Aa Connector Company Case Analysis

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Assignment Submission

Course Name: OSTR_Hyd_168

Assignment Title: AMERICAN CONNECTOR COMPANY CASE ANALYSIS

 Submitted by:

Date: 06/03/2016

(Student Name or Group Name)

American Connector Company (ACC) management was analyzing the implications of DJC corporations’ entry in USA. The management, including Denise Larsen, VP of operations at American Connector Corporation, was worried that DJC’s success in Kawasaki, combined with operational problems faced by ACC’s Sunnyvale plant in California can create trouble for ACC.

The below important attributes of DJC that have made it a success in Kawasaki:

• Plant Layout: Delivered to many customers on a daily basis (some of the largest customers received shipments every few hours). Assembly operations were almost completely automated.
• Product Technology: Design reflected goals of continuous and reliable operations and need to economize on raw materials. Product design of most connectors was standardized to reduce number a product variations. Also, a lot of emphasis is laid on in-house technology development.
• Process technology: Significant resources were devoted towards pre-automation i.e. the activities required to make production process suitable for highly reliable automation. The underlying philosophy is that a production process can be automated only after it is completely understood, properly designed, and properly laid out.
• Sourcing: Close relationships were maintained with suppliers of few of its key raw materials. The suppliers were required to certify quality of products in every delivery. The sourcing policy also required frequent delivery which allowed the company to maintain an inventory of only 5 days.
• Quality control: 5 objectives: 1) improving quality control standards, improving the process inspection system, improving precision of molded components, improving quality of product designs and reducing plant’s waste.
• Production and inventory control: Production runs were scheduled to be as long as possible to minimize yield and capacity losses. Also, the plant refused to make changes for unplanned orders.
• Workforce: objective to gradually reduce the number of direct production workers as well as support and overhead staff. The idea being, as automation increased, fewer direct production workers will be needed. Also, workers were discouraged from staying for a long period of time.
• Organization: Policy of pushing decision-making autonomy down in the organization was followed.

Concerns for American Connector Company:

The company’s gross margin has been gradually declining from 52% to 43%, although the sales have increased (from $252 million in 1984 to $800 million in 1991). After the last major expansion in 1986 (for Sunnyvale plant , bringing capacity to 600 million units), slowed growth in demand has resulted in industry wide excess capacity dissuaded the company from making further expansions or making any new investments in technology. This had concerned the production engineering staff, who felt that the company was losing its leading edge.

Customization was another issue for ACC as it made it difficult for the company to predict demand and had an affected production scheduling. Moreover, recent decline in sales has WIP undesirable. The increase in number of individual products had also made production scheduling more difficult and caused production staff to expand.  Quality was another concern as defects were significantly high (26000 per million units of production) which was then filtered out by inspection team.

Advantages for DJC over ACC: