Flinchbaugh Engineering Turns Lean Success into New Line-Transfer Strategy

Opportunity came knocking at Flinchbaugh Engineering (York, Penn.) and the employee-owned company was ready for it. By embracing lean thinking, Flinchbaugh has aggressively developed its line-transfer business into a viable alternative to offshore outsourcing. It has grown from a supplier of pivot shafts for one company into a $24 million organization specializing in precision machining of complete parts using production lines owned and operated by OEMs nationwide.

Let's call it a 21st century success story, compliments of lean implementation. Companies facing increasing competition from low-cost foreign manufacturers are faced with two scenarios, right? Make it better, faster, cheaper themselves or go to an off-shore vendor where they stand a good chance of losing control of vital processes. Wrong. There's a third alternative and that's the opportunity Flinchbaugh is seizing so successfully. The concept is line transfer and it goes way beyond the old-fashioned sub-contractor relationship. By transferring individual or multiple-part machining lines, a manufacturer can reap a number of benefits including lower part prices, elimination of high labor costs, improved machine uptime and extended equipment life.

The Flinchbaugh line transfer story actually goes back a long time - roughly 20 years -- to 1985. That was when the firm took in Caterpillar, Inc.'s clutch piston manufacturing line. Flinchbaugh manufactured the product using CAT processes until Flinchbaugh's own in-house manufacturing improvements proved even more efficient.

In 1996, bearing manufacturer SKF (USA) transferred an entire assembly line to Flinchbaugh Engineering. New manufacturing processes were developed to improve efficiencies by nearly 300%. On-time delivery improved to 100%. No wonder several more SKF lines found their way to Flinchbaugh in 1997.

It didn't take long for Flinchbaugh to see a win-win situation. Line transfers were good for business growth AND they were good for customers who wanted to remain competitive in an increasingly competitive marketplace.

What Flinchbaugh did not realize until fairly recently, however, was just what this line transfer expertise might mean to even greater business growth!

Lean Learning Puts It All Together

The company's experience with lean manufacturing had taught them that there is, as president Mike Lehman says, "a better way." Lean implementation at Flinchbaugh Engineering started in the 90's with Empowerment, Total Productive Maintenance (TPM), 5S, and even Kaizen. However, the necessary cultural change within the organization didn't truly begin to happen until Jim Reed from Production and Wil Burkholder from Engineering returned from a Lean Experience class held at the Lean Learning Center (Novi, Mich.) in March of 2002. It was this experience that really accelerated the company's lean plan.

The Lean Experience, a five-day program, is designed to jump-start lean thinking, laying the foundation for a company's lean transformation by focusing on lean rules and principles rather than just the tools of lean. "Like so many of the companies we work with," comments Andy Carlino, Lean Learning Center partner, "Flinchbaugh had the lean tools in place, but lacked the internalization of lean rules. It is critical for the entire organization to be able to 'think lean' in order to properly apply lean."

The Lean Learning Center's unique setting engages students in this process through various means of discovery - through reflection, dialogue, and action. For Flinchbaugh Engineering, The Center provided a systematic approach -- a set of rules for putting everything together. It was finally a common language with which everyone in the organization could be trained.

The Lean Learning Center challenged Flinchbaugh to learn, apply, reflect and change, which according to Wil Burkholder sat well with their existing culture. Try certain things, see how well they fit, modify it and go from there. Along the way, the company has experienced phenomenal process improvement that has been the groundswell of their line transfer success.

Flinchbaugh was, of course, challenged with the four lean system rules:

Structure every activity
Clearly connect every customer
Specify and simplify every flow path
Improve through experimentation at the lowest level possible.

By applying the rule of structuring every activity, Flinchbaugh was able to put together a line transfer manual. It incorporates past transfer experiences and lessons learned, compiling the information into a book that's taken on sales calls and used by engineering to develop planning processes for new projects.

As for improvement through experimentation at the lowest level, Flinchbaugh has used this principle to basically change the manufacturing belief system. Individuals closest to the machine operators - who may have resisted change in the past - are now the ones who are experimenting with new ideas and coming up with highly effective solutions.

Establishing high agreement is another Lean Learning Center principle now practiced at Flinchbaugh. This was instituted successfully in a channel line that's part of the 1985 line move. First Flinchbaugh took the whole channel group and provided training on lean rules and principles. Then the group began analyzing their real bottleneck area - lathe set-up. In the past, an exercise like this may have resulted in everyone thinking his/her idea was the best with no one agreeing on anything. But Lean Learning taught Flinchbaugh to concentrate on establishing a level of higher agreement. By bringing everyone in and analyzing the situation step by step, they're working hard on getting the team to say "yes, this is the best way to do this". In a company of 160 employees - that's a real challenge but, according to production manager Jim Reed, the team members have come a long way to make it happen.

Controlled change

As Reed and Burkholder point out, all organizations go through periods when they empower their employees to change. But, this can get out of hand if people start running around changing everything in sight. When it does, and management has to step in, often employees are reined in which tends to stifle their creative thinking. Sound at all familiar?

The trick is to find a happy medium. After coming back from the Lean Experience session, one of the things Flinchbaugh did was take the four bedrock rules of lean and organize then onto an 8x11 chart. That chart is posted in several rooms to encourage employee discussion. By connecting these discussions to lean rules, change is more controlled and thus more positive.

This happy medium or, as Wil Burkholder calls it, "controlled change" is what's occurring now that Flinchbaugh is using new rules along with proven tools throughout the company to improve their line transfer processes. It's the classic definition of lean transformation - a systematic approach to acquiring and applying a shared way of thinking within an organization.

Real results … real savings

Back in 1985 when Flinchbaugh did its first line transfer, they basically brought the line in, put it on the floor, got it up and running - then left it alone. The managers at Flinchbaugh will be the first to admit that with the lean rules and tools they have in place now and the cultural change that's gone on in throughout the company, they could have done better. They could have gone back and improved through experimentation. They could have connected process steps to get a better idea of waste or to improve line flow. The fact is, though, these tools are in place and thanks to a passionate commitment to lean implementation and continuous improvement, Flinchbaugh is now seeing real results in their line transfer business. In one channel area, they've reduced set-ups by 35%. They've also maximized floor space to accommodate new business and they're getting more throughout per person than ever before.

Flinchbaugh's success with lean has changed more than processes and ways of thinking within the organization. Lean success has helped change the nature of Flinchbaugh's relationship with its customers. From engineering firm to sub-contractor to true partner, Flinchbaugh Engineering has parlayed lean into a dynamic, new business model. And, along the way has lowered OEM costs and kept jobs from going overseas.

On-shore alternative to Off-shore Outsourcing

If production in a large company gets bogged down with rules and policy issues, the smaller, empowered Flinchbaugh work force does not. If a company has old equipment and wants to get rid of it, Flinchbaugh can take it -- using the expertise they've gained through Total Productive Maintenance (TPM) and by applying lean principles -- rejuvenate it and keep production going. And, if a facility is closing down because the overseas alternative looks more attractive, Flinchbaugh insists that line transfer can compete successfully - and keep jobs in the U.S.

Flinchbaugh now markets itself as the "on-shore alternative to off-shore outsourcing". According to Flinchbaugh's Lehman, going overseas seems like the thing to do these days. "They hear about 40-50% savings and companies are convinced off-shore outsourcing is some kind of panacea. So, they write down their capital equipment and send production overseas -- only to find out that the savings is more like 15-20%. With our lean manufacturing concept, however, we can take that equipment in-house, maintain it and keep it humming for years - in the states!"

When Flinchbaugh hears about a closure (line or plant) because of outsourcing - they go in and propose line transfer. Flinchbaugh's concept is fairly unique in the marketplace as they go after the more complex projects. Like the agreement etched out in 2003 that calls for 16,000 parts per year, involving 103 part numbers in two different families. Or the transfer of a mature product line of over 100 various Siemens mechanical sensor parts. The value of this line transfer exceeded $870,000 in annual sales and opened even more doors for Flinchbaugh at Siemens. Currently Flinchbaugh has 10 line transfer agreements with many more in the works.

"More companies need to think like Flinchbaugh Engineering," says Carlino. "When a company has truly embraced lean, it uses it not just to improve cost and quality but to really change the value they deliver customers. Through their successful lean efforts, Flinchbaugh Engineering has significantly improved on an already solid line-move strategy, and along the way they are delivering the kind of value manufacturing companies need to compete in our global economy."