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OPERATIONS MANAGEMENT

DONNER COMPANY
SUBMITTED
TO

PROF. JANAT SHAH

PREPARED BY:

ABHISHEK PRASAD BURJOR DADACHANJI ROHIT GOEL JAYARAMA HOLLA

0511147 0511160 0511178 0512005

VISHAL AGGRAWAL 0511196

Donner Company

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Donner Company

TABLE OF CONTENTS
Exhibit A........................................................................................................................25 Exhibit B........................................................................................................................27

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Donner Company

INTRODUCTION
The Donner Company manufactures printed circuit boards for a variety of electronics manufacturers based on the specifications provided by them. It started operations in 1985, and is run by engineers who have substantial experience in the electronics industry. There are 750 printed circuit board manufacturers in the US market, classified as captive or contract manufacturers. The industry has shown phenomenal growth as electronics increasingly becomes a vital part of all aspects of life. The Donner Company is believed to be more adept than its competitors in creating prototypes of new designs and anticipating/resolving any problems that might be associated with these designs.

CASE FACTS
Manufacturing Process Flow
Donner produces solder mark over bare copper (SMOBC) boards. This process has three broad stages: 1. Preparation Stage Master artwork received from the customer

used to produce negative image

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Donner Company panel Double sided copper-clad glass epoxy sheets Location holes punched used in aligning, 36 by 48 sheared into 12 by 18 panels drilling, imaging and routing 2. Image Transfer Stage Approximately 500 holes per circuit board Individual image repeated to maximize panel

utilization (panel size 12 by 18) typically 8 images per

drilled manually or using CNC drill (worth $80000) drilling process needs the operator in both cases Panel is processed through copper immersion bath metallization deposits thin layer of copper on drilled holes are desired copper Exposed DFPR stripped off the panel uncopper is etched off circuit pattern electroplated Conductors are electroplated bare areas and metallized holes are covered by an additional layer of Panels are washed, scrubbed and coated with Film of the artwork is placed on the panel and it DFPR machines wash away un-exposed DFPR photo-resist (DFPR) is exposed to UV light leaving conducting copper surface bare where conductors

protected by tin coating

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Donner Company Tin coating chemically stripped off leaving the

desired circuit pattern on both sides of the board

3. Fabrication Stage Protective epoxy coating over circuit traces Through holes covered with solder Individual boards separated from panel

solder-mask silk-screening

reduced to desired size and shape using the CNC or a punch press final step Boards are inspected, tested, packaged and shipped one senior Donner employee assigned to this

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Donner Company

Figure 1: Manufacturing Process Flow The normal flow described above could be modified based on specific requirements of customers. Sometimes additional steps may also be involved. Special racks are used between process operations to hold up to 20 panels in order to reduce handling damage

Supervision Process
Supervision responsibilities are shared by three people: Diane Schnabs expediter
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Donner Company Bruce Altmeyer design engineer David Flaherty shop supervisor

Figure 2: Flow of Information The expediter: Keep track of orders in process. Investigated delays, fixed problems, kept customers informed. Took charge of rush orders. The design engineer: Inspect artwork, find design errors, and create processing strategy. The shop supervisor: In charge of manufacturing, supervised 22 production employees, worked with the blue-print.

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Donner Company

Order Processing

Figure 3: Order Processing Flow Key steps involved: Estimating labor and material costs preparing a bid for the customer Orders less than 1000 boards 3 weeks, larger orders 5 weeks Material specification and factory order created Supervisor receives the blueprint (4 days after the bid is finalized) Scheduling decisions, labor estimates, made after material arrived Ticketing used to track orders as they moved through processing

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Donner Company

Facilities and Layout


Machines installed prudently to ensure longevity and isolation of corrosive elements No outside capital most of the companies funds invested Full utilization of space in existing plant

PROBLEMS

AND

REASONS

Problem Statement - Difficulty in manufacturing two products with different production requirements in a single facility.

Product Related
Special boards require additional steps Company concentrating more on small order sizes and has a lower delivery time (3 weeks) vis--vis its competitor. Small order delivery cannot be delayed to prevent revenue target constraint

Customer Related
Normal work flows interrupted by several customer orders each Delays due to artwork modifications to be received from the 1 to 9 design changes a week One fourth of delays caused by

week; all having specific requirements customer these requests from the customers. Also involve rework in case they want to revert to original design

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Donner Company

Production Related
Workflow interrupted 6 to 12 times per day 1. To secure more work from the upstream process 2. To seek advice on a problem (Should assistant manufacturing supervisors spend more than 10% of their time instructing and monitoring employees?) 3. Average delay in shipping completed orders is 5.2 days (As calculated further down in the report ) Daily at least 2 3 slow orders (non-rush orders) delayed and need to be expedited Around 3 rush orders a week Rework required in rush orders needing rework in one or two operations Estimated order completion time is a standard rate and not based on capacity utilization as of time order received No raw material storage maintained, and procurement initiated with purchasing agent only after order received. (Materials received same day or next day for rush orders. Otherwise it took several days) Most orders reached manufacturing only 4 days after the bid had been accepted Scheduling decision takes place only after raw materials arrive Prioritization of orders based on work in process at critical points and the manufacturing managers assessment of the sales possibilities of these orders being held up Production bottlenecks shifting based on processes utilized, order sizes and differences in designs for different client orders. No pattern available to forecast where the pile-up would take place

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Donner Company Movement of resources from a particular process to meet

bottlenecks, which are occupied by the time the order, is expedited to that original process

Quality Related
Customer rejection rates up from 1% to 3% Returns due to a) Damaged or out of tolerance (10%) b) Process missed out (90%) Leading to reprocessing and reshipping costs Method improvements not implemented due to output pressure No overall coordination on increasing efficiency of process as a whole Quality inspection standards seem to be too stringent Quality checks being duplicated (both at beginning and end) as well as informal worker examination Pre-shipment rejection rate = 7% (1% total losses & 6% process missed) Shipments are 9 days late on average

Layout related
Production layout with a view to: 1. Minimized installation costs 2. Preserved equipment life 3. Isolated the diverse operating environments Production facilities have been designed primarily around process layout

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Donner Company Constant interruptions due to need for walking from one section to another

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Donner Company

CASE ANALYSIS
Analysis of September Standard Production data On an average 3 orders of size 96 are processed per day Manpower utilization No. of peopl Utilizatio e n Asst. Supervisor New Workers Others Total 4 8 10 22 0.9 0.5 1 576 640 160 0 281 6 Hrs

Capacity utilization Refer to exhibit A for the details. Overall capacity utilization is 56%. Bottleneck processes are Drilling Manual (4 in number) Capacity utilization of 104% Cycle time: 80 min/panel Capacity utilization of 127% Cycle time: 16 min/panel

Drilling CNC

(Usage is more than 8Hrs/day)

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Donner Company In addition electroplating has a very high capacity utilization of 82%. It can also be found that on an average 20 orders are being reworked/ month at an average order size of 360 boards. This totals to an average time spent in rework = 379 hrs. Also 660 hrs are spent in labor movement and 24 hrs is wasted in plating operation. An average of 139.2 hrs are lost when rush orders (3 per week) are loaded on to the process. Wait time analysis (Based on data for September) Average Order Size Average delay Average Order processing time (1000 boards/order) Expected Time in the system (Ws) Total processing time (5761 boards) Average processing time (For 1000 boards) Lead time before start of manufacturing raw material) Average delay in shipping (per Order) ** 5.2 days Expected time waiting in the Line (Wq) 5.2) *Elapsed time (in days) Total available man hours
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1000 boards/order 8 days 4 weeks 36 days (7*4+8) 1531.7 Hrs 3.4 Days* (266 Hrs) 7 days

(4 days for the order to reach the shop floor and 3 days for procuring

20.4 days (36 - 3.4 7

2816 Hrs 15

Donner Company (Per month) Total available man hours (Per Day) Capacity Utilization Average processing time 56% 3.4 days (266/78.85) Utilized Man Hours (per day) 78.85 Hrs. 140.8 Hrs

**Average orders shipped /day = 288. No. of orders shipped per day is calculated using exhibit no. 5. Average delay in shipping is calculated by taking the weighted average of the individual order delays.

DATA ANALYSIS
Standard labor time calculations Order size 1

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Donner Company
Standard Production time Set up Run Artwork Generation Inspect & Shear Punch Tooling Holes 29 20 10 0 0.5 0.5 Total Standard Production time Set up Run Min Hrs 2 29.0 0.4 9 2 0 1 0 1 Drill Manual Drill CNC Materialization DFPR Panel Prep Laminate & Expose Develop Electroplate Strip DFPR Etch & Tin Strip 15 240 10 0.08 0.004 0.75 5 1 0 9 0.0 5 20 20 25 5 10 0.2 2 0.2 8.5 0.2 0.2 5 2 0 2 0 2 5 5 1 0 4 Soldermask Solder dip Profile punch press Profile - CNC router Inspect, Test, pack 45 30 50 150 45 1.5 0.5 1 0.5 1.5 5 3 0 5 0 4 5 0 0 1.5 0 6 1.0 0 46.5 8 9 0.0 6 51.0 5 0.7 3 0.1 9 30.0 0 0.8 6 0.0 3 0.0 3 45.1 5 0.5 3 10.0 7 0.7 3 1.0 6 5.0 8 0.1 5 0.0 3 26.0 3 0.0 3 0.2 5 20.0 3 0.4 3 20.2 4 0.3 0 0.0 9 5.0 8 0.3 6 40.0 0 10.0 7 0.0 6 0.0 6 55.0 2 0.1 0.0 0 20.0 6 10.0 7 0.9 3 0.1 8 0.3

Total:

6.39 hours

Order Size 8 boards


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Donner Company
Standard Production time Set up Run Artwork Generation Inspect & Shear Punch Tooling Holes 29 20 10 0 0.5 0.5 Total Standard Production time Set up Run Min Hrs 29 20 10 0.50 0.50 29.00 20.50 10.50 335.0 Drill Manual Drill CNC Materialization DFPR Panel Prep Laminate & Expose Develop Electroplate Strip DFPR Etch & Tin Strip 15 240 10 0.08 0.004 0.75 15 10 0.75 320.00 0 10.75 5.58 0.18 0.48 0.34 0.18

5 20 20 25 5 10

0.2 2 0.2 8.5 0.2 0.2

5 20 20 25 5 10

0.20 2.00 0.20 8.50 0.20 0.20

5.20 22.00 20.20 33.50 5.20 10.20

0.09 0.37 0.34 0.56 0.09 0.17

Soldermask Solder dip Profile - punch press Profile - CNC router Inspect, Test, pack

45 30 50 150 45

1.5 0.5 1 0.5 1.5

45 30 50 45

1.50 0.50 8.00 12.00

46.50 30.50 58.00 57.00

0.78 0.51 0.97 0.95

Total: 11.57 hours

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Donner Company

Order Size 200


Standard Production time Set up Run Artwork Generation Inspect & Shear Punch Tooling Holes 29 20 10 0 0.5 0.5 Total Standard Production time Set up Run Min Hrs 29 20 10 12.50 12.50 29.00 32.50 22.50 8,015.0 Drill Manual Drill CNC Materialization DFPR Panel Prep Laminate & Expose Develop Electroplate Strip DFPR Etch & Tin Strip 15 240 10 0.08 0.004 0.75 15 10 8,000.00 18.75 0 28.75 8 0.48 0.48 0.54 0.38 133.5

5 20 20 25 5 10

0.2 2 0.2 8.5 0.2 0.2

5 20 20 25 5 10

5.00 50.00 5.00 212.50 5.00 5.00 0

10.00 70.00 25.00 237.5

0.17 1.17 0.42 3.96

10.00 15.00

0.17 0.25

Soldermask Solder dip Profile - punch press Profile - CNC router Inspect, Test, pack

45 30 50 150 45

1.5 0.5 1 0.5 1.5

45 30 50 -

37.50 12.50 200.00 300.00 0

82.50 42.50 250.0

1.38 0.71 4.17

345.0

5.75

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Donner Company
Standard Production time Set up Run Total Standard Production time Set up Run Min Hrs 45 0

Total Time: 153.59 hours using Manual Drill and punch press Total Time: 30.67 hours - using CNC drill and CNC router

RECOMMENDATIONS
Change in job scheduling
At present all the panels that belong to an order are processed completely in a particular process before moving on to the next process. This results in WIP buildup at each stage causing spikes in the arrival pattern of job from the previous process. To smoothen this it is recommended that the panels that have been processed should move on to the next process without waiting for the entire order to be processed. The timing worked out for an order of size 100 shows that the existing method takes 20.87 hours for complete processing. When the panels are allowed to move to the next operation then the process time reduces to 11.32+3.2 = 14.52 hours. The time saved is 6.35 hours. In September on an average, there were 57 orders of size 100 and the total reduction in the processing time would have been 362 hours. That implies 25 more orders of size 100 could have been processed with the same capacity, an improvement of 58%. This figure of 58% has been calculated assuming that there is no interruption in the flow once an order is loaded for processing. A decrease in the throughput time from 20.87 hours to 14.52 hours would also reduce, on an average, the number of times a loaded job is 20

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Donner Company removed to make way for the rush order, resulting in the loss of setup time.

Change Layout of the machine assembly


There is lot of scope to reduce or eliminate the time wasted due to labor and material movement between operations. At present the machines have been arranged in a job shop layout. Due to the nature of the processes involved there are layout constraints such as processes that release acid vapors are located away from machining operations to prevent corrosion of machines and machining operations that produce dust are separated from processes requiring pure atmosphere (imaging, plating and etching). A line-flow or hybrid layout would help in cutting down the material and labor movement time. But this would require installation of additional technology, such air ventilation systems or air screens, to isolate the atmospheric air of plating and etching processes. With an extra 1800-sq. feet of factory space available in the near future, it was considered that the company could look to develop additional production facility to cater to rush and small volume orders. However, the cost involved in setting up a new production facility may be very high. Also, the utilization of certain processes would be very low, thus making it uneconomical to duplicate such facilities.

Reducing Process Bottleneck


Drilling is the critical process. Installation of a second CNC machine would reduce the machining time from 203 hours to 119 hours
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Donner Company (September production figures) but this may require a huge capital expenditure. Alternatively, capacity of the manual drilling process can be increased by adding 4 machines. This would result in machining time reduction from 662 hours to 331 hours. The additional requirement of 4 units of labor can be met by re-allocation of underutilized manpower from other processes. Improving capacity of the drilling process would result in a reduction of the large average waiting time (~20 days) before the order is scheduled on the production line.

Improve Inventory Planning


It has been acknowledged that scheduling has been delayed till raw materials are received from the vendor. It may not be possible to stock all raw materials, but key items should be stocked. Especially those related to the start of the manufacturing process. Time may also be saved in case of larger orders which use common core materials, if Manufacturing is informed upfront and the procurement order initiated with a return policy with the vendor.

Changing Information Transmission


The orders are taking almost 4 days to reach manufacturing after the bid is accepted. This means that there are bottlenecks in information transmission which need to be resolved by the company.

Change in Quality Control Mechanism


Quality checks should focus more on operations required by a client being missed out rather than on actual damages, scratched PCBs etc. There needs to also be a separate personnel assigned to Quality Control to reduce rework caused by processing errors. This would also reduce the duplication of quality checks in the current process. On an
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Donner Company average, there is an additional load of 20 orders of average size 360 per month.

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Donner Company

APPENDIX

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Donner Company

Exhibit A
Standard Production Time Set up Run Artwork Generation Inspect & Shear Punch Tooling Holes 29 20 10 0 0.5 0.5 September's Production Order 50 60 60 Board 83 2 6,00 1 6,00 1 97 Drill - Manual Drill - CNC Materialization DFPR Panel Prep Laminate & Expose Develop Electroplate Strip DFPR Etch & Tin Strip 15 240 10 0.08 0.004 0.75 51 9 60 5 5,02 6 6,00 1 6,00 5 20 20 25 5 10 0.2 2 0.2 8.5 0.2 0.2 60 60 60 60 60 60 1 6,00 1 6,00 1 6,00 1 6,00 1 6,00 1 0 0 60 3 0 30 3 150.0 3 0 1,50 1 150.0 3 750.0 0 0 1,20 3 6,376.1 1 450.0 0 12.5 3 0 1,20 6 150.0 3 7,876.1 7 7.5 8 0.6 0.08 1 8% 0 30 3 1,500.2 6 1,350.0 0 131.2 6 0.3 0.05 1 5% 0 60 5 2,16 Hrs Required Per day Resources required per day Resources allocated Capacity Utilization

September's Total Standard Production Set up Run Min Hrs 1,45 1,450.0 24.1 0 0 7 1,20 375.0 1,575.0 26.2 0 7 7 5 60 375.0 975.0 16.2 0 7 7 5 76 39,000.0 0 10,052.0 8 562.6 0 150.0 3 2,700.2 0 22.5 39,765.0 0 12,212.0 8 1,162.6 0 450.0 0 45.0 662.7 5 203.5 3 19.3 8 7.5

1.2 1 1.3 1 0.8 1 33.1 4 10.1 8 0.9 7 0.3 8 2.2 5 1.1 3 6.5 0.82 1 82% 0.14 1 14% 0.28 1 28% 0.05 1 5% 0.12 1 12% 1.27 1 127% 4.14 4 104% 0.10 1 10% 0.16 1 16% 0.15 1 15%

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Donner Company
Standard Production Time Set up Run Hrs Required Per day Resources required per day

September's Production Order Board 5,98

September's Total Standard Production Set up Run Min Hrs 2,47 5 8 1,65 0 6 2,35 0 8 90 0 3 2,70 0 6 9,001.5 2,255.7 1,284.3 8 3,155.7 3 11,701.5 6 373.9 6 3,634.3 7 52.6 0 195.0 3 1,580.4 8 1,121.8 8 2,023.9 3 60.5 3,596.8 5 33.7 59.9

Resources allocated

Capacity Utilization

3.0 0 1.6 9 3.0 3 2.6 3 9.7 5 79.0 2 21 1.22 2 61% 0.33 1 33% 0.38 1 38% 0.21 1 21% 0.37 1 37%

Soldermask Solder dip Profile - punch press Profile - CNC router Inspect, Test, pack

45 30 50 150 45

1.5 0.5 1 0.5 1.5

55 55 47 6 60 Total

3 5,98 3 1,28 4 4,51 1 6,00 1

Average 3 orders per day Average 288 Boards per day

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Donner Company

Exhibit B
Daily Order value No of boards shipped 0 1 4 5 6 7 8 11 s12 13 14 15 18 19 20 21 22 25 26 27 28 29 11118 -1188 4057 1696 2226 8430 2395 -684 2560 5926 -147 3952 13216 10070 5561 2275 176 -1327 -7975 17939 44560 11118 9930 13987 15683 17909 26339 28734 28050 30610 36536 36389 40341 53557 63627 69188 71463 71639 70312 62337 80276 124836 513 0 187 78 103 389 111 0 118 274 0 182 610 465 257 105 8 0 0 828 2057 No of boards produced 237 288 288 288 288 288 288 288 288 288 288 288 288 288 288 288 288 288 288 288 288 288 No of boards pending shipment 237 12 300 400 610 795 694 872 1160 1330 1344 1632 1738 1416 1239 1270 1453 1733 2021 2309 1769 0

Date

Cumulative order value

Sales No of boards Value per board $

124800 5761 21.66291

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