Case Study Djc To American Connector Company

OPERATIONS MANAGEMENT ASSIGNMENT – I
1. Analysis of
a. General Industry Environment:
It started from 1970 when U.S. Connector industry experienced very rapid growth as firms had enough capacity to meet the growing market demand. But in 1980 as the demand slowed down, there were too many suppliers and too much capacity in the industry. As it progresses further, In the 1990s there were more than 900 suppliers.
IN 1991, sales were down 3.9% from the previous year .High supply helped customers to ask for reduction in prices, improvement in quality and faster delivery. My customers also preferred to reduce the suppliers they were working with and it was estimated that at the end of the 1990s the number of suppliers would decrease to 400.
In

The low cost connector strategy shall neither seek nor demand the product customization ie., huge market space will be available for other players to capture

2. How serious is the threat of DJC to American Connector Company?
Compared to the Sunnyvale plant of American connector company, DJC’ production cost was much lower. The cost of 1000 units produced by DJC is less than 40% when compared to American Connector Company. The US market was highly saturated and competitive and in such time DJC’s less cost will be competitive advantage.
DJC’s effective manufacturing lead to effective pricing. The custom orders of DJC form only 15% of the total volume of production. Due to such aggressive pricing DJC shall cannibalize the 85% of ACC.
DJC’s processing time is 2 days which is much lower when compared to ACC. This will provide another added advantage to produce in a faster manner.
The DJC’s Kawasaki plant has a high productivity of employee of 7.45 compared to 1.06 of ACC plant.
The defective rate of ACC is 26000/ million whereas for DJC is 1 / million.
3. How big are the cost differences between DJC’s plant and American Connector’s Sunnyvale plant? How they are improving in terms of cost

Electricity: The usage of automated machines has its own disadvantages. The electricity cost of DJC is higher.
Depreciation: Depreciation is higher in American Connector due to higher wear and tear. This happens due to frequent start-up and shut-down of machines.
6. What should American Connector’s management at Sunnyvale plant do?
To improve the efficiency American Connector can incorporate 4 different cells for four broad categories of connectors. A dedicated separate production line can also be initiated to counter the Just-In-Time of DJC.
Defective rates shall be reduced to have better quality.
American Connector can incorporate in-house technology to reduce the technical dependence on outsiders. With such incorporation and vigorous quality check the defect rate can be reduced to 26,000 / million.
American Connector can reduce the packaging size (currently offer in the rage of 10 to 1500) which might save packaging costs.
American Connector can replicate the effective design of DJC to reduce material costs.
American Connector may accept changes in last minute as it will reduce the backlogs and production