Donner Company Case Solution

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Table of Contents

1. Donner Company        

1.1 Introduction        

2. Problems faced by Donner Company        

2.1 Quality Problem        

2.2 Layout problem        

2.3 Operating problems        

2.4 Productivity problems        

2.5 Delivery problems        

3. Standard Labor Time and Bottleneck        

3.1 Break-even order size        

3.2 Standard labor time        

5. Conclusion        

6. Exhibits        

6.1 Exhibit 1 Operations process flow        

6.2 Exhibit 2 Calculation of standard labor time        

6.3 Exhibit 3 Operational Inefficiencies        

1. Donner Company

1.1 Introduction

Donner Company was founded in 1985. Donner Company was known for its expertise in electronic industry and Company has positioned itself well within both the small volume, customized printed circuit boards market (contract PCB) as well as the large volume, generic  printed circuit boards market (captive PCB). Large electronic firms (AT&T, IBM) produced their components in captive shops, while smaller sized companies, or when large and small quantities of simple technology or fast turn-around prototype boards were required, these requests usually are fulfilled by contract shops.It produced specialized circuit boards known as “solder mask over bare copper” (SMOBC) boards.  Donner positioned itself to manufacture these boards to small and large electronic firms and management envisioned it as one of the industry leaders. However, in order to achieve this objective, perhaps Donner needed to take a management decision that is more business oriented rather than being managed by engineers who don’t necessarily need the any business management core competency to run the organization.

Donner Company had 750 competitors in US market alone but their ability to provide solutions to design problems and prototype techniques enabled it to maintain a competitive edge over others. However, this competitive edge has been compromised many a times lack of planning and manufacturing problems or by poor on-time delivery and high rate of product return that caused bottlenecks, shifting bottlenecks and improper utilization of labor.  These problems began to hamper the overall performance of the firm, and management started evaluating the company’s position and different strategic policies.

As per the case it is mentioned that approximately one fourth of the jobs delayed in process were held as a result of telephone calls from customer’s engineers who had encountered a design problem. This is due to the contributing fluctuations of 4 day rush orders. In order to mitigate this particular issue they need to schedule a fixed timing slot where customer engineers can solve and Donner engineers help he solving the issue to best of their abilities. This will not reduce the efficiency of the employees while they are working as they will not be interrupted again and again by these calls.

Donner did not implement effective quality control measures to look upon the work in progress.  Donner depended on the individual operators’ experience to perform informal examination as the operation shifted from one process to the next.  The result was the increase rate of product return but they skipped one or the other operation concentrating on delivering in 4 days for rush orders. The company’s reject rate in September alone amounted to 7%, of which 1% was a total loss and 6% required re-works because the end products did not meet the customers’ specifications.  Clearly, re-works resulted in pulling operators from their current jobs to begin re-works on the returned boards, which in turn caused lack of productivity and bottlenecks. This can be resolved by keeping a check at the end whether the product has undergone with all the operations or not. Employees need to be really diligent while performing operation for rush orders.

Flaherty spent much of his time planning and determining how to move jobs ahead of others and how to shift workers from one operation to another (to meet unexpected customers’ changes to specifications and to meet the deadlines for rush orders). He has to chart out a plan regarding different stages which takes varied amount of time ranging from maximum to minimum and then manage or distribute the workers accordingly. If machines are ideal at many instances and drilling workers had ran out of work then labor distribution for each stage is not properly planned. He has to make sure that for any operation, employees are not idle more than few minutes.

2. Problems faced by Donner Company

2.1 Quality Problem

The strategy implemented by Donner for ensuring the quality of raw materials and work in progress was not efficient enough. It used an informal quality assurance process by individual workers as the units moved through the processing unit. The standardization of the quality specifications was not feasible as the standards were dependent on the type of customers. The problem had a huge impact on the process flow as this resulted in increase in product returns. In September alone the rejection rate of Donner’s products were 7% of which 1% was total loss and the remaining 6% required re works to make it compatible with customer specifications. The re works also had a significant impact in the process flow as it required labors involved in the routine production work to be pulled out to work on the defective products. The quality assurance process could be improved by installing dedicated labors for the process as manufacturing defects are unavoidable. The process could also be standardized by categorizing the customers as per the products demanded and making a set of specifications for each category of products. This reduces the time consumed by the labors for the quality checking. The rate of rejection could be reduced by providing the specifications to the customers as well so they could understand the end product beforehand. This way the product could be made as per the expectation of the customers.