Antariksha Ganguly PGP/20/263 9619333635

Pranita Kambli PGP/20/283 9004212758

Vamshi Krishna PGP/20/304 8500015978
 How big are the differences between DJC' plant and ACC's Sunnyvale plant?
Consider both DJC's potential in Kawasaki and its potential in America
What accounts for these differences? How much of the difference is inherent in the
way in which these two companies compete? How much is due strictly to the
efficiency of operations?
KAWASAKI PLANT

Objective: The ultimate rationalization of mass production

Vision: A highly automated, continuously operating plant which could meet the following goals-
Asset utilization of 100%
Yield on raw material 99%
Customer complaints <1 per million units of output
Advantage: located close to the major Japanese electronics companies and major raw material
suppliers and ample supply of relatively young, highly skilled workers

Wire-to- Wire-to- Item-to- Board-to-

wire outlet board board

Plant layout: Four large cells each Each cell- 2 to 6 production lines
responsible for one of the four types
of connectors Each production line

Terminal Housing
Assembly Packaging
stamping molding
Factors Decisions and policies

Product Technology - Product design of most connectors was standardized to reduce the number of product variations
- Tin was used instead of gold in order to economize
- Connectors were packed on tape and reels
- Extensive value engineering was performed to implement cost saving changes without compromising on quality

Process Technology - Significant resources were allocated to pre-automation

- It was possible for one operator to run two assembly lines
- To ensure smooth runs, processes were generally operated below maximum speed
- Molding was particularly considered to be very significant and received daily maintenance
- Relied on in-house technology development
- There was inter-functional coordination of all its technology development activities

Sourcing - Maintained close relationship with suppliers and quality was considered a joint effort
- Suppliers required to certify the quality of products in every delivery
- It demanded frequent delivery, most on daily basis and few on weekly and monthly basis

Quality Control - Pursued five objectives; improving quality control standards, process inspection system, precision of molded components,
quality of product designs and reducing the plants waste

Production and Inventory Control - Production runs were scheduled to be as long as possible and changes were not made for unplanned orders
- Work-in-process inventory was minimized to devote few resources to inventory control

Workforce - General approach to selecting workers was to hire new graduates from high schools for lower level positions and from
universities for higher level positions
- Wages offered were above average for recent graduates in Japan and below average for experienced workers.

Organization - The goals were set, but the plant manager was free to assume those in a way he chose
- The tactical problems were solved by production employees and plant manager, top staff was responsible for long term
planning issues
Sunnyvale Plant:

Always had been a technological leader in the past but currently on the verge of losing that statues
because of excess unutilized capacity for more than 5 years now.
The plant produced ~4500 different models
It was typically a process focused organization
Emphasized on maintaining healthy relationship with big clients by accepting customized orders even
after finalization of production schedule

Plant Layout:
Bottle-neck process
Terminal Assembly Finished
Stamping Holding Terminal and Packaging
goods
and Area Plating Testing Area
inventory
Fabrication Area

Plastic WIP
Housing Holding
Molding Area
Comparison of Operational metrics for DJC and ACC:
Criterion DJC Kawasaki ACC Sunnyvale Remarks
Product Range 640 models ~ 4500 models More customized models
Annual Cost per mold $ 29000 $ 40000
Average life of mold 3 years 8 years
Plant layout Product Focused Process Focused
Packaging 2000 units per reel 10 to 1500 units per Packaging as per customer
reel requirement
Raw Material Inventory 5 days 10.8 days Higher inventory costs
Processing lead time & 4 days 10 days High lead time due to more
WIP inventory customization of models
Finished goods 56 days 38 days Lower serviceability
inventory
Average Production run 7 days 1.5-2 days Higher setup costs for ACC
Plant utilization ~ 90% 70% Excess unused capacity
Employees 94 396 Kawasaki highly automated
Production(1991) 700 mn units 420 mn units Comparison of labor use
Output/Sq ft 15.1 10.9
Effective Utilization 75.4% 30.2% Less process failure for DJC
Comparison of DJCs potential in Kawasaki and USA:

DJC/ Kawasaki, 1991 ACC/ Sunnyvale, 1991 DJC/ USA, 1991

Product Raw Material 12.13 9.39 7.28
Packaging Raw Material 2.76 2.10 1.66
Direct Labor 3.02 - 3.32
Indirect Labor 0.75 - 0.83
Total Labor Costs 3.77 10.30 4.15
Electricity 1.40 0.80 1.12
Depreciation 1.80 5.10 1.80
Other Costs 4.24 6.10 4.24
Total Costs 26.10 33.79 20.24

DJC in US is a substantial threat to ACC in a highly competitive market

Reasons for difference
High product variation led to frequent batch changes in ACC(1.5~2 days) reducing efficiency and expertise on any
Production product.

process DJC had lesser variations and product focussed plants(similar to PWP) with average runs of 7 days

Continuous runtime at Kawasaki increases its overall utilization and also higher per employee output adds to efficiency at
Utilization DJC
Pre-automation and similar such guidelines and disciplined practises ensured efficiency

Defect rate at Sunnyvale is too high at 26000 dpmo due to the final product inspection and newer measures like
Quality implementation of SPC and other measures have shown minimal progress
DJC utilizes process inspection and thus better control; quality losses of DJC and ACC over total production are 0.7%
and 1.6% which is substantial

Cost comparison indices of US/Japan indicates that Raw material and electricity is cheaper in US while labour is cheaper
Cost in Japan
Cost advantages to ACC will be lost once DJC enters US

FA Utilization Kawasaki Sunnyvale

Material Cost savings due to design changes : $6.01 per 1000 units Plant not operating 5.7% 28.6%
Non scheduled 13.2% 23.5%
DJCs wise investment in technology development and lower mold life
helped them in achieving less depreciation cost(6.89% contribution to Process Failure 1% 8.9%
total cost as against 15.09% for ACC) Process Changeover 2% 4.8%
 More cost or
Process
AMCC Highly flexible and driven by marketing/sales team time
focus
consuming

Highly
DJC
Carefully planned schedules tightly connecting Product
processes with manufacturing favoured optimized for
focus
cost and time

Process wise, both are optimized and operate at highly efficient scales; Efficiency of
however DJC has a more focussed manufacturing strategy that allows lesser operations are not the
variations but is much more efficient. major source of the
The suitability of the processes is the major reason for cost advantage to DJC cost differences, it is
For example, ACC uses only final inspection as its quality measure while DJC whole process that
undertakes process while quality checks that ensures lesser defects in the needs to be adapted
final product to better scale