Strategic Cell Migration Successes
NTN-BCA Corporation, Lititz, Pennsylvania
Founded in 1898 in Lancaster, Pennsylvania, as the Star Ball Retainer Company, the company merged with the Bretz Company in 1910 to form the Bearing Corporation of America. NTN acquired BCA in 1997, adding this operating unit to its extensive global portfolio and continuing the century long commitment to the innovative development and production of bearing products. NTN Bearing Corporation is one of the world’s leading manufacturers of bearings, constant velocity joints and other precision industrial equipment. NTN maintains production facilities in several countries throughout the world and is widely recognized for quality manufacturing and design.
NTN-BCA manufactured a comprehensive line of industrial ball bearings at the Lititz, Pennsylvania plant utilizing modern CNC lathes and skilled union production workers. Through the 1990’s competitive pressures intensified in the global bearing market as new entrants from low cost countries aggressively pursued market share expansion. To counter this competitive intrusion, NTN-BCA modified their sourcing strategy to drive much needed costs savings.
Phase 1 of the new sourcing strategy was to take production of high volume products offshore to low cost countries. This change drove immediate and substantial cost savings for the business. Nonetheless, there were a number of products that could not readily be sourced from offshore suppliers, either because the technical requirements were too complex, demand was volatile or batch sizes were too low. After rightsizing variable costs, the in-house production remaining at the Lititz plant was rendered significantly less efficient given the product mix and smaller typical batch sizes. Exacerbating this loss of efficiency was the fact that many skilled and energetic workers were displaced.
To offset savings eaten away by the loss of efficiency, NTN-BCA executed a second phase of the sourcing strategy where domestic contract manufacturing sources were developed, where practical, to machine bearing rings not suitable for the offshore supplier network. This course of action resulted in additional unit cost savings but further displaced in-house CNC machining making it more challenging for NTN-BCA to achieve cost efficient production. Furthermore, the domestic contract manufacturers typically priced based on volume tier pricing making it difficult to accurately forecast costs where demand was uncertain or volatile. The management team at NTN-BCA regularly faced unfavorable variances and decisions on whether to commit working capital to acquire inventory to drive piece price down.
In early 2006 Flinchbaugh Engineering presented the Strategic Cell Migration™ solution to NTN-BCA. Through mutual due diligence and agreement it was determined that six CNC lathes would be relocated to the Flinchbaugh manufacturing campus in York, PA. These machines would produce over 200,000 bearing rings annually including parts produced in-house at the Lititz plant, as well as parts supplied by the domestic contract manufacturer. This strategic change enabled NTN-BCA to affect a complete exit of “green ring” turning for industrial ball bearings, recommitting floor space to much needed warehousing. The Flinchbaugh cost model solved the issue of purchase price variances by applying a uniform cost standard across all parts. The benefits driven from the Strategic Cell Migration were roughly $95,000 in annual cost savings, or a little more than 25%, resulting in a payback of 11 months on one-time costs.
Flinchbaugh Engineering is employee owned, resulting in a deeply personal commitment by each team member to embrace the principals of Lean Manufacturing and Six Sigma to drive continuous improvement and customer satisfaction. Flinchbaugh operates totally non-union manufacturing around the clock, 24/7, supported by a lean and extremely flat management team. Core competencies in machine tool rebuilding and Total Productive Maintenance (TPM) enable us to restore and maintain depreciated manufacturing assets to “like new” condition, assuring repeatable quality and productivity.