The Disciple of Data

Change has been the one constant in the job of Veera Gordijevski, Fortaco Estonia’s production director. Over the last two years the factory has added 200 workers, several welding robots and CNC machines, and introduced tens of new products.

Coping with dramatic growth requires change, and in a modern production environment change isn’t most effective when it’s dictated. Shop floor personnel need to buy in to change and be convinced there is a better way. To make a convincing case, Gordijevski doesn’t consider herself a “person of words.” Data is her tool of choice.

Study the processes
Gordijevski's approach has been to study processes and understand deviations, employing data analysis to isolate the root cause of a problem.

When Fortaco’s Narva factory found itself in the situation of actual orders exceeding customer forecasts, Gordijevsky and her team froze forecasts for two months in order to analyze the lines and verify capacity. "We studied the workflow of every line, balanced resources, rotated people, and eventually optimized the processes. We built a dashboard tool which gave us a global view of production so we didn't lose information." It may sound simple when expressed in a few sentences, but implementing change in a period of heavy growth required a large amount of discipline.

"When I started as production director in 2017 I made the decision that I would take the time to investigate processes myself. I didn't want to take anyone's word for how something worked, and I learned that employees themselves don't always have an accurate view.”

‘Is it possible we’re not right?’
Middle management had worked with the processes for many years and were accustomed to doing things in a particular way. Gordijevski views it as her job to pose the tough question: Is there a possibility that you are not right?

“Sometimes a problem gets identified,” she says, “but that problem represents only a small part of the root cause. In order to convince middle management that change is needed, you’ve got to have the numbers.”

A good example was with pre-fabrication in small machining centers. "There was the belief that we had 400 hours of delays, and we needed to add labor and produce 24/7," says Gordijevski. "But when we carefully analyzed delays and associated hours, we saw that 300 of those hours were due to other mistakes in the process. There were only 100 hours of real delays. We used data to prove it wasn't a backlog and we did not add an additional shift."

"I'm not a person of words," says Gordijevski. "I am confident when what I say is based on figures. I dislike long meetings where lots of time is spent speculating about what might be the problem. Meetings can only give you a hint of where the problem might be and help you figure out ways to gather data."

Sowing doubt
Gordijevski is the first to admit that she can’t be an expert on everything. “I once thought that as production director I should understand all detailed technical elements. But I’ve realized it’s more important to lead.”

“I have great experts on my team. My role as a leader is to rely on these experts. I can use data to sow a bit of doubt, to make them question the way we’re doing things. Should it really work like this? How else might it work? If you can raise doubt in the mind of those doing the work, get them to consider that the way we’re currently doing it may not be the best, then they will find a way to improve it!”

‘How strong you are inside’

Larissa Shabunova, Managing Director of Fortaco Estonia, talks frankly about industry- and personal challenges.

"Fantastic growth" is how Larissa Shabunova characterizes today's business situation in the off-highway industry. It’s not only overall market growth, she says, but growth due to the success of Fortaco's most important customers winning more market share over the last five years.”

According to Shabunova, Fortaco Estonia's most difficult challenge is balancing customers’ rapidly changing demands vis-à-vis capacity limitations, ensuring delivering on required lead times, right quality, and right price.

Fortaco challenges
To handle a 40-percent growth in net sales over the past two years, Fortaco Estonia has purchased and put into use several large CNC machines and welding robot stations. At the same time, it has added 200 new employees to its Narva factory team. In Ida-Virumaa, a county with a total population of only 140,000, this has not proven easy.

"We've been proactive, always looking a few years ahead," says Shabunova. Her team works closely with vocational technical schools, training the best students at Fortaco while they're still in school and hiring them when they graduate. Fortaco Estonia also works closely with the county's unemployment agency to train and hire new workers. And, of course, Fortaco hires from the open market.

"Our salaries are competitive on the local market," she says, "but this is not the main driver. We're working hard to be an attractive employer thanks to the way we treat people, plus how we establish social- and development programs, support and train workers, fund worker education, and even support their children's sports initiatives."

Fortaco Estonia also has an impressive track record for promoting from inside its organization, and there is no better reference case than Shabunova herself.

First female plant director
Shabunova started her career in an assistant position and constantly worked on self-development. Holding a pedagogical education from Narva, she added an MBA from the Estonian Business School in Tallinn, and found herself in HR- and finance roles.

Working with Nordic companies she found the European work culture motivating. In 2014 Shabunova was named Managing Director of the Fortaco Estonia plant. It was not easy being the first female plant director in the history of the factory. "The factory had 70 years of history with men with strong personalities in the top position," she says. "And these men always had a technical background." She says it was a psychological challenge to be the first woman leading a heavy industry company, but any doubts about her ability dissolved when she showed year-on-year positive results in the factory.

Abilities tested
Shabunova’s leadership abilities were critically tested in crisis situations. Recently, the core problem haunting Fortaco Estonia was related to capacity planning and machinery availability challenges. "We took a holistic view on the customers’ forecasts, putting all forecasted and non-forecasted demands into one software. We were amazed how many non-forecasted requests we got in the end – for example product modifications, new products implementation, new product development, engineering change requests. It meant overall demand was much bigger than original forecasts and, at the same time, problems with machinery from time to time reduced capacity.”

Shabunova buckled down and focused on leadership and execution. "You must find the root cause of a problem and attack it. You plan and then you make sure the planned actions are properly executed.” After a few months, her team started to see positive results. After six months, she says results were excellent. “Results were good enough that nobody asked any more questions!”

Don’t fear a challenge
Shabunova is a non-technical person in a highly-technical job. Yet she says that can play to her advantage. "There is benefit if the leader has a technical background, but there are also disadvantages. You might be tempted to dictate what should be done. For me, however, I rely on my people and give them the opportunity to use their skills. I empower them. And we are very successful technically speaking."

Shabunova realizes that as factory director she not only occupies a high-profile position at the plant, but in the entire community, as well. She frequently finds herself in front of young women who are faced with making decisions about their own futures. Her advice: Don’t run from a challenge. "Men are used to challenges. But women’s first reaction may be 'Oh, I won't cope.' My advice to them is to be braver."

Take the chances life offers you, she says. "My credo is that it's better to take the opportunity. If you don't try it, you'll regret it your whole life. Take it. Give your maximum. You don't yet understand how strong you are inside."

The Economics of Safety

India has always been a source of vast wealth. In the 18th century, before India's deindustrialization at the hands of the British Raj, it held over 24 percent of the world's wealth. Today, India ranks second worldwide in farm outputs. Agriculture employs 50 % of the Indian work force and contributes roughly 18 % to country's GDP. India is a market to be reckoned with, and a great opportunity for companies with meaningful experience to contribute.

Your grandfather’s tractor
If you want to get a sense of tractors in India, do a Google image search using the term “tractors India.” The cabinless machines may make you nostalgic for your grandfather’s farm, the open air and the smell of the harvest.

“Some companies are still producing tractors introduced in the 1960s,” says Aki Komulainen, Fortaco's Director of Cabin Technology, “and that’s because they’re very good machines for their purpose: simple, robust, easy to service, and proven in the field.” Small tractors make sense in India, where the average farm size is estimated to be 1.15 hectares, and there is not a culture of farming collectives where equipment is shared across multiple farms. Government policy also serves to keep farm size small and encourage family farming.

New regs, new cabins
But as India reasserts itself on the world stage, a culture of safety is on the rise. In the next few years, new safety regulations are coming into force for newly manufactured tractors. “No one yet knows exactly what the new regulations will call for, but we can be sure they’ll include European-style ROPS and FOPS,” says Fortaco’s Komulainen, referencing roll-over protection and falling-object protection. “And because of the recent rise in family car comfort in India, farmers are also demanding air conditioning in tractor cabins.” The new cabins will minimize vibrations and noise, include air filtration systems for pesticide handling, and be delivered at a cost significantly lower than in Europe.

Typically, a cabin for the Indian market must be delivered for around 1,500 euros, versus a European cabin which could easily cost ten times more. “But a one-to-one comparison here is not appropriate,” clarifies Komulainen, who notes that a typical Indian cabin is a drop-on cabin with no floor structure, pedals, or heating unit. “However, cabins for the Indian market cannot be stripped-down European cabins. They must be specifically designed and manufactured for the purpose to meet all needed requirements.”

Local partnership
In September 2018, Fortaco and Tata AutoComp Systems Limited signed a memorandum of understanding. Fortaco will provide technical expertise, cabin know-how, and design competence. Tata will provide the manufacturing facilities near the city of Pune in western India, home to many global OEMs.

“The tractor market in India is estimated to be 700,000 units per year,” says Komulainen, “and a good partnership like this is the key to growth in the market.”

Beyond agriculture, other off-highway businesses in India are also experiencing growth. According to Construction Week, manufacturers in the construction and mining equipment market have enjoyed double-digit growth. Aki Komulainen says Fortaco is also looking at the construction market, participating in the last Bauma expo to develop construction contacts in India. There are plenty of Indian OEMs, plus European manufacturers are showing clear interest in the Indian market.”

Bringing flexibility
India continues to compete neck and neck with China for the title of world's fastest-growing large economy. In 2018, India’s economy improved 23 spots in the World Bank’s Ease of Doing Business ranking.

It’s a dynamic market waiting to be served. “Local manufacturers often make cabins for only one specific customer, or they are limited by geography,” says Komulainen. “Fortaco’s 30 years of experience mean we can bring real flexibility to the market.”

Not Ready for Robots (in High-Stress Structures)

Robots may soon dominate the service industry. But heavy industry still requires welding skills only humans possess.

“Robots weld. They don’t think.” Wärtsilä Inspection Manager Raimo Mäki-Reini succinctly delivers his verdict when asked how quickly the robots will begin welding structures for his company.

How soon robot overlords will put humans out of jobs has never been a more popular topic in the mainstream media. In the service industry, it’s predicted that by year 2030 between thirty and forty-seven percent of humans will be replaced by robots. But welding is a different story.

Robot flaws
Steel base plates which house Wärtsilä ship engines and generators can weigh 32 tons. Add an engine and they weigh over hundreds of tons. This is not yet a job to entrust to robots. “I was amazed in the visual inspection,” says Mäki-Reini of the times he’s inspected robot work. “What beautiful welds! But when I broke them open they were terrible. Robots don’t notice air gaps.”

Tolerances are tight in Wärtsilä’s business. Material tolerances for welded plates are +/- 0.5 millimeters; cutting tolerances +/- 2.0mm; assembly +/- 2.0mm; and expansion tolerance +/- 5 mm. “A robot can’t handle all of these,” says Mäki-Reini. “I’ve inspected nine suppliers who use robots and I’ve rejected all but one. The one I accepted made assembly planning, and they welded only the clear areas with a robot — only about half of the total welding job.”

“Manual welding, like Fortaco does it, is the only possible way of working to get the quality level Wärtsilä requires with the highest stress structures,” says Mäki-Reini. “However, Fortaco does use robots to do small parts of the larger job in areas where a robot can excel.”

A robot future?
Mäki-Reini does not totally dismiss robots but believes if they’re to have a future working for Wärtsilä, then good communication will be part of that solution.

“If you want to use robots, then step one is better defining where a robot can weld and where it can’t,” says Mäki-Reini. “Step two: program it so well that the robot can weld tough parts like the corners. Step three is better cutting control.

Perhaps the tolerance should be +/- 0.5mm and not 2 mm.” But tightening tolerances is not only tough — it also causes increased costs.

Whether robot welders will ever replace humans in large part depends on the development of a machine eye. “If we can give it clear requirements for what it must see, then it can determine what’s okay and what’s not okay. After that, however, you need an adaptive system. And then after that you need control, checking the work. You need a robot to do the control if possible. There is no equipment for that today.”

Wärtsilä is currently working with a company in Germany which makes machine eyes for automotive manufacturing. “But our situation is more complicated,” Mäki-Reini says. “Automotive robot welding tolerances are in centimeters. Ours are in fractions of millimeters.”

Humans rule (for now)
For the foreseeable future humans will rule the shop floor. “We have great manual welders and Fortaco is one of them,” says Mäki-Reini. “The secret to great welding is good routines to control process and clear requirements to the floor. When that’s done right the result is satisfactory. The result is the most important part.”

Mäki-Reini says if there’s one human challenge to address it’s creating welders themselves. “Young people don’t want to weld anymore” – he makes a gesture of typing on a keyboard to show the type of jobs the young prefer. “We could lose all our welders in 20 years, so our challenge is to improve robots to the point they can weld high-stress structures.”

The Welding Inspector - Bad Guy or Consultant?

How to make the grade as a Wärtsilä supplier – and how to remain one.

Approximately 100 days per year, Raimo Mäki-Reini is on the road visiting more than 40 different countries around the globe. He’s not a tourist: if you happen to find him at the Eiffel Tower, it’s probably because he’s curious about the quality of the welding.

Mäki-Reini works for Wärtsilä, and he’s mostly found on factory floors where he inspects, consults, advises, and trains. He’s there to decide which suppliers qualify to weld structures for Wärtsilä, the Finnish corporation which manufactures and services power sources and equipment for the energy- and marine markets.

A thousand suppliers?
Mäki-Reini works in Wärtsilä’s Energy Solutions division where they build engines for power plants to power cities and heavy industry. Although Wärtsilä has 18,000 employees in 70 countries, it concentrates on engines and buys in most non-moving and welded parts from suppliers. Mäki-Reini doesn’t know exactly how many suppliers Wärtsilä has but estimates there are likely more than a thousand. He shows a visiting journalist a map charting Wärtsilä suppliers. The world, reduced to the size of his laptop’s screen, looks as if it’s suffered a measles outbreak: there are dots everywhere, sometimes on top of each other.

The quest for quality
Over millions of cycles, Wärtsilä engines vibrate and turn on their base plates. The welding in the base plates must be near perfect: any defect will cause cracks. Yet since base plates weigh tens of tons, they are preferably welded locally in the faraway lands where the power plants are constructed. It’s to Wärtsilä’s advantage to use as many local contractors as possible, but not every supplier can meet Wärtsilä standards. It’s Mäki-Reini’s job to find those who can. He visits every current and potential supplier about once per year. “I have a quality capability checklist,” he says. “If a supplier meets a minimum 70 percent of the criteria then they can be accepted with some corrective actions. 80 percent is considered ‘good.’”

The news isn’t always positive. Mäki-Reini holds up a document far enough away that the journalist can only make out red and black text. The journalist leans in for a closer look but Mäki-Reini pulls it away. “Sorry, top secret,” he says. The journalist notes that there is a lot of red on the page. “Would it be fair to say that half of potential suppliers don’t make the cut?”

This year 70 percent of those inspected have been approved. “It’s a very good year,” Mäki-Reini says. “Last year it was only 55 percent.” He’s pleased the number is so high but notes that the relationships aren’t necessarily forever — suppliers can be cut. Quality sometimes falls when a company’s management changes. “In 2014 we had a supplier that was selling us steel structures. But when I visited in 2017 they had a new managing director who wanted to save money. They’d fired the welding coordinator, maintenance was poor, and they met only 56 percent of our requirements. I had to reject them.”

Welding is art
“Welding is an art,” says Mäki-Reini. In order to make money, the supplier needs quality at what Mäki-Reini terms “the correct level” — not too poor, but not too good. “We don’t waste money on perfection; just fulfill the requirements.”

Visual inspection results may be fine but a destructive test is conducted – a fillet weld test piece is broken to make sure the root has melted. “Welders have to follow the WPS [Welding Procedure Specification] and this is supported by a WPQR [Welding Procedure Qualification Record],” says Mäki-Reini. But he notes following the directions isn’t as simple as it might sound. “There are in total 164 standards in welding which amount to around 8,200 pages of text.”

Mäki-Reini will break apart a fillet weld and examine the heat affected zone, as well as the root. “Most cracks start at the root. If there’s a flaw in the weld, the product will crack in under a couple thousand running hours.”

Welding is communication
“Many companies only check visually,” Mäki-Reini says. “They don’t know any better. And it sometimes happens that management may not understand the requirements and push the welders to work faster and faster.”

“In manufacturing there’s sometimes a communications gap between the office and the factory floor. ‘Upstairs they didn’t tell us anything about that,’ I’ll hear. The gap is physical, too, because the office is literally upstairs.”

Mäki-Reini has a lot of respect for welders and he knows what they’re capable of. He’s qualified twice as a welder, though after 32 years in the business his eyes are no longer what they used to be. “Welders are good and they’ll solve the problem, but the result isn’t always satisfactory. Welders may not know what’s behind the drawings, and so they need support from the welding coordinator. To produce our products requires a team like an orchestra. If one musician is playing poorly then the result is poor.”

Bad guy or consultant?
In order for a factory orchestra to play to its full potential, Mäki-Reini occasionally finds himself in the role of consultant. “I organize three-day training sessions where we bring together management, the design department, and the workers. We do it in the local language so nothing gets lost in translation.”

Other times he simply offers a new perspective on an old problem. “I bring fresh eyes and I can see things that they cannot see.”

But is he welcomed as an inspector? Is he loved or hated? “Depending on how they view things, suppliers either see me as the bad guy or a free consultant,” he says. “The companies understand my job.”

But if a supplier is required to meet 70 percent of Mäki-Reini’s requirements, the journalist asks, how are welding inspectors judged? The answer seems to be results. Mäki-Reini has been with Wärtsilä for five-and-a-half years and so far there have been no cracks caused by poor welding. “Knock on wood,” he smiles.

Big Data and Million-cycle Machines

Big data is put to use more and more to offer customers a better service. But in the off-highway industry it will soon drive the way products are designed and manufactured.

by Dr. Rafal Sornek, Senior Vice President, Fortaco Technology

In 1998, the American car insurance company Progressive launched its Snapshot program. Drivers could opt to place a self-contained autonomous electromechanical sensor (telematics) in their car which would send Progressive a picture of the driver’s habits. In the beginning, the program was used to reward safe drivers with discounts.

In 2013, the company went a step further and used collected data to penalize bad drivers. They measured speed, time spent driving, and recorded incidents of hard braking. The data could tell Progressive whether a driver took risks and whether he (or she, though data shows women are safer drivers) paid attention.

The Progressive case is perhaps the most famous example of how a service company utilized big data to dramatically improve its consumer offering. It’s not often that big data is used to improve manufacturing – but that day is coming soon. I should know: it’s my company that’s pioneering it.

Your million-cycle forklift
In today’s off-highway vehicle manufacturing business, vehicles are manufactured for the most demanding use case. The forklift in your warehouse, for example, likely contains steel components which enable it to run millions of cycles, operating 24/7 to offload thousands of pallets.

But it’s also quite possible that your business doesn’t require that. Perhaps you use your forklift once a day when the truck comes with your delivery. You start it up, offload one pallet, and park it for the rest of the day. Do you really need a forklift with a fatigue life made for the million-cycle customer? What did you pay for that forklift? And how enthusiastic are you about paying to offset the design costs that are not really applicable to your needs?

Today, the steel components in your forklift are made for the most demanding use case. But they won’t be for long. Because big data is changing the way we manufacture.

The digital toolchain
Much like the Progressive Corporation gathers information about its drivers, big data and the digital toolchain enables us to gather information about forklift users.

The fleet management system provides our OEM customers with data about how their customers are using equipment. Is it once per day? Or is it thousands of times per day? Is the end customer utilizing the product’s full lifting capacity? Or only 10 percent of it? Are they utilizing the forklift’s extension boom, or simply taking something off a truck and putting it on the ground?

Next we quantify the data. What portion of our OEM’s customers are light users and how many are heavy? Is it a normal distribution, or are there peaks? If we find that 90 percent of customers are light users, how do we translate that into product architecture? How many product versions do we now need knowing what we know?

The era of data-driven product design and production is not far off. In fact, at Fortaco we have already begun the process. This year we were the recipients of a research grant for a project we call RapidSteel. It's a 1.6 million-euro research project, half financed by us, half by the Polish government, which will be used to pioneer data-driven product design for one of Fortaco's top OEM customers.

It's a three-year project. This year we’re using data analytics to simulate production options. Next year we'll build the pilot line which can handle multiple product versions. In year three, we will validate those prototypes in the field.

Customization is coming
I believe that this type of manufacturing in the off-highway industry is inevitable. Whether we like it or not, the reality is that we’ve got to learn how to manage it.

Even in the automotive industry the legacy of Henry Ford is coming to an end: No longer are customers satisfied with any color they want as long as it’s black. Sure, mass production makes sense for cars that carry you from point A to point B –car sharing fleets, for example. But premium cars will have highly-customized “car content,” from the engine to the entertainment system.

Last year, Porsche said that electric vehicles are among the reasons its suppliers will have to work with a modular approach. Electric off-highway equipment will present particular opportunities for the use of big data. Since electric vehicles are powered by expensive nickel batteries, every kilo reduction in the weight of the steel structure results in huge long-term savings for the customer.

No one knows how fast the development of electric equipment will proceed, but we do know manufacturers will be required to provide both diesel and electric offerings in the near- and medium term. This doubling of product offerings can only be made efficient through the use of big data.

Communication is key
The Progressive Corporation’s use of data was so innovative that it changed an entire industry. Competitors eventually discovered that if they weren’t able to offer a similar product, they’d become a niche player serving mainly reckless drivers.

What has already happened in the insurance industry is happening now in the off-highway industry. The modular factory is coming, and big data is its driver.

In the past, OEMs sent us a drawing. This was the communication of a solution, not a need. In this new era, big data is communication – a seamless flow of information which removes opinion or conjecture from product design and manufacturing. It’s communication that cannot be ignored, and communication that allows Fortaco to deliver solutions that serve both your customers and your bottom line.

Still Waiting for the Robot Rapture

The popular press may lead you to believe that the Singularity is right around the corner. But a Fortaco welding engineer explains why robots used on big structures must dramatically improve before they’ll completely replace human welders.

by Jari Hakalahti, QHSE Manager & Welding Engineer

Manufacturing professionals who are not welding engineers — often those who have been justifiably amazed by functioning robot lines –sometimes talk about robotic welding as if it's incredibly simple. Just throw the parts in the air, press a button, and voilà, your finished product is ready to ship!

At Fortaco, we enthusiastically use robots whenever they make real sense for our business, yet our behind-the-scenes vantage point forces us to think in sober terms. The robot revolution may one day arrive: robot welders which (who?) understand, learn, and adapt to changing conditions while they weld. But before this day comes, there are a host of issues which need to be sorted out.

Can you match this, bots?
At our factory in Kalajoki, Finland, our 40 welders produce around 7,000 tons of welded structures every year, among them 32-ton steel base plates on to which ship engines and generators weighing over 70 tons will be fastened. Given the millions of loading cycles and vibrations our welds will endure over the ship engine's lifetime, there is not much room for error.

For a robot to match human quality, it will need to see air gaps and immediately adapt. It will have to be sensitive to environmental conditions and immediately compensate. And of course it will have to figure out how to get to those hard-to-reach places and corners where a bot isn’t currently up to the job, or can’t be repositioned without major human effort.
Another challenge is tack welding. Since robots can drive over tack welds and may cause defects underneath, humans are necessary to ensure even quality. Assuming a robot could tack weld, you'd also need another robot who could position the parts perfectly. Yes, this can be (and is) done for simple products and huge volumes, but it doesn't make sense for Fortaco’s biggest structures over 15 meters long and weighing 32 tons.

A challenge to suppliers
The size of the structure presents other problems. If you want robots to weld them, you need perfectly-cut and pre-bent parts to avoid gaps and weld stress deformation in big structures.
Also, as any hobby welder knows, a large part of good welding is positioning the parts before you begin to weld. And even beyond the realm of robotization, we see that most new welding technologies demand very accurate parts and plate fitting. Parts manufacturers may wish to take this as a challenge, as the success of robots is partly in their hands.

It’s payback time
For robots to match human performance is not impossible, but it is expensive. Optical sensors, temperature sensors, cameras, sound sensors – all these are required to approximate the human welder. Not only are these items expensive, but they take up massive amounts of space.
Please don’t view me as a Luddite – I’m very much in favor of robotization. I love that robots don’t take coffee breaks and that they can turn a part in a second without the use of a crane. It’s just that I work with big structures and robots every day. I know their limitations.
In many Fortaco factories we have products that suit well to robot use, and we will no doubt continue to invest in robot welding in the future. [SD1] But since we’re also running a business, we have to be very careful about which robots we invite into our lives.
From an investment point of view, we cannot wait an eternity for a return on the investment. With robots, the investment is huge and the payback time is long. There’s always the risk of investing today in yesterday’s technology, and recouping only a fraction of your original investment. So before we invest, we need to be convinced the robot will make a meaningful contribution.

Sympathy for the bots
Perhaps it’s time we humans show some sympathy for robots. After all, sometimes it’s we humans who are holding them back. Robot manufacturers, interested in sales, often provide numbers that are too optimistic. For us, the best measure of efficiency is how much welding wire is used in one hour. A human welder uses approximately one-half to two kilograms per hour, depending on the welding process used. For the jobs robots can do, they use four to ten kilos per hour, depending on the set-up. It’s great efficiency, but the main issue (which is usually forgotten in comparisons) is that it’s the only part of the welding phase that can be automated — welding set-up and finalization must still be done manually. Therefore, the over-the-moon numbers some robot makers give you for the overall performance boost are not always accurate.

Also, robots can literally suffer from prejudice. Take welding around notches, for example. In some conditions, robots can do this work well, but some humans still oppose their use. Even when robots achieve the required state of development, humans may still make decisions about their use using outdated information. It takes a while for information about their proven track record to circulate. Poor robots. We’re lucky they don’t yet have emotions.

As professionals, the best thing we can do is to attempt to understand the real applications of robots, accept that they are not the universal fix-all in manufacturing, and not demand too much of them. From time to time, we might even offer a little bit of robot love.

Engineering with Glass?

Lund University offers new ways of thinking about glass.

Glass is generally treated by engineers as, well, glass. It offers protection from wind, insects, rain, heat, and cold, but many engineers don’t consider its mechanical properties when designing new products. From the point of view of strength, it is literally invisible! This is especially true in the heavy machinery industry where machines can weigh 70 tons -- and our job is to protect the operator with the care that might be afforded an infant in a car seat. In the event of a roll-over or fall-over, the operator must emerge unscathed.

In the cabin environment most mechanical engineers would laugh at the idea of using glass as a load-bearing element. But they would be terribly wrong, as my team and I recently learned during an informal seminar at Lund University’s Department of Construction Science.

Challenged by Professor Erik Serrano and his colleagues, we convened a meeting to discuss engineering with glass – and we invited our cabin-specialist customers. What we learned was that the civil engineering industry is bravely exploring new applications for glass. Designers and architects are driving the demand for the wider usage of glass as an engineering material.

Our discussion also explored the topic of improving visibility for the operator in the cabin. Of course, there is a list of problems to be solved, but every solution starts somewhere as a spark in a meeting like ours with our clients and the experts from Lund. It was an open discussion where engineers representing a variety of product needs could share their ideas as well as learn about what’s taking place in other parts of their industry.

Thank you, Professor Serrano, Professor Persson, and Dr. Kozlowski, for hosting us in Lund! We look forward to building further on the ideas we discussed.

The New Reality of R&D

In the race to reduce costs, traditional outsourcing of engineering tasks may lead to higher R&D costs. But to stay competitive the OEM must still outsource. Fortaco Technology's Rafal Sornek shows how to improve R&D efficiency through early involvement of strategic suppliers.

by Rafal Sornek, Senior Vice President for Technology, Fortaco

Batch engineering and outsourcing your engineering haven’t always been bad ideas, but they can easily be carried too far. Savings on an hourly rate are tempting, especially for what may first appear to be repeatable tasks. But despite a better hourly rate, the number of hours involved for seemingly simple tasks can often add up.

If I would ask one of my Fortaco engineers to design a steel bracket, he’s likely to tell me we need to take five-millimeter steel and bend it in a certain way. But if I have to outsource that same bracket to engineers, who don’t know my product, they’ll use software to calculate stresses, they’ll model the bracket, establish boundary conditions, and then they’ll send me a report. The outcome may be the same, but it will take twice as long. It may not even be cheaper, and it certainly doesn’t add to my efficiency.

Too far from the product
In my past life as head of R&D for a major OEM, I witnessed the outsourcing of key component engineering. I realized that given the turnover in R&D, many OEM engineers just don’t have much of a connection to manufacturing. In new component design you design details, send drawings, you have a price target from a sourcing organization, and then you just have to pray that your supplier’s price is on target.

But usually it’s not. Then a discussion ensues about how to lower the price. The supplier will suggest alternations, and the result is three to four loops of design changes. The heavy time pressure makes engineers reluctant to make any big changes, and the outsourcing process puts engineers between a rock and a hard place. That is unfortunate, because the bigger game – what the OEM needs to worry about – is being first to market with your product.

The costs of inefficiency
Delays to market can mean the loss of the premium price and share-of-mind that first-to-market products command. But even simple delays will cost you dearly. To understand what delays cost you, first forecast your revenue, your cost of goods, and get your net present value. If you have a 30 million NPV in a 60-month period, then every month of delay is costing you one-half million euros. Companies often fail to calculate delay costs, or are sometimes even unaware of them. They don’t see it directly in the cost, but it’s there.

A third cost of delays can be felt in the return on R&D, calculated as the gross margin generated by the product divided by the R&D spend over a given period. According to studies done on OEMs, their return on R&D is 12 euros gross margin per one euro spent on R&D. But if you concentrate on your core — let’s say you’re a system integrator — then I know companies that can go up to 60 euros gross margin per one euro spent on R&D.

How is this possible? It’s because these companies are not asking their engineers to design a hydraulic cylinder. Instead, they outsource it to a company that specializes in hydraulic cylinders. An OEM simply cannot afford to be an expert in everything.

Electric mobility: problem or opportunity?
Given changing CO2 emissions standards and improving technologies for lightweight steel structures, electric mobility in the off-highway business has finally arrived – and with it the potential to destroy an OEM’s return on R&D. Electric mobility does not mean the replacement of diesel engines, but rather that crane manufacturers, for example, will need to produce every model in both diesel- and electric-drive versions. This means companies will be looking at doubling their R&D expenses in order to produce an electric model.

Unfortunately, there is no reason to expect sales to double, and with sales held constant, doubling R&D expenses will result in the return on R&D decreasing by half. OEMs will be left with the choice to invest more in R&D, or find partners who can do it on their behalf. Since there is no fixed cost connected to the external option, this approach holds appeal to bean counters at OEMs. But it makes engineering sense, as well.

In this age of digitalization OEMs need to focus their R&D on what makes them unique versus the competition. Does it make you unique that you design your own steel structure yourself? I’d argue that it’s better to put your resources into thinking about the solution you’re offering. Think at the system level.

Bring it home with Fortaco Technology
“Outsourcing” may be one of the uglier words in the engineering vocabulary, but it is not necessarily a synonym for cheap or low quality. We created Fortaco Technology to offer design-to-manufacturing capabilities for the off-highway industry.

In 2017, we began working with a major construction equipment company in a design-to-manufacturing advisory capacity. We’re the guys looking over their shoulder. We were able to show the customer how their current designs would mean a robotic arm couldn’t get access to make a weld and would require human intervention. Our advisory approach is expected to reduce manufacturing costs for the customer by 15 to 20 percent.

A second solution from Fortaco Technology is called Toolchain. Its role is to extend the “looking over the shoulder” aspect of Fortaco all the way back in the work process to data analytics and carried through, in part with a digital twin, to product specification, concept, design, and manufacturing. Expected benefits are a 10 percent material savings, 18 percent labor cost reduction, and 50 percent faster product development time.

A new reality
It’s the new reality of R&D. Outsourcing doesn’t have to be a dirty word. In fact, outsourcing is inevitable, and how we handle it can make or break the business. The good news is that while engineering services may have to be outsourced, there is no good reason an OEM can’t improve efficiency – and its return on R&D – by doing so.

Rafal Sornek, PhD, Fortaco's Senior Vice President for Technology, invites you to calculate your return on R&D and get in touch

How OEMs can get the most out of a supplier

"An OEM-supplier relationship is like a marriage", says Marcus Engman, Senior Vice President at Fortaco. We asked him to play marriage counselor and answer tough questions about OEM-supplier relationships.

If we look at the OEM-supplier relationship as a marriage, what are the key factors to keep a couple together? What makes a relationship work?

It’s really important to sit down, talk and to get to know each other, because no relationship can support too many wrong assumptions. In terms of business, both parties have to understand the supply chain. Since you can’t keep marrying and divorcing all the time – or if you do, it gets disastrously expensive – it pays to invest in a strategic partnership and, as importantly, invest in the selection process to ensure a strategic fit.

For a supplier it’s exhausting to fill out RFIs and RFQs that arrive via email. You fill them out, you tell your story, but you never meet your potential client. Generally speaking, things that happen via email are not fruitful. When an OEM begins looking for a new supplier there is always a reason behind it. Maybe their current supply chain has price or quality issues, or capacity constraints, or perhaps they’re going to open a new factory somewhere and need to localize the supply chain . You’ve got to understand their motivation, and an email exchange doesn’t provide the type of dialogue so that a supplier can add value.

But OEMs are so burdened that they’re even bringing in consultants to do RFQs. What’s a more ideal process – better than email – for finding the right match?

It’s true that consultants are often brought in to do prequalifying work. Another common practice is to leave that work to dedicated business intelligence. They don’t always have the authority to do more than the bosses have told them to do. No dialogue comes from it.

It’s not efficient if an OEM is paying a lot of money for someone to shortlist companies without even knowing whether those companies are really interested or if they’re a good match. If an OEM’s short list is full of suppliers that don’t fit their strategy, then the OEM really has no short list. Choosing a good tier-one strategic supplier isn’t as easy as just doing a Google search, though this tool can aid you in preparing a long list. More important is preparing the correct supplier profile.

Of course, you have to take part in RFIs and RFPs. These are the steps before the RFQ. But the level of commitment to the process is different. If an unknown OEM approaches me and asks for a long list of information, and they’ve provided an RFQ. I don’t immediately say “Yippee, let’s do it.” I’ll say “Yes, we’re interested, let’s meet.” It’s a complicated relationship and many things must fit: ambition, timing, resources, industrial processes, just to name a few.

But an OEM can’t meet with everyone, so how should a good short list be built? What’s one important element that must match between supplier and OEM?

One observation I can make is that size matters. A supplier needs to have a certain size of business, the right processes, people, and so forth. Take steel fabrication, for example.

One European OEM’s spend in steel fabrication can be 100 million euros and upwards. Fortaco’s larger competitors in steel fab are around 30-50 million euros in turnover, but you can find suppliers who have turnover of five million euros or less. A supplier has got to have the critical mass, a certain amount of fixed competences or resources – project management, quality, sourcing, inventory management, and other support functions. Fortaco’s turnover in steel fab is 170 million euros, and this means we can afford a higher fixed cost base.

Those serious about being a tier one supplier must have the willingness and ability to invest in the operation. The bigger the company the bigger the investment budget. Investments can be in the range of millions. It doesn’t make sense to form a new relationship for revenue of a half-million euros. There’s got to be a clear target, commitment, and the long-term business case must be clearly understood by both parties.

So can you define your dream OEM?

For us, our dream customers are those with whom we have a strategic relationship that’s not only about manufacturing, but where it’s also about technology and early involvement. Fortaco’s dream customer comes to us with a question and is open to ideas about how to develop new products that are easier to manufacture or products that come with improved functionality. The dream customer is quality driven, values performance in terms of delivery accuracy, and is more focused on value than on cost.

The dream customer gets involved in R&D and we work together in the early stages to secure the best product at the right price and right quality. A dream customer is a customer who can critically examine their own processes and, if something goes wrong, doesn’t take the easy way out and blame the supplier. To make any marriage work it’s got to be a balanced relationship.

You have been known to say that “suppliers actually choose the OEM, not the other way around.” Explain what you mean, because it seems OEMs are often proud of their huge spends and some have reputations for being dictatorial.

In principle, you should choose your customers yourself. Why should you let somebody else decide on your future or your destiny? You have to be in charge of your own business!

Fortaco lately had a rather good experience with one customer we’ve been with in talks with for many years. And I mean literally years—this customer was already auditing our factories several years before we had a concrete business case. We both wanted to work with each other, but we had to wait for the planets to align and for a concrete project to appear so that we could begin cooperation.

We have made mistakes in the past when we were not critical enough of a potential customer. Perhaps we were hungry for new business and we began working together, but later we understood that it was not a good match. We’ve learned that we need to use our resources on relationships that are fruitful in terms of executing our strategy. It means that we must choose our customers as much as our customers choose us.

Bringing you back as a marriage counselor, how about one practical idea for OEM-supplier relationship improvement?

Consider this: a typical supply agreement is about ten pages long. Three of those pages are concerned with how prices are formulated, one page about warranties, one page about liquidated damages if you don’t perform, and another page about quality, and so forth. In all of those ten pages there may be only a few sentences about how we will work together to ensure we meet the delivery performance and quality targets. The part which describes how we’ll work together is basically missing! The communication, sharing of information, production planning, capacity flexibility issues – this is crucial information in order to meet targets, but it maybe rates the attention of only a few sentences.

My point is that lots of energy is expended when it comes to price. But very little energy is put into the question of how we’ll work together. I am not placing blame here, because we as a supplier can also take some responsibility for this. But the supply agreement might be one place where we could start—in the name of better marriages—in order to shift the focus away from cost and back to value.

Please contact Marcus to discuss in more detail about OEM-Supplier relationship