Processing - Klein Steel Service

Processing— Critical to Success
Why is processing important to Klein
Steel’s strategic goals?
Six years ago a group of senior
managers sat around a table discussing
Klein Steel’s future. That was the start of
identifying opportunities to ensure the
company’s long-term success. Looking at
the data, we quickly identified that over
90 percent of the business was directly
distribution. Distribution is defined as
buying steel from the mill, storing it
until the customer needed it, and then
picking it to load on a truck to deliver to
the customer in full lengths. We talked
about the many operations the customers
needed to perform before the steel
was ready for their core competency
activities. Several important elements
became clear:
• Klein Steel could increase its value to
a customer if steel was made ready
(processed) for their core operations
• Processing a product would provide
greater value to the customer,
therefore, Klein Steel could increase
the price of our services
• If Klein Steel added the ability of
processing operations, we would
provide a unique offering that typical
steel service centers “just didn’t do”
• In determining total value of a
truckload, processed steel increases
its profitability
At that point, Klein Steel set out to
change the business model aiming for
50 percent processing orders of all steel
sold, starting at approximately 8 percent.
Every company has
its own lingo and
Klein Steel is no exception.
You have
heard the terms
drops, scrap, surplus and Big
Mama— but what about cost to serve,
service model, quantum profit management
(QPM) and Waypoint? These terms
are part of the rollout of a new profit
improvement system called Waypoint.
Quantum Profit Management (QPM)
is a philosophy focused on breaking our
business into small pieces to analyze
profitability. Waypoint is the software
that applies QPM to our business. For
instance, whether the entire company
is making money or not, we know part
of the business is profitable and part is
not. Through Waypoint Analytics, we can
determine which customers, products
and processing centers are profitable
and which are not profitable.
When we understand what creates
Klein Steel’s profits, we can take steps to
increase those results; when we un-
The company’s actions
since that initial meeting
are now history:
• Built a new building
with room to expand (Vanguard
location completed in 2004 and
expanded in 2007)
• Purchased state-of-the-art
equipment: lasers, water jet, new
sawing equipment, AngleMaster,
Haas machine for drilling, milling
and tapping, new plasma burning
equipment, and beam drilling line
This growth has led to Process Cell
customers such as SPX and Gleason with
orders that are almost entirely processing.
Klein Steel has been able to better
weather the economic storm of the
recession by providing this balance and
expansion of services offered.
Klein Steel’s processing has run
in the high-30 percentile for the past
several years. Our goal has not changed
with a vision to achieve 50 percent
processing for the calendar year. Current
and potential customers will move us
beyond the 50th percentile
within the next 18 months.
Water Jet in Action
Klein Steel’s processing
capabilities have grown
significantly in the last
decade to meet and
exceed customer needs.
Gaining Profit with Waypoint Analysis
derstand the customers, products and
processes that are not currently profitable,
we can work to make them profitable.
Waypoint offers many reports and
tools to help us analyze our business and
improve our profits.
Defining Cost to Serve
Improving profitability could result
from raising prices for some customers
or even discontinuing business with
certain customers; however, a more effective
starting point is minimizing Klein
Steel’s cost to serve. When we sell to our
customers, we incur various expenses:
our cost to buy the steel we sell (cost of
goods sold), and other expenses to sell,
receive, stock, process and deliver steel.
Cost to serve represents all costs except
cost of goods sold. Our goal is to ensure
that gross profit exceeds cost to serve so
the company earns a net profit.
How do we start using Waypoint?
To date, the first phase of setup is
complete. We can analyze profitability
Corporate Call Center
Builds Relationships
Klein Steel’s new Customer Call Center, which
officially opened on June 1, allows Klein Steel
to extend a high level of customer service and
support to those customers who aren’t directly
served by a designated sales representative.
www.kleinsteel.com Third Quarter 2010 • Vol. 2, Issue 3
It is critical to continue to pursue
the goal of 50 percent processing. Key
factors include:
• A complete recovery from
the recession
• Provide what customers want—
a complete service “one stop shop
for steel requirements”
• Continue unique offering of fullservice
steel parts to distinguish
Klein Steel from the competition
• As processing grows, more technical
jobs are available to Klein Steel
team members
Other articles throughout this third
quarter issue of The Cutting Edge illustrate
how far Klein Steel has travelled in
becoming a technology rich company
with vast capabilities to meet the diverse
needs of our customers. As a team, we
can be proud of our progress and success
as we move forward.
Al Mangiamele, former chief operating
officer, is currently vice president of
sales for Klein Steel.
for customers, products and processes.
Recognizing the company-wide learning
curve to utilize Waypoint and QPM,
we will undertake a phased approach.
An initial group of team members has
received sign-on credentials and has begun
to analyze our business. Additional
sign-on credentials and training will be
rolled out in the near future.
Achieving success will require a
cross-functional “all hands on deck” approach
– every department and function
at Klein Steel will be involved. The endstate
goal for Waypoint is to be profitable
in every aspect of our business (each
customer, product and process) while
continuing to deliver excellent customer
service. This is no small challenge given
the current business climate, but Klein
Steel doesn’t shy away from challenges.
Waypoint will lead us on an exciting
journey to be stronger… for companywide
success!
Laurie Leo is the vice president of
strategic initiatives at Klein Steel.
President’s
Message
In May, we achieved
another profitable month with
year over year sales up over 10
percent and tonnage shipped
up 27 percent. The profitability
trend will continue in June and
beyond. We can all be extremely
proud of what our team has
accomplished through a tough
recession, without a reduction in
force. Economic indicators point
toward slow and incremental
growth over the next two to
three years— our focus on taking
care of each other, our mission,
and the imperatives of safety, accuracy,
quality, on-time delivery,
and productivity set us up for
continued success.
Emerging from the recession,
Klein Steel priorities
focus on growing our profits.
Our number one priority and
company-wide main effort is to
harness the full potential of Waypoint
Analytics. This is our future
and expectations are high. Laurie
Leo is leading this effort, supported
by a cross-functional
action team from across the
company. Laurie’s article (page
1) about Waypoint explains how
this software system will allow us
to fully examine and dissect the
details of net profit and the costto-serve
for each customer and
product line.
The second priority is sales
growth— focusing on increasing
the amount of processing sold,
continuing to grow stainless steel
sales, expanding the Albany territory,
cultivating opportunities
with a number of potential customers,
generating government
sales, and developing our new
Klein Steel Call Center. Through
May, processing was just under
32 percent of total revenues
measured against a strategic goal
of 50 percent— we have plenty
of room to grow. Based on our
collective focus, I am confident
we will achieve our strategic goal
in this important area.
Keep up the focus on
safety— our number one
imperative. We all have a moral
obligation to ensure “No one
Call Center Supervisor Wende Weber, recently joined
Klein Steel as a member of the Sales team. Joined by Sharon
Easton, who brings more than 10 years of experience from
the inside sales desk, the Customer Call Center conducts outbound
calls to new and existing customers for all locations.
The Call Center team updates customer account information,
educates customers about Klein Steel’s processing solutions
and value through email correspondence, brochures, video,
and other media.
Continued on page 2

2
Message continued from page 1
gets injured on my shift” and,
financially, the impact is enormous.
As we all know, we aim to
take full advantage of our membership
in the Raffles insurance
captive. The first step is no
accidents. I have yet to see an
accident that was not avoidable.
Each one of us is empowered to
take charge when conditions are
not safe.
Economic indicators
point toward
slow and incremental
growth
over the next two
to three years—
our focus on
taking care of
each other, our
mission, and
quality, on-time
delivery, and
productivity–
set us up for continued
success.
Remember to mark the
afternoon of Sunday, July 25
for the annual Klein Steel summer
family picnic at Seabreeze
Amusement Park (details on
page 4).
I am extremely pleased
with the degree of teamwork
and cross talk throughout the
company. Let us continue to
succeed together!
John Batiste
The Cutting Edge is a quarterly
publication of Klein Steel
Service Inc., designed for its
employees and families.
Managing Editor
Deborah A. Mangiamele
Contributing Writers
John Batiste, Laurie Leo,
Al Mangiamele, Rob Sihto,
Jim Sloan
Newsletter Team
Mary Castaldo, Debbie Kurvach,
Mary Longchamps, Dolores
Starks, Joyce Petruzzelli,
Jessica Wagner
Graphic Design
Yasmin Jung
We welcome employee
comments and submission ideas.
Please contact newsletter@
kleinsteel.com
Klein Steel Service Inc.,
105 Vanguard Parkway,
Rochester, New York 14606
585-328-4000
.1
Klein Steel Processing Definitions
Glossary of terms to accurately talk-the-talk:
CKS— Certified Klein Steel— an internal,
stringent quality control program
to ensure all orders are timely and
accurate.
CPI— continuous process improvement;
an ongoing, deliberate effort to
analyze how work is done and create
ways that processes can be improved
to do a job more efficiently.
Bevel— an edge of bar or plate that
is not perpendicular to the faces of the
piece; can also refer to the process of
creating an edge that is not perpendicular
to the face of the piece.
Drilling and Tapping— creating the
holes and threading the inside edges
of those holes using the Haas machine.
Grinding— a process using an
abrasive tool to smooth the edge
of a metal part by removal of rough
edges or burrs.
Quality
Corner
with Jim Sloan
Gusset— usually a triangular shaped
part used to reinforce the intersection
of three or more other parts.
Klein Steel Memorial—
Remembering Jim Morris
It’s important to celebrate the
lives of our team mates, especially
in times of loss. This is what families
do and is a vital part of who
we are as a company.
~Pat DiLaura, Chief Talent Officer
Team member Jim Morris, age 62, was
remembered during a June memorial
service honoring him for his seven
years of work at Klein Steel. His wife
Mary and several of his family members
joined team members for the
ceremony in Buffalo.
“It’s important to celebrate the
lives of our team mates, especially in
times of loss. This is what families do
and is a vital part of who we are as a
Heat #— a unique identifier (such as
a serial number) that documents the
chemical composition of the steel and
percentages of the different components.
ID— inner diameter of a circle created
through processing.
Kanban— a Japanese term meaning
“visible record”— a system used to
move product from one manufacturing
process to another, giving a visual cue
when items need to be reordered.
Kasto— refers to the Kasto automatic
storage and retrieval system using individual
cassettes that houses inventory
of long, narrow metal products.
Kerf— when processing steel, kerf is
the width of the material cut away in
the process; because this “slot” can
affect the final dimensions, slight
positioning changes must be taken
into account.
Quality in Processing
Klein Steel’s strategic direction is moving
to 50 percent of all sales as processed
material. In order to grow and meet our
company objectives, a critical element is
producing high quality parts to customer
specifications.
As we produce more complex parts
and shapes, the requirements become
more stringent with higher tolerances that
must be checked with precision— a very
different way other than just a tape measure.
Therefore, Klein Steel has incorporated
additional technical ways to measure
and ensure adherence to standards for our
customers.
Certified Klein Steel (CKS) was created
as a first step in meeting this challenge.
Yet, our quest for quality doesn’t end
with CKS. We must continually improve
our processes by using tools such as CPI,
Kaizen Events and a good Quality Management
System (QMS).
Lean— refers to a manufacturing
process that optimizes flow for maximum
efficiency. Lean is a streamlined
production practice that considers the
expenditure of resources only for the
creation of the value for the customer.
company,” notes Pat DiLaura, Klein
Steel’s chief talent officer.
The Klein Steel Memorial, located
at the front entrance of Vanguard,
honors those who have died during
their service at the company. The metal
bridge displays the various alloy materials
offered by Klein Steel and displays
the names of Founder Arnold Klein and
team members: Andrejs Puhalskis, Cori
Mitchell and, most recently, Jim Morris.
LTL— less than a truck load.
OD— outer diameter of a circle
created through processing.
Oxy— Oxygen fuel mixture used
to heat, pierce and burn through
steel to create different dimensions
and shapes.
Plasma— an inert gas (in some
units, compressed air) blown from
the nozzle to the surface being
cut, turning some of that gas to
plasma. The plasma is sufficiently
hot to melt through steel and
other metals.
Slot— the opening created
during processing; associated
with kerf.
Scrap— trimmings, shavings
and small remnants
of steel that cannot be
further processed.
Traceability— system of
tracking and referencing a
job order with the specific
heat number and product
used for processing.
The future will focus on training,
equipment and a total quality attitude
towards meeting the customer requirements.
Ongoing training is a key factor for
processing to meet increasingly complex
customer needs. EEquipment to measure
parts and testing of materials now has a
much larger role to help ensure that Klein
Steel has met the requirements.
The most important element is that
all Klein Steel team members have a total
quality attitude toward our Quality Management
System. This approach allows us
to continue to grow our processing business
and achieve the company’s strategic
plan.
Jim Sloan is Klein Steel’s quality and
engineering manager.

Chase Corporate Challenge 2010
Good times recently prevailed at the 20th
annual Chase Corporate Challenge on the
RIT campus in Rochester.
Klein Steel had a representation of
15 runners and walkers among the 9,102
entrants who joined in the 3.5-mile event.
Rain fell on the sea of participants, but
didn’t dampen the festive spirit— who
were greeted by a double rainbow at the
finish line.
Klein Steel runners and walkers were
(top five): Amy Tylutki, Joe Rodibaugh. Mike
Keliher, Jr., Deborah Mangiamele, and Mike
Hobbs. Rounding out the Klein Steel Chase
team were Dave Cron, Mary Castaldo, Debbie
Kurvach, Jennifer Price, Jack Sparling, Joe
Bailey, Jim Doran, Darrell Thompson, Sarah
Piedmont and Jessica Wagner.
Team Member Spotlight—
Ken Hixenbaugh
Klein Steel Driver
Ken Hixenbaugh
has been “delivering
the day”
to customers for nearly 20 years.
Early this year, Ken was recognized
for delivering over 100 million
pounds during his career. Below is
an excerpt from a recent interview
by team member and reporter
Mary Castaldo.
What do you like best about your
work as a driver and delivering to
customers?
Freedom...of making the “right”
choices I try to take responsibility
to do what is right— in the absence
of supervision.
What is the most challenging aspect
of your job?
Rules / DOT regulations are the
most challenging aspect of this
job. While there have been very
August HR Forum
Team members are invited to the August
HR forum: How to Take the Stress out of
Planning and Paying for College. This
informative program can help prepare
for a child’s future higher education.
For more information, contact Human
Resource Manager Rob Sihto at ext. 173.
Eat Well Live Well
Klein Steel’s first Eat Well Live Well
challenge wrapped up in June— with 34
team members enjoying a healthier and
more active lifestyle! The challenge ran
for eight weeks from mid-April until mid-
June with a goal of walking 10,000 steps
and eating five cups of fruits and
vegetables per day, according to HR
Manager Rob Sihto who coordinated the
challenge. Participants were from
Vanguard Operations, the Vanguard
office and Klein Steel of Buffalo.
“Congratulations to everyone who
participated in making the choice to live
a healthier lifestyle! Until the next challenge...have
a healthy day by staying active
and eating your fruits and veggies,”
Rob notes.
Team members enjoy the
Chase Challenge at the RIT
campus on June 3rd
good changes towards improving
safety over the years, I believe some
changes are overrated (commercialized
for the money). In addition,
it can be a challenge in dealing
with egos.
What led you to work at Klein Steel?
Previously, I was working two jobs
and going to school for tractortrailer
driving. (Note: Ken’s father,
brother and mother are all truck
drivers!) Klein Steel hired me right
out of high school. I was looking for
a better opportunity and schedule
…and Klein Steel offered the best
opportunity. I typically carry an average
of 45,000 lbs. of steel on my
daily run to Klein Steel of Buffalo.
Hobbies Ken enjoys when not
on the road:
I enjoy racing cars, deer hunting,
fishing and tubing.
Team Member Wellness
Average Cups of Fruits & Vegetables
Team:
1 Vanguard - Office 3.76
2 KSS of Buffalo 3.51
3 Vanguard – Operations 3.11
Overall Average 3.46
Top Five Team Members:
1 Sharon Easton 5.47
2 Bob Messmer 5.01
3 Petr Sidorchuk 4.77
4 Laurie Leo 4.37
5 Randy Fiege 4.31
Overall Average 3.24
Average Steps for 8 Weeks
Team:
1 Vanguard – Operations 9796
2 KSS of Buffalo 8002
3 Vanguard – Office 7731
Overall Average 8510
Top Five Team Members:
1 Loraine Cook 17,727
2 Rick Beyrle 14,404
3 Ryan Johnson 13,569
4 Klein Le 13,313
5 Pauline Malone 11,495
Overall Average 8,855
Going Green with
Paperless Payroll
Almost 40 percent of Klein Steel
team members have gone online
and registered for the ADP portal,
which is the prerequisite for signing
up for paperless payroll.
“People who register at the
(ADP) website may not realize they
need to take an additional step
and click onto pay statements and
choose the go paperless option,”
explains Ashley Smith, Klein Steel’s
payroll administrator.
“The site is very user-friendly
and only takes a few minutes to
sign up,” Ashley notes. “Plus, there
is lots of excellent and informative
company news on the website.”
For more information, contact
Ashley at ext. 182 or go online to
www.portal.adp.com and click
on First Time Users.
Metal Service
Center Institute
(MSCI) Scholarship
The MSCI (Buffalo Chapter) is accepting
scholarship applications for 2010
until July 31. Four scholarship awards
for $2,000 each will be available for
students who meet the selection
criteria, which include being a child
of a Buffalo Chapter MSCI member
company in good standing. Klein
Steel is a current MSCI member.
For more information and to
view additional scholarship application
requirements contact Joyce
Petruzzelli at ext. 117.
Congratulations
The Safety Committee recently chose
the Safety Cyborg illustration by Mike
Keliher, Jr. as the winner of a $100
gift card. Look for more details about
Klein Steel’s safety mascot in future
issues of The Cutting Edge.
Delete - Delete - Delete
Email Cleanup Essential
As our dependency on email grows daily, so does the
size of the Klein Steel server database, according to
Scott Miga, system administrator.
“Team members— please take time to reduce the
size of your mailbox to the best of your ability,” emphasizes
Scott. “Use a few of the following helpful steps to
trim some fat from your e-mailbox.”
• Empty your Deleted Items folder - emails are not
deleted until this folder is emptied
• Sort by size and delete the largest emails
• Sort by date and delete emails older than “X” years
• Sort by “has attachment” to locate and delete emails
with attachments
• If emails contain large attachments, consider saving
the attachment somewhere and deleting the email
(emails should not be used as a fileserver)
• Make sure you check other folders, not just your
Inbox (i.e. Sent Items)
• Sort by Subject to delete all of one type of email
(i.e. previous Processing Lead Times)
The IT Department appreciates team members
taking a proactive approach to a growing concern.
3

4
Save the
Date— July 25
Team
Summer Picnic
at Seabreeze
The Klein Steel family
summer picnic will be
Sunday, July 25 at Seabreeze
Amusement Park,
located at 4600 Culver
Road in Rochester.
Klein Steel is sponsoring most
of the cost ($21.40 per person)
for team members and their
families, with each team member
contributing a co-pay of
$8.00 per ticket— a fraction of
the typical entry fee. Those eligible
to attend are Klein Steel
team members, their spouse
or domestic partner, and any
dependant children age 18 or
younger. For more information
and/or tickets, contact Jessica
Wagner, safety and human
resources manager.
2010 Third
Quarter
Anniversaries
Congratulations to those
celebrating five or more years
of service with Klein Steel:
July
Cheryl Englert 7/16/1984
Sarah Piedmont 7/24/1995
Albert Mangiamele 7/20/2000
James Cottrell 7/18/2001
Rick Beryle 7/19/2004
Howard Baxter 7/6/2004
Laurie Leo 7/5/2005
August
Angel Andujar-Vargas 8/11/1986
Pauline Malone 8/1/1988
Clinton Newton 8/1/1989
Ken Hixenbaugh 8/27/1990
Jane Griffin 8/1/2000
Crystal Jacques 8/6/2001
Bradley Heppler 8/2/2004
Mary Castaldo 8/29/2005
Timothy Hartgrove 8/1/2005
Mary Longchamps 8/1/2005
September
Sharon Easton 9/27/1999
David Feinstein 9/18/2000
Glenn Teneyck 9/20/1994
Glenn Teneyck – 9/20/2004
Jenelle
Theresa
Tracy
Wende Stephen
Klein Steel Continues
Team Growth
Klein Steel welcomes the following
new team members to the organization:
Summertime Tips for Sunscreen Use
Summer is here and everyone should be
aware of the necessity of sunscreen.
“Welcome evidence suggests that
more people are becoming aware about
the dangers of UVA and UVB rays,” says
Ray Richardson, Technical Operations
Director for Calypso sun care products.
“But there are still too many ignoring the
advice and taking unnecessary risks by
underestimating the potential harm.” He
offers these tips:
1. Put enough on. The recommended
application for adequate protection is 35
to 40ml per person per session (a handful).
“So someone may think they are
applying SPF15, say, but if they don’t use
the correct amount then it may only be
equivalent to SPF8,” says Richardson.
2. Budget brands are just as effective as
the more expensive brands.
Company Values
Accountability
We believe in delegation of responsibilities
and being accountable for
our actions
Candor
We value the positive contributions
of every team member and welcome
candid discussions of team
member’s questions and concerns at
Klein Steel; every team member is
empowered to make a difference
Klein Steel
Athletes Play Ball
The Iron Men of Klein Steel began their recreational
softball season in June at Cobb’s Hill Park, located at
Culver Road and Norris Drive in Rochester. All games
take place at the park on Sunday afternoons through
August (see remaining schedule below).
“This is the third year of playing together and we
are looking better than ever,” says Iron Men coach Mike
Hobbs. “The players are playing for the championship
or bust!”
2010 Iron Men Softball Schedule
July 11 4:45 pm
July 18 2:30 pm
July 25 4:45 pm
August 1 3:30 pm
August 8 7:00 pm
August 15 3:30 pm
August 22 Playoffs
August 29 Playoffs
Christina
Blair
Team Member Hire Date Position
Jenelle Cassano 5/3/2010 Accounting Manager / Vanguard
Wende Weber 5/3/2010 Customer Call Center Supervisor / Vanguard
Theresa Gardner 5/6/2010 Customer Service Representative / Buffalo
Tracy Fisher 5/10/2010 Counter Sales Representative / RSS
Stephen Deck 5/17/2010 Inventory Cycle Counter / Vanguard
Christina Cozan 6/3/2010 Market Research Analyst / Vanguard
Blair Regan 6/14/2010 Human Resources Administrator / Vanguard
3. Apply correctly. Sunscreen should
be applied to clean, dry skin 30 minutes
before exposure to the sun which allows
it time to absorb properly.
4. Take time out in the shade between
11 am and 3 pm when the sun is strongest,
but still apply sun screen because
sand, concrete and water can reflect
harmful rays.
5. Reapply. Perspiration, exercise,
swimming and towel-drying removes
sun creams from the skin so you
should reapply after taking part in
any of these activities, even if the
product is waterproof.
6. Everyday use of sun lotions on your
face and back of the hands will limit the
chances of developing dry leathery skin,
wrinkles, mottling and other signs of
premature aging and skin cancer.
Customer Satisfaction
We move mountains to achieve
complete customer satisfaction with
Certified Klein Steel (CKS) standards
Dependability
We are dependable, prompt, and
always on time
Dignity and Respect
We take care of one another and
treat each other with dignity
and respect
Discipline
We “do the harder right than the
easier wrong”
7. Cover up in the sun with loose cotton
clothing, a wide-brimmed hat and
sunglasses with UV protection.
8. Use a “broad spectrum” sunscreen
with a sun protection factor of at least
15 to protect against harmful UVA and
UVB rays.
9. Overcast weather still requires sunscreen
in summer because 80 per cent
of ultra-violet radiation is still present on
cloudy days.
10. Children and babies need greater
protection so use specially formulated
kids ranges with gentler ingredients and
higher SPFs.
HR Manager Rob Sihto provides health
tips each week with “Wellness Wednesday”
columns distributed via email to all Klein
Steel team members.
Integrity
Integrity is non-negotiable—
“we always tell the truth”
Safety
We take pride in our safety record—
“No one gets injured on
my shift!”
Sharing of Information
We build trust with open sharing of
information— “Knowledge is power”
Team Work
We value teamwork— “The whole is
greater than the sum of the parts”
Iron Men team members for 2010 season:
Mike Coleman, Pete Hall, Kenny Hixenbaugh, Michael
Hobbs, Ryan Johnson, Michael J. Keliher, Pauline
Malone, Bob Marsala, Dave McGloin, Bob Messmer,
Mark Reynolds, Joe Rodibaugh, Dan Sile, Michael Sullivan,
Tim Sullivan, Eric Sundlof and Mark White
Iron Men model their Klein Steel uniform prior to a Sunday
afternoon game.