American Connector Corporation (AC) Is one of the 28 suppliers of electrical connectors, worldwide with sales greater than $100 million. AC manufactured Electrical Connectors from Sunapee, California since 1961. Electrical connectors are devices made to attach wires to other wires, attach wires to outlets, attach wires, components or chips to PC boards, or to attach PC boards to other boards. Connectors were used in a variety of product applications, ranging from military and aerospace equipment to consumer electronics and appliances.
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 were established mainly by International Institute of Connectors and Interconnect Technology (CCITT the National Electronics Distributors Association (NEED) or by the end use Industries. In LISA, the connector Industry was characterized as a hostile environment. The 1991, sales had fallen by 3. 9% over the last year and the Industry was 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 600 million units per year. The 1991 utilization was 70% and was expected to reach 85% by 1996. Because of the depressed market conditions, the Sunnyvale plant made no major investments in capacity or new technology since 1986. DC Corporation of Japan 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 Japan, DC had not established itself in the US. It had no plants in the US and only a mall sales force.
There have been rumors in the last few years that the DC would build a new plant In USA to launch an attack on the US market. Denies Larsen, the Vice President of Operations at AC felt that Sac’s position was particularly vulnerable 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 Lie. The plant manager felt that it would not be easy for DC to implement their strategy in USA. 1. THE DC CORPORATION
DC produced four basic connectors : wire-to-wire, wire-to-outlet, item-to-board and board-to-board. Competitive Strategy of DC Corp. 1. DC 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 Memos b.
DC adopted designs to economize raw trials and to sloppily manufacturing so as to eliminate features which did not add perceived value to the customers. 3. DC believed in low cost positioning of its 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. The Sukiyaki Plant The 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 hut 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 DC 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 injectors. With the exception of plating, all the processes, needed to manufacture a 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 DC also guaranteed low work 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 volume is necessary for this type of layout to prove profitable. . 4. Product Technology 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 , he plant produced only 640 stock keeping units (SKU), a relatively small number for a plant its size. To economize on raw materials, the designers adapted some pins plated with tin rather than gold. Also, to simplify packaging, DC 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. Emphasis was placed on eliminating unscheduled downtime. 3. Absolute reliability on upstream molding process: As molding was an important process in the manufacturing of a connector, it was important to ensure he molds were fault free. Regular maintenance and replacement kept the mold yields in excess of 99. 99%. Even with such stringent measures, DC managed to keep it’s annual cost per mold at $29,000 compared to $40,000 for AC. 4. Reliance on in- house technology development 5.
Inter-functional co-ordination of all its technology development activities. Process Technology Sukiyaki maintained close relationships with a few suppliers of its key raw materials. These suppliers had to meet rigorous quality standards. When Sukiyaki received a hinted from a supplier, materials were used directly in production without further inspection. Sukiyaki’s sourcing policy demanded frequent delivery which allowed Sukiyaki to maintain a raw material inventory that averaged five days. 1 . 2. 6. 2. 7.
Production and Inventory Control On average, a production run of a particular model lasted one week, though some product lines were run on an almost continuous basis. Long runs were possible due to the limited number of SSW. Sukiyaki’s processing lead times and work-in- progress inventories each averaged 2 days. However, it had a relatively high finished odds inventory of 56 days. 2. 8. Workforce Production workers were directly responsible for all activities affecting conversion and material flows and were not specialized to particular processes or functions.
