The LEAN Accountants

Commonwealth of Pennsylvania Expands Grant Programs

 

Global Access Grant Program Launched

The State of Pennsylvania recently was awarded a grant from the U.S. Small Business Administration which resulted in the expansion of the Market Access Grant program. The new program, called Global Access Program (GAP) provides up to $5,000.00 in 1:1 matching funds per year to qualifying Pennsylvania companies. GAP is designed to provide flexibility and encourage innovative use of funds to meet the specific international needs of PA companies. Qualifying activities include: overseas trade mission or trade show participation, domestic trade show participation, foreign market sales trip, subscription to USDOC service, independent consultant assistance for CE mark, CSA, ISO, REACH, CITRA, etc., export training workshops, product certification, international marketing media design, website internationalization and marketing literature translation fees. To learn more about this program contact the World Trade Center of Central Pennsylvania at www.wtccentralpa.org

New Trade Adjustment Assistance Guidelines Qualify More Manufacturers

The Trade Adjustment Assistance program was established by the U.S. Department of Commerce to balance global competitiveness and to help those manufacturers that lost business due to foreign competition. The federal guidelines were recently updated to make the application process easier and allow more manufacturers to qualify for the grant dollars, even if they tried unsuccessfully once before. Qualifying companies can be approved for matching dollars up to $75,000. Locally, manufacturers can access the grant dollars through the Mid-Atlantic Trade Adjustment Assistance Center (MATAAC). MANTEC has established an effective process with MATAAC to make the paperwork as painless as possible and help manufacturers access the funds sooner. For more information, please contact Leigh Ann Wilson at MANTEC: (717) 843-5054 x223 or wilsonla@mantec.org

For further information on these grant programs please contact the organizations above or contact the LEAN Accountants of McKonly and Asbury, LLP.

Year 2011 Manufacturing Technology Demand Strong Amid Other Economic Weakness

As initially reported by The Association for Manufacturing Technology (AMT) The most current U.S. manufacturing technology orders show 2011 at $4,529.11 million, which is up 80.5% compared with 2010 and is the second highest dollar amount in the last 15 years. As of October, manufacturing technology orders had already surpassed the total value accumulated in 2007.

The Midwest and Central regions of the U.S. have seen the greatest surge in manufacturing technology orders. The Midwest's manufacturing technology orders in 2011 are 105 percent more than the comparable figure for 2010. This large increase is the result of the region's large traditional customer base.

It is also where the oldest equipment resides and the industries impacted most by the weak dollar and reshoring trend are located. The Central region pick-up — 85 percent higher compared to 2010 — was powered by the growth in the energy business and secondly by the automotive industry.

Beyond manufacturing technology, overall U.S. manufacturing is robust. Despite the past several years trend of offshoring, the value of U.S. manufacturing output increased by one-third to $1.65 trillion between 1972 and the 2008 recession. Even though China accounted for 19.8 percent of global manufacturing value in 2010, the U.S. was strong with a share of 19.4 percent.  Exports are rising as American manufacturers meet overseas demand. Manufacturing technology from the U.S. is less expensive than foreign equipment, and U.S.-made goods are more price competitive than many imports due to the weak dollar.

The average age of machinery currently in use at U.S. manufacturing facilities crept up from nine years in 2007 to 13.5 years, and as demand started to increase the need for investment to replace the aging equipment became apparent. Those investments are being made in completely new technology. Multi-operation machines are profoundly impacting productivity. Water jet cutting and hydroforming are experiencing massive growth because they offer all the benefits of traditional processes but eliminate distortion and deformation. Additive manufacturing is growing, nano machining has become commercially affordable, and the availability of new materials, such as compact powdered metals, is having a tremendous impact. Plus, the emergence of cloud manufacturing, which promotes collaborative efforts across organizations, is opening new doors to manufacturers.

Harrisburg Regional Chamber To Sponsor LEAN Event January 25th

The Harrisburg Regional Chamber will be sponsoring a program called "Return on Investment (LEAN, 5S, LEAN 101a)" on Wednesday January 25th, 2012 from 11:30 am to 1:00 pm. The event will take place at the Appalachian Brewing Company located at 50 North Cameron Street in Harrisburg. Through this session participants will:

   

• Learn why LEAN techniques can be benefical to their business
• Be introduced to the concept of LEAN and 5S
• Learn about additional training opportunities available

The session will be led by representatives of MANTEC. MANTEC is one of seven industrial resource centers (IRC's) located in the Commonwealth of Pennsylvania with the goal of supporting and growing manufacturing in the Commonwealth of Pennsylvania.

To learn more about this program and details on how to sign up, click the following link http://www.leanaccountants.com/Mfr%20Roundtable%20Flyer%20Jan%202012.pdf.

To learn more about the concepts of LEAN, please contact the LEAN Accountants of McKonly and Asbury, LLP.

PNC Bank Reports December Economic Data Showing Continued Momentum

PNC Bank has reported that December economic data shows continued improvement in economic conditions in both the manufacturing and construction markets. More specifically, PNC's Economic Division is reporting the following:

 

• Manufacturing and Construction both expanded at the end of 2011
• Retail sales were up over the Holiday season
• Falling house prices remain a drag on growth
• The economy appears to be gathering steam heading into the New Year

To read the full report, click http://www.leanaccountants.com/ISM%20Manufacturing.pdf.

To learn more about LEAN, contact the LEAN Accountants of McKonly and Asbury, LLP.



Staying in the Money: Ten Ways to Keep Cash Flow Problems from Putting You Out of Business

The following post was first seen on mfrtech.com. the authors of the post are Tage C. Tracy and John A. Tracy. Tage C. Tracy is principal owner of TMK & Associates, an accounting, financial, and strategic business planning consulting firm. John A. Tracy is professor of accounting at the University of Colorado in Boulder and the author of Accounting For Dummies^®. 

Cash flows pose an unending challenge to business owners and managers because they have to be carefully managed. Read on to learn what you can do to make 2012 the year of the cash flow reboot for your business.

Respect and understand financial statements. According to some surveys, 25 percent of businesses don’t even maintain accounting records (let alone produce financial statements).

“The bottom line for small business owners is simple,” says Tracy. “If you don’t make an effort to prepare, review, and completely understand your financial statements, then you need to ask yourself why you’re in business in the first place. And this especially holds true for the statement of cash flows, because an abundance of invaluable information is available from this most commonly overlooked and mismanaged financial statement.”

Plan, do projections, and plan some more. Proper planning is essential to the launch, growth, management, and ultimate success of your business as measured by the ability to generate profits and, just as important, to avoid running out of cash. According to Tracy, “Having access to sound financial plans structured for different operating scenarios is an absolute must.”

Focus on capital and cash—the lifeblood of your business. One of the most common reasons small businesses fail is that they lack adequate cash or capital, not only to survive difficult times, but also to prosper during growth opportunities.

“Remember, one of the greatest losses a small business can realize is that of lost opportunity, which has its roots in not being prepared to properly capitalize on market opportunities,” explains Tracy. “The harsh reality is that this great loss is never accounted for or presented in any way, shape, or form on the business’s financial statements. Rather, missed market and business opportunities lurk in the torturous thought, Imagine what I could have achieved!”

 Understand your selling cycle. The length of the complete selling cycle is often much longer than the aspiring entrepreneur projects and/or wants to believe.

“The selling cycle in its entirety spans the time from the very start of the process when a product or service is first visualized and developed to supporting customers after the sale and developing additional products or services that may be in demand,” says Tracy. “And if not properly managed, the selling cycle generally becomes one of the largest consumers of cash in a business. Without fail, almost every aspiring business owner, at one point or another, will experience delays in the selling cycle.”

What is SMED and Why is it Important?

LEAN principles are all centered on process improvement which leads ultimately to improved efficiency which leads to higher profitability. The concept is simple but getting there is usually harder that one can imagine.

One of the vast building blocks of LEAN relates to quick changeover setup. The faster the changeover times, the less downtime of equipment. Remember DOWNTIME is the definition of the Eight Deadly Waste of a manufacturing environment.

The key to quick changeover setup is the term SMED. SMED stands for Single-Minute Exchange of Die. The SMED system is a theory and set of techniques that make it possible to perform equipment setup and changeover operations in fewer than 10 minutes – in other words, in the single-minute range. SMED principles can be used and applied in almost any operation or process. It was developed to improve die and machine tool setups.

SMED’s goal is to reduce the setup time to within minutes. Depending on the process, setup within minutes may be very difficult, but in most cases, if the SMED principles are followed, drastic reductions in setup time can be obtained.

 

The basic principles of SMED are:

• Identify internal versus external changeover tasks.
• Analyze each task’s real purpose and function.
• Focus on no/low cost solutions.
• Aim to eliminate changeover time.

So you ask, how do I go about this process? SMED is typically broken down into three stages. Each stage has specific tasks and objectives and all are inter-related and work together. Those stages are outlined below.

Stage 1 – Separate internal and external setup

Certain tasks can clearly be done before machines are stopped for changeover. These include lining up the right people, preparing parts and tools, making repairs, and bringing the parts and tools closer to the equipment. There are three practical techniques to doing this:

• Develop and implement changeover checklists.
• Perform function checks on parts and tools.
• Reduce transportation or tools, parts, and materials.

By separating these tasks and performing them as external setup can cut changeover time by as much as 30% to 50%.

Stage 2 – Convert internal setup to external setup

Stage 1 functions alone will not reduce internal setup time to within the single minute range. For that you must implement Stage 2. There are two primary steps to Stage 2:

• Look at the true functions and purposes of each operation in your current internal setup
• Find ways to convert these internal setups to external setup.

The key to successful implementation of Stage 2 is to look at the function as if you are new to it. Three practical techniques help shift internal setup tasks to external setup. Those techniques are:

• Prepare operating conditions in advance
• Standardize functions
• Use intermediary jigs

Stage 3 – Streamline internal and external elements

In this third and final stage, all of the remaining internal and external setup operations are improved. This can be done by looking closely at each operations function and purpose one more time. More specifically, Stage 3 improvements can be divided into external and internal setup improvements. Four basic approaches to accomplishing this are through:

External Setup

• Maintain a visual organized workplace

Internal Setup

• Implement parallel operations
• Eliminate the need for adjustments
• Use functional clamps
• Mechanize functions

SMED provides many benefits for companies and those working within the company. More specifically, the advantages of SMED along with quicker and more efficient setup times are improved flexibility, quicker delivery, better quality and higher productivity. Through these benefits you will also see simpler setups and safer changeovers, less inventory and more standardized processes.

For more information on SMED or other LEAN initiatives contact the LEAN Accountants of McKonly and Asbury, LLP.

Guideline Changes to Qualify More Manufacturers for Grant Dollars

Over the past several years manufacturers have lost business due to foreign competition. The Trade Adjustment Assistance program was established by the U.S. Department of Commerce to balance global competitiveness. The federal guidelines were recently updated to make the application process easier and allow more manufacturers to qualify for the grant dollars, even if they tried unsuccessfully once before.

How do I qualify?
There are dozens of ways to qualify for the grant dollars. Some examples include if sales, employee hours, or employment head count this year is less than any of the previous 3 years. As the economy slowly improves and manufacturers rebound from the recession, the window of opportunity to take advantage of this grant will be closing for many companies. MANTEC recommends that interested firms inquire immediately.

How much can I get?
Qualifying companies can be approved for matching dollars up to $75,000. Over the summer Senator Bob Casey visited American Products Inc. (API) in York, PA to show his support for the MATAAC program. API qualified for the full $75,000 and was able to train employees in LEAN practices and upgrade its ERP system. API President Jack Eltringham commented that "the training makes us more competitive."

How can I access the grant?
Local manufacturers can access the grant dollars through the Mid-Atlantic Trade Adjustment Assistance Center (MATAAC). MANTEC has established an effective process with MATAAC to make the paperwork as painless as possible and access the funds sooner.

To start the process contact MANTEC at 717-843-5054 or at info@mantec.org. You can also contact the LEAN Accountants for more information.

Creating the Lean Warehouse: Evolution Not Revolution

The following post was first seen on the Manufacturing and Techonology Ejournal (business@mrftech.com). The post was written by Robert Martichenko, CEO of LeanCor Supply Chain Group. Mr. Martichenko can be reached at www.leancor.com.

Creating a lean warehouse (or distribution center) is not something you accomplish overnight. It takes vision, planning, strategy, tools and tactics. Relative to people, you need to develop team members into problem solvers and then provide a leadership infrastructure to support their efforts. Identifying and solving problems may seem basic; however experience would suggest it can prove elusive in application. The results achieved through your lean efforts can be quantum in nature. Improved customer fill rates, decreased inventory levels, decreased inventory carrying costs, improved inventory accuracy, increased asset and team member utilization are all benefits of lean warehousing.

When Toyota Motor Manufacturing developed and shared its lean manufacturing strategy (known as the Toyota Production System), many realized it had implication as an overall business system and not just a manufacturing system. The principles of lean are now being applied universally, including inside the warehouse. Some of these principles include team member training and development, standardization, visibility, quality at the source, continuous improvement, waste elimination, visual management, and problem solving thorough the Plan, Do, Check, Act Cycle.

Starting with team member training and development, we understand that it is people who can identify problems and create sustainable solutions. One of the lean tools that we can give our warehousing people is value stream mapping. This allows us to map out current processes on the floor and identify waste and see where we can take non-value added activities out of the value stream. The value stream is simply defined as the flow of activities that add value to the customer. The premise is that we should only be doing those things that add value. All other activities are considered waste and should be eliminated.

The concept of standardization is also a key lean principle for the warehouse. Creating standardization of processes is to create tasks are easily repeatable with planned zero waste. The creation of standard work allows your team to understand processes from the point of view of inputs, procedures, timing and outputs. However, creating standard work is not about turning people into robots ! It is about creating a baseline from which we can improve. Many warehouse operations are a series of manual processes. The unfortunate aspect to this is that people will do the same process in different ways.

Unstable Economy Remains Chief Concern for Manufacturers

While 66 percent of manufacturers expect to experience revenue growth in 2012, many say the recovering economy will remain a major hurdle to operations, according to a recent ASQ survey.

Nearly 1,600 manufacturing professionals from around the world responded to ASQ’s 2012 Manufacturing Outlook Survey, which was conducted online from Oct. 17 through Nov. 4. Respondents represent the aerospace, automotive, food, medical device, pharmaceutical and utility industries, among others.

According to the survey results, more than 70 percent of respondents say they experienced revenue growth in 2011. In ASQ’s 2011 Manufacturing Outlook Survey conducted in late 2010, 67 percent had hoped to experience revenue growth in 2011.

Despite the outlook regarding revenue, manufacturers continue to be wary of the global economy, citing the housing market and fears of a double-dip recession. Specifically, some respondents said:

• “Customers are scared to release purchase orders. They act differently because of the economy.”
• “Economic conditions are hurting people’s ability to purchase our products.”
• “The housing market is not recovering in a timely fashion.”

In addition to fears of the world economy, manufacturers say the lack of a qualified workforce is inhibiting their ability to grow.

According to the survey results, 44 percent of respondents say finding qualified applicants is the biggest hurdle to filling vacant positions, while 27 percent say budget is a biggest hurdle to filling open positions. Twenty-three percent claim time—and the lack thereof—is the biggest hiring hurdle.

Retiring employees pose minimal effect

Survey results show few manufacturers think their company will be adversely affected by retirements in 2012.

On a scale of one to 10, where one is “very unlikely” and 10 is “very likely,” nearly 68 percent of respondents said retirements were “unlikely” to affect their business, including 26 percent who said retirements were “very unlikely” to affect the organization. Only 9 percent said retirements were “very likely” to affect the business.

And when retirees leave, many businesses consider options about refilling the position. According to the survey:

• 54 percent of respondents consider the positions on a case-by-case basis
• 26 percent simply hire a new worker to replace the retiree
• 18 percent leave the position unfilled and delegate responsibilities to existing employees
• 2 percent completely dissolve the position and duties.

When new employees are hired to replace retirees, many companies rely on on-the-job training to help bring the new employee up to the production level of the outgoing retiree.

In fact, 87 percent of respondents say they use on-the-job training, while 5 percent say their business requires company-provided classroom training, and 2 percent said they use third-party training, like local colleges or other training providers. The remaining respondents say they use any combination of on-the-job training and classroom training.

“While many manufacturers are showing improvement and experiencing revenue growth, there remains clear hurdles facing these businesses,” said ASQ CEO Paul Borawski. “Even though companies say retiring baby boomers aren’t adversely affecting their businesses, finding qualified employees is still a concern—one that can affect businesses in this global economy—as retiring employees often leave with a wealth of knowledge not easily replaced.”

To learn more about this survey contact ASQ at www.asq.org . For up to date information on economic conditions and factors impacting manufacturers contact the LEAN accountants of McKonly and Asbury.

Does My Company Qualify for Research and Development (R&D) Tax Credits?

The Research & Development Tax Credit can provide, among other things, a hidden and immediate source of cash for many companies as well as a significant reduction to current and future years’ federal and state tax liabilities. 

 Do you design, develop or improve prod­ucts, processes, techniques, formulas, inven­tions, or software? If your company has in­vested time, money and resources towards the advancement and improvement of its products and processes, then you may qual­ify for the R&D tax credit. The R&D tax credit regulations allow eligible taxpayers to “look back” to all open tax years (typically 3 years plus the current year) for potential R&D cred­its that were never claimed.

Today's manufacturer may not realize that their activities may entitle them to generous and R&D tax incentives, and even if they do, the traditional notions of R&D may cause manufacturers to limit qualified research expenditures to activities associated with new product and invention developments. However, in many cases, manufacturers spend a considerable amount of time and effort to develop product designs that achieve optimized manufacturing process performance. Furthermore, many manufacturers, including “job shops,” conduct extensive activities to design and develop the manufacturing processes themselves to achieve specific project requirements or to stay ahead of competitors in the marketplace. All these activities may require time and money both in the engineering department and on the production floor itself, which may be captured as qualified research expenditures leading to significant tax benefits. If you think you have to be a large public corporation developing products and inventions to be conducting qualified activities as defined by the Internal Revenue Code, think again.

If your company is in the manufacturing industry and you've recently introduced new or improved products or manufacturing lines there is a strong chance that you could benefit from an R&D tax credit study

Examples of manufacturing innovations eligible for R&D tax incentives include the following: 

• Innovative product development using computer aided design tools
• Development of second generation or improved products
• Tooling and equipment fixture design and development
• Developing unique computer numerical control programs
• Designing innovative programmable logic controllers
• Designing innovative manufacturing equipment
• Prototyping and three-dimensional solid modeling
• Designing innovative cellular manufacturing processes

Production process that may be eligible for R&D tax incentives include the following:  

• Designing and developing cost-effective and innovative operational processes
• Integrating new materials to improve product performance and manufacturing processes
• Determining tooling requirements and optimal placement of equipment
• Evaluating and determining the most efficient flow of material
• Designing and evaluating process alternatives
• Designing, constructing, and testing product prototypes
• Developing processes that would meet increasing regulatory requirements
• Reducing labor costs
• Alternative material testing
• Achieving compliance with changing emissions laws and regulations
• Streamlining manufacturing processes through automation
• Increasing manufacturing capabilities and production capacities
• Developing & Implementing new / improved safety enhancements
• Developing new applications
• Improving product quality
• Implementing new production standards and quality assurance processes
• Improving yields
• Reducing manufacturing times
• Optimizing manufacturing processes
• Increasing operating and economic efficiencies 

To learn more about whether your company qualifies for R&D tax credits, contact the LEAN Accountants of McKonly and Asbury, LLP.