t exist.

[37:10] It’s a collaborative application. The entire application has to be collaborative. Meaning like you could throw a sword on a cobot. It’s not collaborative. It will very likely kill you. Yeah.

Nick Goellner: I wanna put a lightsaber on a cobot. Seriously,

[37:30] Eric Nekich: you had me at Sword on a cobot and I would say that is exactly why you give it a six foot cord in case it turns on you.

It can only chase you six feet.

[37:40] Kaleb Mertz: Yeah. I was like, Eric, just, Eric wants to like message Gary and buy this cobot from him now so that he can,

[37:50] Eric Nekich: I will say, and you kind of started this tradition of showing a little sensitivity to Gary, having Gary’s back, Caleb. So I will say that he’s not alone. He’s not on an island here.

We’ve all been in a lot of shops. There are a lot of people who tried to throw a cobot at a business problem.

[38:00] Nick Goellner: It’s not always the answer. It’s probably usually not. What’d you say to me the other day? Like, I’ve seen

[38:10] Eric Nekich: more cobot. How’d you say? I have seen, and I am not exaggerating, I have seen more cobots still in the box sitting on shop floors than I have actually seen loading parts in and out of.

[38:20] Nick Goellner: Yeah, we’ve all seen that. If you’re like the three of us and you visit a lot of the shop, that like little cobot in a crate, just being like, put

Eric Nekich: me in coach someday.

[38:30] Nick Goellner: Here’s what I love about the two of you. So Caleb picks up right away on application red flags, like why would you do that? And then Eric, you’re a commercial sales leader.

[38:40] So there’s one thing that I’m picking up. I wanna see if you’re picking up on the same thing, but as far as like applying the robot to win a contract and pricing, did that jump out to you at all?

Eric Nekich: Yeah,

[38:50] Nick Goellner: a little bit Uhhuh like why would you bid dangerously low? ’cause you added a robot. The robot should make you more profitable, not more of a commodity.

[39:00] You’re more efficient. You shouldn’t dock yourself, ruin your company. Yeah. Hey, we got better. So like now we’re worth even less.

Eric Nekich: It just genuinely like a fundamental misunderstanding of why Klaus is successful.

[39:10] Nick Goellner: Yeah. You nailed it. So, all right, we’ll get in. It’s the last scene for the day class. Are you ready for it?

[39:20] Eric Nekich: I’m ready. I just hope that you don’t do like that hanging last scene thing where we gotta wait till next week to you’ll see. Get the rest of the story. Hey, I’m the teacher. Okay. Alright. Alright.

Nick Goellner: If I

Eric Nekich: want a cliffhanger, I will Hang on a cliff. I don’t know why I couldn’t think of that. Cliffhanger. Looked like searching for it.

[39:30] The hanging

[39:40] Nick Goellner: Chad? Is that what the hang. All right, let’s finish this up. So to his delight, the job gets awarded to iron clunk, but it comes with a stern warning from Mr. Green, the supply chain director of Shrewd Tech Enterprises. Gary, we’re taking a risk by sending this job your way. I’ll be honest, lean Stream was our first choice, but their capacity is priced at a premium and they’re fully booked right now.

[40:00] These parts better be on time and they better be perfect. Gary nods a knot tightening in his chest, knowing his cobot and shaky processes are untested against such high stakes. The warning echoes in his mind as he faces his shop’s chaos. Earl’s slow quality checks, veteran machinists grumbling, and the relentless pressure of loan payments straining him.

[40:20] His fleeting triumph overshadowed by the fear that iron clunk might not deliver, and Mr. Green might regret ever giving him this chance. What happens now? Are we hanging on a cliff? Let’s go.

Eric Nekich: My childhood experience playing clue. I knew it was gonna be Earl with the veneers in the QA lab that No,

Nick Goellner: no.

[40:40] Someone’s definitely a psycho in this story. We gotta figure out who it is. Gary’s a little obsessed with Klaus. Earl’s all pissed off. He’s checking parts. Just think I’m gonna kick the hack out. My wonder if these

Eric Nekich: are all characters that. Exist within the depths of your personality, Nick?

Nick Goellner: Yeah, if I come on, happy go lucky, but deep down,

[41:00] Kaleb Mertz: these characters are coming out for a reason.

[41:10] We might actually have to turn this into a, uh, murder mystery. That’s such a trend right now. Murder mystery, like goes, you know, if we really wanna get an audience, if someone actually ends up putting a sword on a Cobo man. I’m like, I don’t know

Nick Goellner: how it got there. Who did it? Earl’s like, Gary, check this out.

[41:20] Look what I did off with this. But yeah. Okay. So a, as the story closes, any final takeaways before next time where we continue the saga, the tale of two shops and the automation trap.

[41:30] Eric Nekich: The thing I pull out the most is that last sentence where he decided on a solution. He’s implemented the solution and he is a afraid, he has zero confidence and it’s just at this point it reads of just throwing good money on top of bad.

[41:50] Kaleb Mertz: Yep, I hear that. You wanna be excited going into that, and I’ve seen that firsthand is like when a customer gets it, and we’ve run these numbers, we’ve tracked your process, you have a stable process. They’ve gotten to the point where it’s so close to being automated, but not, and they take that next step.

There’s such a confidence there and it’s just, I dunno, it’s honestly just a beautiful thing. So I feel really bad for Gary. Yeah. I’m not gonna be able to sleep.

[42:10] Nick Goellner: You know, back to pricing and the commercial side of it, like when you’re confident that your shop is gonna kill it and you’re efficient, you’re confident to say, here’s my price, and I know Gary’s desperate.

[42:20] There’s some truth to like, hey, when you’re desperate and you gotta fill your shop with work and you gotta get out of debt and all the financial woes that Gary feels, you can’t exactly like pick and choose and cherry pick your customers, but. You also don’t wanna be like, Hey, the only reason I’m getting this job is ’cause I was the lowest bidder.

[42:40] Eric Nekich: Yeah. And you know, by not leveraging an expert by not. Seeking some sort of a consultation, maybe peeling back a few more layers on what truly makes Klaus successful. I mean, even going and getting like a productivity coach or hitting a chat board or something like that. Did Gary effectively buy a car with no tires?

[43:00] Nick Goellner: Yeah. Learn how to do value stream mapping, or if you don’t know how to do it, call your local MEP. That’s something we’ve been talking about a lot on making chips like you can call. If they’re still open, you could call your local MEP if they haven’t been shut down and you could say, Hey, uh, can you help me with this automation project?

[43:20] Not only will they help you understand, like everything Caleb talked about with what’s the right tool for the job, what’s the right solution for the application? They’ll also help you like apply for grants and get this paid for with a tax credit or some sort of incentive that you might not be aware of.

[43:30] It feels to me like Gary’s probably not. It when it comes to what’s available and what to apply for and how to be awarded certain grants and opportunities. So there’s a lot of people who can help you. Hey. Chips can help you light the lights out. Team can help you if you need help with work holding or if you need help with applying automation and where to apply it.

[43:50] I think that where to apply it part is what sticks out to me. Earl’s pissed, right? Earl’s Unhappy. Earl’s, the bottleneck. You just automated something that’s gonna run through the night. That’s before Earl. Is Earl gonna be less stressed tomorrow? Exactly. No,

Kaleb Mertz: and I’ll say too, like in Gary’s story, I have a feeling this is gonna be a beautiful redemption story.

[44:10] Over the next few episodes, we’ve looked at the this first part of this, of what not to do. That’ll probably likely go into the next episode of Yeah. Things not to do. Yeah. But I will say, I have a feeling there’s gonna be a redemption story and he is gonna look back and, oh, these are the things I should have done.

[44:30] So for anyone listening, I think that’ll be really exciting too, is like, okay. Showing both sides of this Yeah. Is like things not to do and then Okay. What he should have done and what to do down the road. I’m excited for that.

Nick Goellner: Yeah. If we depressed you by telling you Gary’s story, Caleb might be right.

[44:40] Eric Nekich: It might not be too late for Gary and Linda.

Yeah, the

Nick Goellner: whole next episode will be a marital counseling

[44:50] Eric Nekich: session. Awesome. Policy session. You know, one thing I really like to point out here. Gary’s kinda willingness to come forth and say, yeah, there’s gotta be a better way to manufacture. There’s gotta be a better way to run my shop. But then he just gets to this point where he like, he kinda loses that desire to, I don’t know where I’m going with this, but in a scenario where he should have really been okay accepting what was.

[45:10] Beyond his area of influence, you know? Mm-hmm. Outside of his wheelhouse and be like, yes, I need to start automating. I need to start measuring these processes. I need to get more like lean stream. Who can I call instead of just this kind of,

Nick Goellner: yeah. Gary’s not without courage. He is super stressed out and he is afraid, of course, but he is got courage.

[45:30] He’s taking some risks here, so it’ll be exciting to see how this all turns out. But boys, the class is out. The class is outta session. If you’re the last one outta the classroom, will you please turn off the lights? I’ll dim them. Oh, that’s where

Kaleb Mertz: we’re at in the story. Yeah. I will only dim the

Eric Nekich: lights. I will have a cobot with a sword.

Chop the light switch off the wall.

[45:50] Nick Goellner: There you go. Wonderful. Thanks. All right guys. Thanks. See you next time. Thanks guys. Hey guys, it’s Nick and I’m so excited about Machine Shop Mastery being part of making chips. So my good friend Paul Van Mader, he’s been a partner. He’s been a sponsor, he is been a friend and he’s been involved with making chips for a long time.

[46:10] And now his podcast that I love is part of our group. Here’s why you should listen to it, Paul. Just run a software ERP company for machine shop leaders. Paul was a machine shop leader. He loves machine shop leaders. He’s the one leading the charge to thank all the machinists out there for all the incredible work they do.

[46:30] And the best thing about him is he actually knows how to make their incredible work turn into an incredible business. So when you listen to Machine Shop Mastery, you’re gonna hear Paul and his guests talk about exactly what they’ve done to overcome their challenges and make their business successful.

[46:50] You’re gonna get those kinda like heart wrenching stories that tell you what people have been through, things that you can empathize with because you’re a manufacturing leader too. So check out Machine Shop Mastery and learn how to master your machine shop. Hosted by my good friend Paul Van Mader, under the Making Chips Network.

[47:00] Thanks.