“SigmaNEST helped us to win a contract approaching $100 Million.”
President and CEO
Formed in 1987, Service Steel, Inc. (Portland, OR) is the Northwest’s leading steel processing facility. With eleven high power laser cutting machines, Service Steel has more than twice the laser cutting capacity of its nearest competitors. The company processes thousands of tons of metal each week on its combination plasma/flame tables. These and other cutting machines are housed in a 300,000 square feet facility boasting 25 overhead cranes plus numerous jib cranes and considerable storage capability. The company uses a broad array of world-class machinery, and can handle steel plates up to 12 feet x 70 feet, weighing up to 40,000 lbs. With CNC machining, forming, welding and painting Service Steel is the definition of a full-service steel service center.
But size and machinery are just part of the equation. What sets Service Steel apart is the ability to leverage this strength in the most efficient manner possible. CAD/CAM nesting software is a key component of this advantage and for Service Steel, that software is SigmaNEST®.
“SigmaNEST is specifically designed to maximize material usage,” explained Service Steel CEO, Ed Westerdahl. “In addition, because our machinery can accommodate large scale material, we are able to nest parts quite efficiently, generating very high yield with very little waste. This results in a lower cost for our customers.” Controlling material cost is critical for all companies. "They can’t make parts that cheap, They’re selling for less than the material costs, They’re trying to buy the job." Those are some of the criticisms we hear from competitors — and sometimes even customers! In truth we quote to make money on every job and use SigmaNEST to minimize material cost. Sometimes the results are hard to believe for those who use other nesting software packages.
Many of Service Steel’s major customers require yearly price reductions – with 3% being typical. With tight margins on large contracts 3% can be a big hit to the bottom line. As an alternative Service Steel has begun offering cost savings via scrap utilization. “With SigmaNEST we can cut additional parts from the drops of existing part runs. If a customer has a different part that could fit in the drop of a current nest we can offer to produce that new part for just the cost of cutting because the material cost was already covered in the previous job. This is a big material savings to our customer and it can count against the yearly price reduction. If the entire 3% reduction can be satisfied in this way we end up reducing our customers’ costs while INCREASING our revenue with the profitable cutting charges. We both win.”
Many manufacturers quote by calculating the smallest rectangle that fits around each part. Then they add up the rectangles to determine total weight for a given set of parts. Such an inefficient method generally results in higher estimates. “If you give SigmaNEST a list of parts, you can have it nest the common materials to determine the minimum rectangle that will fit around the SET OF PARTS. Then, that set rectangle is your actual material cost and is usually less than the sum of the individual rectangles.”
“It is no secret that multi-million dollar contracts are won or lost by a few percentage points,” said Westerdahl. “SigmaNEST saves us 15% to 20% on material costs by efficient nesting and yield maximization. SigmaNEST’s unmatched part nesting efficiency delivers 15%-20% material savings, tighter estimations, and more winning contracts.”
Large contracts allow companies like Service Steel to make custom sheet sizes via dedicated mill runs. SigmaNEST lets users pick the best possible sheet size for a given parts list. That optimal sheet size is almost never a stock size. Service Steel saves money on every sheet that is ordered to the optimal size vs. stock size.
Sometimes odd material sizes are available at a discount. “SigmaNEST lets us quickly re-nest to any sheet size and determine the yield,” said Westerdahl. “We have made substantial savings that were unanticipated by making spot buys based on SigmaNEST yield calculations on discounted materials.”
SigmaNEST is earning its keep at Service Steel. But while some have a difficult time quantifying the value of given software packages, Ed Westerdahl has no such problems in putting a dollar figure on the value of SigmaNEST. “SigmaNEST helped us to win a contract approaching $100 million,” said Westerdahl.