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Introduction

A Comparison of Operations Strategy between American Connector & DJC (The Kawasaki Plant) CAPACITY: ACC The plant maintains excess capacity (goal of 85%) utilization, with output of 510 million units per year). In 1991, the plant is running at 70% of capacity producing 420 million units per year. DJC The goal is to operate at 100% utilization, producing 800 million connectors per year. In 1991, DJC/Kawasaki operated at 80-90%utilization and produced an estimated 700 million units. FACILITIES: ACC The plant is organized into five production areas - terminal stamping and fabrication, terminal plating, plastic housing molding, assembly and testing, and packaging with holding areas in between steps for work-in-process. DJC The plant is organized into 4 large cells - each of which produced one of the four general typed of connectors - with 4-6 production lines each. Each cell is dedicated to running one basic connector type. ...read more.

Middle

Reliable processes are inherently tied with goals for low defects, high utilization, low process failures, and high raw material yield. WORK FORCE: ACC Sunnyvale employs 396 employees. 54% are direct labor, 56% are indirect labor. DJC Kawasaki employs 94 employees, 68% are direct labor and 32% are indirect labor. Management's goal is to decrease the number of employees over time. PRODUCTION PLANNING: ACC The plant operates 120 hours/week on a 3 shift per day, 5 day per week schedule (called 3x5), 50 weeks of the year (approx. 7,920 hours/year). Relatively long lead times (10 days for standard products and 2-3 weeks for special orders), short production runs (averaging 1.5 to 2 days), and small finished good inventory (38 days) are all manifestations of the plants strategy. These operating characteristics are typical for a plant with a high number of SKUs (4,500) and a flexible production schedule that accommodates customer requests. ...read more.

Conclusion

SUMMARY: ACC American Connector has configured its operations to emphasize flexibility and esponsiveness to customers. This operations strategy leads to higher costs. For example, there are costs associated with flexibility, such as keeping extra capacity (maximum utilization is 85%, rather than 100%). Similarly, there are additional costs associated with offering a wider variety products (increased in total changeover times) and using expensive materials in products (such as gold, rather that tin). Adjusting the productions schedule to suit special orders also adds costs, as do short production runs and lower yielding processes (which result because of small, customized product lots). DJC Like American Connector, DJC has an operations strategy which is closely aligned with its competitive priorities. However, in the case of DJC, the chief competitive priority is low cost. High utilization, strict production scheduling and inventory control, low product variety, and use of less expensive materials in products (such as tin, instead of gold) all contribute to lower costs. Product innovation and responsiveness to customer needs are less valued. With its strategy, DJC is lower cost than American Connector, but less innovative and less flexible. ...read more.

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