AMERICAN CONNECTOR COMPANY CASE STUDY

Presented By Sarvesh Roshan

Subhrojit Chowdhury
Sachin Ghanwat
Vikalp Bachan
 A BRIEF COMPARISON
ACC DJC

 Quality and Customization  Highly efficient

 Design and Performance manufacturing and Quality
 52% to 43% decrease in gross  Attention to customer needs
margin from 1984-  No customization
1991  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 with incremental
improvement
 Equipment bought from vendors changed to suit needs.
 Impact of manufacturing strategy on
5
competitive objectives
ACC: Sunnyvale plant
 Low Cost
 Highly automated process
 High WIP inventory, so number
of employees increased
 capacity utilized is 70% approx.
 Product
 Wide range of products (4500
Variety)
 Superior design
 Initially Technology Leader
but Later Less investment
on technology
 Low Quality
DJC: Kawasaki plant
 Low Cost
 Less inventory
 Reduced workforce
 No start-up & shut-down cost
 Standardized products
 Location advantage
 Connectors packaged in tape &
reels
 Product
 Copied from US designs
 Innovative ways to produce
developed, pre- automation, in-
house technology
 Impact of manufacturing strategy on
6
competitive objectives (contd.)
ACC: Sunnyvale DJC: Kawasaki

 Reliability  Reliability
 Latest production equipment  Old reliable process used in quality control
used  Molds checked regularly
 High defective rates on new products,
but no defective product is sent to
customer  Flexibility
 Flexibility  Not much flexible
 Flexible  High finished product inventory
 Customized products  Production schedule is more or less fixed
 Production schedule changes often
 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, DJC’s
material cost will come down to $ 7.27/1000 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)
 DJC’s highly efficient style of production may attract buyers who
need standard products
 Continued …
9

Policies of DJC Impact on ACC

Cost savings will be high (Cost per 1000 Higher margins for DJC. Thus profits of
units will be 20.241) DJC will be higher compared to ACC. (Cost per 1000
units will be 33.79)

Frequent deliveries will make the ACC will lose its customers.
customers satisfied with DJC

Lower rate of defects at DJC will improve Adverse effect on ACC.

its image and also cut down on costs

Process at DJC fully automated. Thus DJC will offer products at a faster
rate than ACC.

DJC always updated with the ACC had not bought new equipment in
advancement in molding technologies. the past two years. Thus they will be producing at a
slower rate than DJC.
 Recommendations to ACC
10

Suggested Change Current Scenario

Improve tech development.
Improve employee productivity
Improve utilization by focusing mainly on
increasing plant operating time
Presently its 12.8% for Kawasaki ,6.8%
for Sunnyvale
At Present: 7.45 m for Kawasaki, 1.06 for
Sunnyvale
At Present: (330 days/year-Kawasaki, 3
shifts/day,5 day/wk,50 wks/yr for ACC.

Decrease raw material inventory size 5 days for Kawasaki, 10.8 days for
Sunnyvale.
Bring in a degree of standardization for -
orders
Focus on reducing depreciation and -
other costs

Combination of functional and cellular layout Batch Process

 Conclusion

It can be safely concluded that though DJC does pose a significant threat to ACC,
with some changes in the production process, ACC can effectively counter the threat
of DJC’s entry into the US market
Thank you