Case Study: American Connector Corporation

Each application and often each producer called for different connector specifications.

In 1990, there were over 700 standard connector product lines in North America alone. Standard designs Nerve established mainly by International Institute of Connectors and Interconnect Technology (CITE), the National Electronics Distributors Association (NEED) or by the end use industries. In USA, the connector industry was characterized as a hostile environment. The 1991, sales had fallen by 3. 9% over the last year and the industry Nas seeing a downward trend since 1987, with 1986 being the peak year.

Consequently, Sac’s last major expansion occurred in 1986 bringing its capacity to 500 million units per year.

The 1991 utilization was 70% and was expected to reach 35% by 1996. Because of the depressed market conditions, the Sunnyvale plant made no major investments in capacity or new technology since 1986. DDCD Corporation of lapin was a dominant supplier of electrical connectors in Japan. It was rumored to be one of the most efficient connector plants in the world. Despite its success in lapin, DDCD had not established itself in the US.

It had no plants in the US and only a small sales force.

There have been rumors in the last few years that the DDCD would build a new plant in USA to launch an attack on the US market. Denies Larsen, the lice President of Operations at SAC felt that Sac’s position was particularly ‘alienable at the moment and contemplated a major overhaul of the manufacturing operations at Sunnyvale. Jack Mitchell, a recently graduated MBA and her assistant concurred to her view that the future looked bleak. Andrew L’, the plant manager felt that it would not be easy for DDCD to implement their strategy in USA. . Produced four basic connectors : wire-to-wire, wire-to-outlet, item-to-board and board-to-board.

1. 1 . Competitive Strategy of DDCD Corp. 1 . DDCD cultivated and maintained close links with the major computer, telecommunications and electronics companies and distributors in Japan. These relationships represented an important entry barrier in the Japanese connector market.

2. The company’s design strategy emphasized simplicity and manipulability over innovation. A. Doc’s connectors were designed for maximum compactness to suit Japanese Moms b.

DDCD adopted designs to economize raw trials and to simplify manufacturing so as to eliminate features which did not add perceived value to the customers. 3.

DDCD believed in low cost positioning of its products and built its operations to achieve the same. C emphasized on the importance of manufacturing and the balance of power was tipped in favor of manufacturing. Thus, product schedules, product mix and lead times were fixed and rigid. 2. 2.

The Sukiyaki Plant rhea Sukiyaki 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.

The main advantage of this continuous running of the plant was to minimize start up and shut down costs. The company President, Mr..

Sake had a vision with three goals for the plant, they were 1 . Asset utilization of 100% 2. Yield on raw material of 99% 3. Customer complaints of not more than 1 per million units of output. Thus, the major aim of DDCD at the Sukiyaki plant was to achieve “the ultimate rationalization of mass production”.

2. 3. Plant Layout In accordance to the vision of the President of the company, Mr.. Sake, the plant layout was designed for mass production.

The Sukiyaki plant was organized in 4 cells, each of which was responsible for producing one of the four general types of connectors. With the exception of plating, all the processes, needed to manufacture complete connector were located in each cell Each cell contained anywhere from two to six production lines, with each line consisting of terminal stamping, housing, molding, assembly and packaging The production process can be depicted with a process flow diagram as shown. This arrangement can be classified as a typical product oriented layout and production process.

Advantages of Product oriented layout: A Product oriented layout works best when the output required is of high volume and low variety. This layout facilitates high equipment utilization, given there is adequate demand. The line production process followed by DDCD also guaranteed low Nor in process inventory.

The product is standardized Disadvantages of Product oriented layout: Not flexible to handle products of high variety. In cases of insufficient demand, this may lead to high Finished Goods inventory. High ‘meme is necessary for this type of layout to prove profitable. 2. 4.

Product Technology en product design at Sukiyaki retracted the goals to continuous and reliable operations and the need to economize on raw materials.

Product design of most connectors was standardized to reduce the number of product variations. In 1991, the plant produced only 640 stock keeping units (SKU), a relatively small number for plant its size. To economize on raw materials, the designers adapted some pins plated with tin rather than gold. Also, to simplify packaging, DDCD packaged its connectors only on tape and reels 2000 connectors per reel/tape, even though the industry standard was 1500 connectors per tape/reel.

Thus, Doc’s engineers undertook extensive value engineering to implement cost saving designs which did not compromise on product quality or performance.

2. 5. Process Technology There were several principles which guided the process technology, they were 1. Pre-automation: These activities were done to make the production process suitable foe highly reliable automation. Specifying raw material quality and process tolerance levels were also some pre-automation activities. 2.

Better to use an old reliable process than a new, less reliable one. Thus, to ensure smooth runs, processes were operated below maximum speed.