AMERICAN CONNECTOR

COMPANY CASE STUDY

XIMB students’ presentation

 A Brief Comparison
2

ACC DJC

 Quality and  Highly efficient

Customization manufacturing
 Design and  Attention to
Performance customer needs
 52% to 43%  No customization
decrease in gross  Never alters
margin from 1984- production schedule
1991
Comparison of Manufacturing
Strategies
3

ACC: Sunnyvale plant

 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.
 Continued …
4

DJC: Kawasaki plant

 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.
 Impact of manufacturing strategy
5
on competitive objectives
ACC: Sunnyvale plant
 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
DJC: Kawasaki plant
 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
 Impact of manufacturing strategy
6
on competitive objectives (contd.)
ACC: Sunnyvale
 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
DJC: Kawasaki
 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
 Changes required in DJC for U.S.
7
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
 Threat for ACC if DJC opens a new
8
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
 Continued …
9

Policies of DJC Impact on ACC

Cost savings will be high (Cost per 1000 Higher margins for DJC. Thus profits of
units will be 20.241) DJC will be higher compared to ACC.
(Cost per 1000 units will be 33.79)

Frequent deliveries will make the ACC will lose its customers.
customers satisfied with DJC

Lower rate of defects at DJC will improve Adverse effect on ACC.

its image and also cut down on costs

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

DJC always updated with the ACC had not bought new equipment in
advancement in molding technologies. the past two years. Thus they will be
producing at a slower rate than DJC.
 Recommendations to ACC
10

Suggested Change Current Scenario

Improve tech development.
Improve employee productivity
Improve utilization by focusing mainly on
increasing plant operating time
Presently its 12.8% for Kawasaki ,6.8%
for Sunnyvale
At Present: 7.45 m for Kawasaki, 1.06 for
Sunnyvale
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
Focus on reducing depreciation and -
other costs
Study cost cutting policies of KW and Total of 6.04 for KW while total of 11.20
implement the same for Sunnyvale.
THANK YOU FOR YOUR PATIENCE…