AMERICAN CONNECTOR

COMPANY CASE STUDY

XIMB students presentation

A Brief Comparison
2

ACC

Quality and Customization

Design and Performance

52% to 43% decrease in gross

margin from 1984-1991

DJC

Highly efficient manufacturing

Attention to customer needs

No customization

Never alters production schedule

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 on

competitive objectives
5

ACC: Sunnyvale plant

Low Cost

DJC: Kawasaki plant

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

Less inventory
Reduced workforce
No start-up & shut-down
cost
Standardized products
Location advantage
Connectors packaged in
tape & reels

Low Cost

Product innovation

Copied from US designs

Innovative ways to produce
developed, pre-automation,
in-house technology
Standardized design

Impact of manufacturing strategy on

competitive objectives (contd.)
6

ACC: Sunnyvale

Reliability

DJC: Kawasaki

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

Old reliable process used in

quality control
Molds checked regularly

Reliability

Flexibility

Not much flexible

High finished product
inventory
Production schedule is more
or less fixed

Changes required in DJC for U.S. plant

7

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 plant

8

Cost of raw material

$12.13/1000 units for DJC
$ 9.39/1000 units for ACC (But due to cost
advantage of US, DJCs 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)
DJCs highly efficient style of production may attract
buyers who need standard products

Continued
9

Policies of DJC
Cost savings will be high (Cost per
1000 units will be 20.241)

Frequent deliveries will make the

customers satisfied with DJC

Impact on ACC
Higher margins for DJC. Thus profits
of DJC will be higher compared to
ACC. (Cost per 1000 units will be
33.79)
ACC will lose its customers.

Lower rate of defects at DJC will

improve its image and also cut down
on costs
Process at DJC fully automated.

Adverse effect on ACC.

DJC always updated with the

advancement in molding
technologies.

ACC had not bought new equipment

in the past two years. Thus they will
be producing at a slower rate than
DJC.

Thus DJC will offer products at a

faster rate than ACC.

Recommendations to ACC
10

Suggested Change

Current Scenario

Improve tech development.

Presently its 12.8% for Kawasaki ,

6.8% for Sunnyvale

Improve employee productivity

At Present: 7.45 m for Kawasaki,

1.06 for Sunnyvale

Improve utilization by focusing

mainly on increasing plant
operating time
Decrease raw material inventory
size
Bring in a degree of standardization
for orders

At Present: (330 days/yearKawasaki, 3 shifts/day,5 day/wk,50

wks/yr for ACC.
5 days for Kawasaki, 10.8 days for
Sunnyvale.
-

Focus on reducing depreciation and

other costs

Study cost cutting policies of KW

and implement the same

Total of 6.04 for KW while total of

11.20 for Sunnyvale.

THANK YOU FOR YOUR PATIENCE