The strategic push to concentrate on core competencies, lowering costs and freeing resources, is stronger than ever. You''re being pushed to find a timely, long-term answer that will maintain quality and increase your profits. Traditional outsourcing could be a solution, but it has several drawbacks: what happens to existing equipment, costly learning curves, in some cases overseas travel, and inconsistent quality.
A line transfer may be your solution. This unique concept is really quite simple; your machine tools, technology, and overhead are transferred to a second-party facility to produce your parts. This solution recognizes that your existing manufacturing line has value: capital, technology, and consistency. Because it is your machinery and your technology, there is no need to develop or redevelop a process. You know what to expect when the parts arrive, providing continuity for the rest of the production or assembly.
"A successful line transfer is a low risk solution that can cut production costs by 15-30%. There are no upfront capital costs, less overhead, no machinery maintenance, and a reduced learning curve," said Rob Campbell, vice president, Business Development for Flinchbaugh Engineering, Inc in York, PA.
When To Consider Line Transfer
According to Flinchbaugh Engineering, the best candidates for this type of manufacturing line transfer are those companies that have aging equipment and capital constraints; have excess capacity on the line; have inflexible work rules and high labor costs; don''t or can''t implement Lean tools; and don''t see manufacturing as a core competency. The best product candidates are those that are difficult to produce; larger parts with lower volumes; those forecast to have reduced sales; complex or expensive parts with higher failure risks; and those that are difficult to ship long distances.
When considering a line transfer, it is important to work with your supplier to perform rigorous due diligence on feasibility. Every aspect of the manufacturing process must be scrutinized, from hidden costs such as travel and electricity to making sure the drawings match the finished part. Any unexamined process can result in unnecessary expense in the transfer.
Monitor the Process
Once the line transfer has been established and is running in the new facility, the supplier''s engineers should question the questionable and continue to refine and define more effective processes. A supplier, such as Flinchbaugh Engineering, assumes this function so your engineers are free to focus on new projects and core competencies.
A line transfer also relieves your equipment burden. Depreciation vs liquidation of the machinery should be part of your negotiation. Whether the machinery remains the property of the company or is transferred, the supplier should assume the responsibility for its maintenance. For instance, when Flinchbaugh Engineering assumes responsibility for machinery, it employs the Total Preventive Maintenance (TPM) program resulting in equipment longevity and efficient production.
Since line transfer is a big step in outsourcing, it is important to deal with a supplier with experience. Flinchbaugh Engineering is a pioneer in this outsourcing concept; its first line transfer started in 1986 when CAT transferred 14 machines and 120 part numbers to the Flinchbaugh facility. Since then, the company has been a partner in 13 other line transfers with the likes of Siemens, Mack/Volvo, and SKF.