AMERICAN CONNECTOR COMPANY CASE STUDY

XIMB students’ presentation

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A Brief Comparison

Quality and Customization

Design and Performance

52% to 43% decrease in gross margin from 1984-1991

Highly efficient manufacturing

Attention to customer needs

No customization Never alters

production schedule

ACC DJC

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Comparison of Manufacturing Strategies

Production Type : Majority Batch Process, rest Job Process Average Production Rate : 420 million units 

(600 million units maximum) Competitive Strategy : Flexibility and customization Production Areas: 5 Separate Areas - Terminal Stamping and

Fabrication, Terminal Plating, Plastic Housing Molding, Assembly and Testing, Packaging

Production Planning:Operates 120 hours/week on a 3 shift per day, 5 day per week schedule, 50 weeks of the year.

Lead Time:Relatively long lead times, short production runs (averaging 1.5 to 2 days), and small finished goods inventory (38 days).

Capacity Utilization : only from 50-85% Outsourced design of equipment.  Emphasized cutting edge equipment.

ACC: Sunnyvale plant

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Continued …

Production type : Completely Continuous Flow Average production rate : 700 million units 

(800 million units maximum) Competitive Strategy : Low cost production, standardization and

superior design Production Areas : 4 Production Cells with Terminal Stamping, Housing

Moulding, Assembly, Packaging Production Planning : Operates 168 hours/week on a 24 hour per day,

330 days a year Lead Time : short lead-times, large finished good inventory Capacity Utilization : 100% utilization All technology in house.  Emphasis on older technology. Equipment

bought from vendors changed to suit needs.

DJC: Kawasaki plant

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Impact of manufacturing strategy on competitive objectives

Low Cost Highly automated process High WIP inventory, so

number of employees increased

3shifts/day,5days/week, capacity utilized is 70% approx.

Product innovation Wide range of products Superior design Less investment on

technology No quality control

Low Cost Less inventory Reduced workforce No start-up & shut-down

cost Standardized products Location advantage Connectors packaged in

tape & reels Product innovation

Copied from US designs Innovative ways to produce

developed, pre-automation, in-house technology

Standardized design

ACC: Sunnyvale plant DJC: Kawasaki plant

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Impact of manufacturing strategy on competitive objectives (contd.)

Reliability Latest production

equipment used High defective rates on

new products, but no defective product is sent to customer

Flexibility Flexible Customized products Production schedule

changes often

Reliability Old reliable process used

in quality control Molds checked regularly

Flexibility Not much flexible High finished product

inventory Production schedule is

more or less fixed

ACC: Sunnyvale DJC: Kawasaki

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Changes required in DJC for U.S. plant

Emphasize on Marketing/Sales Invest in new technology Increase customization and number of

product variants Should be more flexible Production scheduling should be

improved

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Threat for ACC if DJC opens a new plant

Cost of raw material – $12.13/1000 units for DJC $ 9.39/1000 units for ACC (But due to cost

advantage of US, DJC’s material cost will come down to $ 7/1000 units approximately.)

Cost of labor – $10.3/1000 units for ACC $3.77/1000 units for DJC (But this will increase

to $6 due to more labor requirement) DJC’s highly efficient style of production may

attract buyers who need standard products

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Continued …

Policies of DJC Impact on ACC

Cost savings will be high (Cost per 1000 units will be 20.241)

Higher margins for DJC. Thus profits of DJC will be higher compared to ACC. (Cost per 1000 units will be 33.79)

Frequent deliveries will make the customers satisfied with DJC

ACC will lose its customers.

Lower rate of defects at DJC will improve its image and also cut down on costs

Adverse effect on ACC.

Process at DJC fully automated. Thus DJC will offer products at a faster rate than ACC.

DJC always updated with the advancement in molding technologies.

ACC had not bought new equipment in the past two years. Thus they will be producing at a slower rate than DJC.

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Recommendations to ACC

Suggested Change Current Scenario

Improve tech development. Presently its 12.8% for Kawasaki ,6.8% for Sunnyvale

Improve employee productivity At Present: 7.45 m for Kawasaki, 1.06 for Sunnyvale

Improve utilization by focusing mainly on increasing plant operating time

At Present: (330 days/year-Kawasaki, 3 shifts/day,5 day/wk,50 wks/yr for ACC.

Decrease raw material inventory size

5 days for Kawasaki, 10.8 days for Sunnyvale.

Bring in a degree of standardization for orders

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Focus on reducing depreciation and other costs

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Study cost cutting policies of KW and implement the same

Total of 6.04 for KW while total of 11.20 for Sunnyvale.

THANK YOU FOR YOUR PATIENCE…