comparison between a.c.c.c and d.j.c , and who performed better

1. AMERICAN CONNECTOR COMPANY(A)
BY
GROUP 9

2. THE KAWASAKI PLANT
•The Kawasaki plant was designed to produce a maximum of
800 million connectors per year.
•The plant operated 24 hours a day, seven days a week, 330
days a year.
Three goal of the company were
• Yield on raw material of 99%
• Customer complaints of not more than 1 per million units
of output.
•Asset utilization of 100%
Thus, the major aim of DJC at the Kawasaki plant was to
achieve “the ultimate rationalization of mass production”.

3. ORGANISATION STRUCTURE

4. Plant layout
Wire to Wire
Connectors
Wire to Outlet
Connectors
Item to Board
Connectors
Board to Board
Connectors
Plating
Plant layout was designed for mass production.
The Kawasaki plant was organized in 4 cells

5. PROCESSING STAGES IN A CELL

6. 3 MAJOR AREAS
PRODUCT
• Product design of
most connectors
was standardized to
reduce the number
of product variations
• Economize of raw
materials
• Engineers undertook
extensive value
engineering to
implement cost
saving designs
PROCESS
• It maintained close
relationships with a
few suppliers of its
key raw materials
• Sourcing policy
demanded frequent
delivery which
allowed Kawasaki to
maintain a raw
material inventory
that averaged five
days
PRODUCTION AND
INVENTORY
CONTROL
• To minimize yield
losses, production
runs were
scheduled to be as
long as possible
• It had a relatively
high finished goods
inventory of 56
days.

7. Process Technology
There were several principles which guided the process technology,
they were
• Pre-automation
• Better to use an old reliable process than a new, less reliable
one.
• Absolute reliability on upstream moulding process
• In-house technology development
• Inter-functional co-ordination of all its technology development
activities.

8. THE AMERICAN CONNECTOR COMPANY
The American Connector Company operated four plants in the U.S and two in
Europe.
Each of these plants produced all the four basic types of connectors and each
services a particular customer segment.
Competitive Strategy of American Connector Company
• Emphasized quality and customization
• Customization was an extension of ACC’s emphasis on quality
• Custom orders made up 15% of the company’s total production volume.
ACC had been very profitable, sustaining margins as high as 52%.
while sales had grown from $252 million in 1984 to $800 million in 1991, gross
margins had eroded from 52% to 43% during the same period.

9. The Sunnyvale Plant
• The ACC opened the Sunnyvale plant in 1961 in order to serve the emerging
electronics industries in and around Silicon Valley
• The plant had started off with a capacity of 1 million units per year, but the last
major expansion in 1986 saw the capacity at 600 million units per year.
• The plant’s utilization peaked in 1986 which proved to be a peak year of demand.
Utilization sunk as low as 50% in 1988, but rebounded to 70% by 1991. Using
current demand forecasts, the plant was expected to reach 85% utilization by
1996.
• The Sunnyvale plant produced about 4500 different models of connectors.

10. Plant
Layout
A batch process or modular process was followed for production which is be depicted
by the process flow diagram as below-

11. MAJOR AREAS
PRODUCT TECHNOLOGY
• Customization was an extension of
ACC’s emphasis on quality. Custom
orders made up 15% of the
company’s total production volume.
Production and Inventory Control
• processing lead time for a standard
batch was only 10 days, special
orders took two to three weeks
• It carried a finished goods inventory
of 38 days. While it had high work-
in-progress inventories

12. COMPARISION OF PRODUCTION PROCESSES OF
DJC vs ACC

13. Existing Situation Situation in USA Remarks
1
Customer
Contacts
close links with the major
computer, telecom and
electronics companies
and distributers in
Japan.
USA has more than 900
suppliers of connectors. Of
these 900, 28 firms existed
with a sales of greater than
$100 million.
have to compete in a new
market without major
customer contacts. Thus, it
cannot leverage this
strength to compete in USA
2
Design
Strategy
The company's design
strategy emphasized
simplicity and
manufacturability, over
innovation.
designs were custom -
produced, usually on a one-
year contract with a single
connector company and
were often accepted as
industry standard after the
contract expired.
.
More customized
product will lead to
more margin, so it has
to follow a new strategy
to enter in U.S market
3
Production
and Inventory
Control
Very large run time to
produce a particular
product
Large variety of product
Need to produce high
variety, so would be very
difficult for it to produce
large variety with large run
time
4 Cost cutting
Used many cost cutting
techniques like replacing
gold with tin
The standard designs were
those which had been
established by the IICIT,
NEDA or by end industries.
Are these changes
accepted in USA market

14. COST ANALYSIS
DJC/Kawasaki 1986 ACC/Sunnyvale 1986 DJC IN USA 1986 DJC/Kawasaki 1991 ACC/Sunnyvale 1991 DJC IN USA
1991
capacity utilization 99% 85% 99% 99% 70% 99%
Raw Material, Product 14.32 10.40 8.59 12.13 9.39 7.278
Raw Material, Packaging 3.27 2.25 1.962 2.76 2.10 1.656
Labor, Direct 7.63 ... 8.393 3.02 3.322
Labor, Indirect 2.30 ... 2.53 0.75 0.825
Total Labor 9.93 8.53 10.30
Electricity 2.47 1.80 1.98 1.40 0.80 1.12
Depreciation 7.63 5.52 7.63 1.80 5.10 1.8
Other 4.12 4.41 4.12 4.24 6.10 4.24
TOTAL 41.74 27.9735 35.203 26.10 23.653 20.24
TOTAL S.P (MARGIN TAKEN AS .50)
0.06261 0.04196025 0.0528045 0.03654 0.0331142 0.028337
33.11 28.37
G.M 1.5 1.4
Exhibit 8 Cost Indices, United States/Japan (1991)
Expense Item Index
Raw Material, Product 0.60
Raw Material, Packaging 0.60
Labor, Direct 1.10
Labor, Indirect 1.10
Electricity 0.80
Depreciation 1.00
Other 1.00

15. STRATEGIES
In Terms of ACC Existing Situation Threat from DJC Suggested Strategy for ACC
1
Process
Layout
The plant was divided
into 5 production areas.
This was a typical
modular process layout.
Modular process layouts
are designed to
accommodate high
variety and low volume
production.
THREAT OF LOOSING 85%
MARKET SHIFTING TO LEAN PRODUCTION
FOR THIS 85% PRODUCTION
2 Quality
High defect rate- 26000
per million units of
production in 1990.
Yields on new designs
was sometimes as low
as 55%.
Manufacturing at two different
assembly line and using TQM
system

16. 3
Quality
Losses - Non-
Scheduled
it is observed that
28.6% of loss in fixed
asset utilization is due
to non-scheduled
outages.
DJC's non-scheduled
outages were only 13.2%
Timely maintenance should
be done
4 Strategy
ACC was characterized
by its emphasis on
both quality and
customization.
DJC would be marketing
itself as a low cost supplier
of connectors.
ACC has an upper hand