Aic Systems Netbooks

2. AIC Systems: An Overview

2.1 About the Company

AIC Systems formerly known as Advanced Integrated Circuitry, Inc. is a Taiwan based company established in the year 1992. They manufacture printed circuit boards, motherboards and graphic cards for personal computer Industry. The company competed in the market as a low-cost manufacturer and supplied to branded desktop manufacturers like Dell, Hewlett-Packard, and Compaq. Even though the company had low volume sales as compared to other competitors, but it focused on cost management which allowed it to be competitive.  

By early 2000s, AIC Systems had evolved into an original design manufacturer (ODM) and took an active role in innovating and designing the new generation of components. Since the company had in-house designing and development it was able to foster more exclusive, long-term relationships with its customers. The company shifted all its production volume to China because of the cheap labor cost. In 2007, AIC Systems diversified its product portfolio to include consumer electronics in order to serve customer needs directly and build a new proprietary consumer brand.

2.2 History of Netbook

Ultraportable laptops were earlier available but were expensive. In partnership with a Taiwanese firm, One Laptop Per Child (OLPC) aimed to produce a $100 laptop and received support funding from companies like AMD, eBay, Google, Red Hat, and others. The organization failed to make a $100 laptop but forced other companies to make their own version of low priced, ultra-portable laptop. Intel and Via launched their own version of the ultraportable laptop but failed to overcome production and specification challenge. Taiwan manufacturer ASUS targeted middle-class consumers in western Europe and United States than students in the developing countries. ASUS Eee which was launched in fall 2007 sold 350,000 units in just four months. Later every major PC manufacturer launched a similar device or announced plans to do so. The analyst estimated total industry unit volume of these products to exceed 15 Million for 2008.

2.3 Development of QuiN Netbook

In March 2008, AIC systems began development of QuiN and targeted to bring the netbook in the market by third quarter of the year. The company had the challenge of selecting the processor for QuiN, instead of selecting Intel Dothan processor company waited for the launch of advanced Intel Atom processor as they were confident, they could meet the deadline set by Taipei corporate office. The team developed motherboard named “Koda” that offered solid capacitor, a BIOS that allowed overclocking and lower profile heatsink for a thinner netbook. The “Koda” motherboard featured Atom processor, Intel GMA950 integrated graphics, 5.1 channel audio, and Realtek LAN. Rest of parts of QuiN netbook were sourced externally.

2.4 Netbook Assembly Line

After the development of Koda board, AIC system moved Kaizhi plant into production. Will Lapin, the company’s process engineer designed 4 assembly lines each 16-meter in length that will be operated by 10 workers. There is one supervisor per assembly line who must ensure a smooth production process, help workers and troubleshoot the problem. Two dedicated material handlers had to ensured there is an adequate supply of materials to assembly lines. Two highly skilled dedicated floaters per line ensured that they could cover for less efficient workers or when workers required breaks. The assembly lines are designed to produce 700 netbooks per one working shift. Each Working shift is of 9 hours and there are 2 shifts in a day. The assembly line is operated 6 days in a week. The capacity of the assembly line was designed in such a way that plant can handle peak demand without much need to make changes in line. Once the netbooks were assembled, they were placed on racks for transportation to quality assurance on another floor.

2.5 Challenges in Assembly lines

        Initially, the AIC system had very little demand for QuiN netbook however later due to a promotion run by Korean mobile telecom company there was a sudden spike in the demand. Due to variable and unpredictable demand, there had been some refinement in the assembly line. To meet the sudden demand Chief Strategy Officer, Anne Lin was unwilling to invest in hiring and training the workers and supervisors required for the third shift and the plant was forced to run 10 to 12 hours shift which is not sustainable. Also, with two floaters company could not keep to the required rate of production.

        By November 2008, the assembly lines were running smoothly and were producing netbook every 50 seconds but could not achieve the planned cycle time of 41 seconds. Some non-standard operations were forced in assembly line which increased the cycle time. Also, unsanctioned buffer inventories accumulated between the stations. Company’s Kaizen meetings in which workers gave their valuable inputs for improvement in the line performance were helpful to some extent. However, supervisors were often engaged in firefighting i.e. due to the pressure of meeting the demand they often address the immediate problem then solving its root cause to find the permanent solution. Labor cost in Shenzhen area was increasing and the company was reviewing whether floaters were required on a permanent basis.

3. Effects of Variability on Assembly line

The demand for QuiN 816 Netbook was unpredictable since a Korean mobile telecom company ran a promotion offering a free Netbook for signing up for the plan for 2 years, which lead to a significant publicity but also generated an unexpected spike in the demand for the products which would lead to demand variability in the assembly line production.

The demand variability will affect the design of the line in the following ways:

1. The workers would be forced to work for 10-12 hours per shift unlike their normal shift of 9 hours which would affect the efficiency of the assembly line.
2. The floaters (highly skilled workers) would also not be able to compensate enough for the less-efficient workers in an assembly operation as a result of which cycle time of assembly line could not be reduced.

Since the Chief Strategy Officer was not willing to invest in hiring or training the workers and supervisors for a permanent third shift. Therefore, the complete load would be transferred on to the workers in the two shifts and they had to work overtime with 10-12 working hours. Due to this reason, the actual time for all the workstations is greater than the planned times.
Efficiency Calculations