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Improving organizational productivity and quality are issues that have been showing for some time and

will continue to be important to any business and production organization. All types of organizations need to be as productive as possible to best utilize their important resources, to meet the needs and demands of their consumers, and to stay competitive with similar business organizations. In todays fast-changing and dynamic way of life, many organizations come up with different strategies and ideas to improve and develop their products. The development of science and technology has led to the improvement of many companies in terms of product development and research. The use of technology has become an essential part of the strategies of companies to increase production and to check the quality of the product. Similarly, with the role of technology in their development and growth, companies can properly evaluate the performance of their employees and the opinions of their consumers regarding their products. As such, this essay aims to discuss and analyze the problems of the Donner Company, particularly of Mr. Edward Plummer, the president of the company. It also provides recommendations or possible solutions for the problems to be discussed based on the situation and the concepts in operations management.

Problems of the Donner Company As reported, the Donner Company manufactures printed circuit boards to the specifications of its different customers, the electronic manufacturers. It employs new designs and prototype production techniques that enable the company to become more adept in anticipating and resolving the problems of its consumers, over its competitors. However, despite the effective maintenance of the companys workers over its operations, several problems have been encountered in sustaining the operations of the company, which become the source of its loss of profit and sales. The problems identified and described by Mr. Plummer include problems related to operations, productivity, quality and delivery. Primarily, the operation of the company is declining, due to production bottleneck. The shifting of workload from one operation to another without pattern causes this bottleneck. The company is having a hard time anticipating the workload pile up in the shop daily because individual orders from clients impose varying workloads on each operation. The variation in the workload depends upon the differences in the size of the order that bypass some operations and from the differences in circuit designs. In addition, the company entertains four-day rush orders, which require rework at one or two operations, thus, delaying the process of delivering artwork modifications of a client. This is because the companys workers are shifted from one work operation to another depending on the demand of the operation. In this sense, some workstations are left vacant, while some workstations are overloaded. Moreover, disturbance in the operations of the company is may be attributed to telephone calls from the customers engineers who had encountered a design problem. As a result, the customer would be requiring redesigning and rework on the products. For the past months, the companys supervisor, David Flaherty, has been having a hard time predicting work pile up or run out daily, thus, resulting to the continuous transfer of workers from one workstation to another.

This problem is only encountered in the production of bulk orders, while in short orders, with eight circuit boards or less, a senior employee, Arthur Dief does the work alone successfully. Another problem of the company can be encountered in terms of its productivity, as some machines are left idle more often that expected. Another source of this problem is that the standard labor hours do not include time spent in reworking parts that have failed inspection or have been returned by clients. In addition, the time used for moving from one station to another adds to the idle time used by workers, thus, further lessening their time for production. Plummer also believes that the job strategies used in the company are far from ideal, thus, not reflecting improvements in its operations. This leads to the realization that operations and productivity method improvements are not being implemented due to the pressure for output, the constant shifting of workers from one job to the next, and in inhibiting experimentation with new ideas. Furthermore, the introduction and implementation of new ideas and methods has led to further confusion, as the increase in the production of a particular station resulted to the piling up of work in another, thus, rescheduling orders and reassigning workers. This further impeded the productivity of the company. Aside from operations and productivity problems encountered, the company also encounters problems and failures in maintaining the quality standards of products and in meeting promised delivery dates. The companys sales manager, Lloyd Searby reported that since August, the company has been receiving customer returns, which increased from under one percent to about 3%, and delay in product delivery, which averaged 9 days late. This would result to the continuous loss of sales, as the companys competitors are able to promise four-week deliveries on small orders. In addition, the company fails to inspect the quality of their products more effectively, thus, resulting to increase in returns and reprocessing. The problem occurs as the president feels that a more strict inspection system would not be possible, as product standards vary from customer to another and from one order to another. In September, the companys preshipment reject rates increased, resulting to a 6% total loss due to incomplete operations and subsequent reworking and reprocessing of circuit boards. Moreover, due to the delay of production and the increase in the reworking of products, the company has fewer shipments, with actual deliveries delayed with an average of 9 days. This forced the company to hire an addition of eight employees assigned in the production force. However, it would still take some time before making the additional employees skilled in the business. (From , 1998)

Possible Recommendations on the Problems Possible recommendations must be made in order for the company to regain the loss of their sales. Primarily, as a solution to the problem of the company regarding the production bottleneck and the work pile up and run out in its operations system, the company should only be accepting orders that are feasible to do and to deliver in time. In

this way, the company would be able to focus on the project and the specific demands of the client. Accepting feasible orders from clients would also allow the production line of the company to focus on the quality of the products, with due consideration of the amount of time required by the client. With this, the idle time of employees would be reduced, because all of them have a particular task to do, enough for the time and resources provided to them. This would also reduce the shifting of workers from one job to the next, as each worker in the production line would have something to do, given the enough number of orders compensating the enough time and resources provided to them. Another possible recommendation that can increase the productivity, quality and delivery of products is by separating the production line into two departments, where one department would be responsible for processing new orders from client, while the other department would be responsible for the rework and the redesign of previously done or accomplished projects. More workers would be assigned to the department that would be responsible for processing new orders, and less workers would be assigned to the department that would reworking and redesigning the previously done products. The separation of the production line into two departments would be hitting two birds with one stone, as both departments would be simultaneously doing their jobs. This also reduces the idle time of employees, the piling up of work, and the run out of things to do. This serves to be beneficial for the company because employees would be more focused in doing their jobs, thus, ensuring the quality of the products, the increase in productivity of the company, and the on-time delivery of products to clients. It has been mentioned that Diane Schnabs, the companys expediter is in-charged of tracking orders in process and the initiation of action if a particular order failed to progress through manufacturing. She is also responsible for the investigation of delay, in determining the number of rush orders, in securing missing supplies or instructions, and in calling the clients to advise them of possible delay in delivery. With this, it can be deliberately observed that the load of work of Schnabs is more than she can actually handle. Thus, in this regard, it can be recommended that the company can hire or pull out an employee who would be assisting her in accomplishing her responsibilities. Schnabs and her assistant can divide the work themselves, thus, one would be in-charged of the manufacturing of new orders, and the other in the processing of rework. Both of them would also be separately handling calls from clients, such that one would be entertaining new orders and the other would be entertaining rework or redesign. In this way, a system would be developed between them, in turn, scheduling all orders simultaneously. This recommendation would be most effective if the company would be able to divide the production line into two, as discussed previously. In relation to this, the company can also assign someone to assist Bruce Altmeyer, who is responsible for the products quality control. Having two individuals to be assigned for the inspection of quality of products, it would be easier for the company to detect mistakes in production and to comply with the requirements of the clients, given the separation of the two production lines. They can divide their tasks between them, thus, one would be responsible for inspecting the quality of the new processed products, while the other one would be responsible for inspecting the quality of the reworked or redesigned products based on the requirements and demands of the clients. Moreover, the company can also assign an assistant for David Flaherty, the companys

supervisor, and who is responsible for the manufacturing and shipping of products. Flaherty and his assistant can divide their tasks between them, thus, one would be responsible for the manufacturing and shipping of new processed products, and the other would be responsible for the manufacturing and shipping of the reworked or redesigned products. Once these has already taken place in the company, then this would be the proper time to implement and introduce method improvements, including employee training and development programs that would further enhance and develop the skills and talents of workers. In terms of organizing, the company can introduce the strategies under Total Quality Management (TQM) or Six Sigma. Total Quality Management is a management approach that improves the effectiveness and flexibility of businesses by involving every department, every activity, and every single person at every level of the organization (, 2002). It creates a quality culture where the aim of every member of the organization is to delight their customers, and where the structure of their organization allows them to do so, thus, moving with changing customer expectations, to fashion and design products that meet and exceed their demands (, 2002). On the other hand, the Six Sigma approach can also be inculcated in the employees, wherein it is defined as a disciplined, data-driven approach and methodology for eliminating defects in any process, from manufacturing to transactional and from product to service (, 2007). With such approaches, the employees of Donner Company would be able to adopt the strategies under them, which could increase their productivity, creativity, quality of work and delivery. Moreover, because the problems of the company have already been determined, it can be recommended that the company can have its SWOT analysis, which aims to identify critical strategic factors and to build on core strengths, to eliminate undermining weaknesses, to take quick advantage of significant opportunities, and to circumnavigate or mitigate threats (, 2003). The SWOT analysis would give the company relevant information on the strengths and weaknesses it has and matches it with the competitive environment it engages in. It would help the company create strategic plans that would help the company once it had encounter any problem or threat from competitors. These possible recommendations would be helpful in addressing the operational problems of the Donner Company. However, it would still be essential if careful study and planning would be done, depending on the changes that are continually happening in the company.

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Donner Company Case Study: Analysis of Operating Problems

Donner Company Case Study: Analysis of Operating Problems 2 Contents Executive Summary....................................................................................................................................... 3 Analysis and Recommendations ................................................................................................................... 4 1. 2. The Donner Company flow diagram ................................................................................................. 4 Reflections on the Donner company manufacturing process .......................................................... 4 Bottlenecks in the Donner process: ...................................................................................................... 5 1. 2. 3. 4. Drilling: .......................................................................................................................................... 5 Dry Film Photoresist ...................................................................................................................... 7 Profiling ......................................................................................................................................... 9 Inspection, Testing and Packaging .............................................................................................. 11

Donner Company Economies of Scale ................................................................................................ 12 Quality Control System in the Donner Company: ............................................................................... 13 Facilities, Layout and Operation Flow ................................................................................................. 14 Alternative Solutions........................................................................................................................... 14 Information Flow................................................................................................................................. 15 Supply Chain & Logistics ..................................................................................................................... 15 Late Delivery Problem ......................................................................................................................... 16 Implementation and Risks .......................................................................................................................... 16 Conclusion ................................................................................................................................................... 17

Donner Company Case Study: Analysis of Operating Problems 3

Executive Summary Since the start of its operations in 1985, the Donner Company managed to compete in the business of printed circuits for a while, having a competitive advantage producing customized circuit boards based on its customers design. Before September 1987, growth was steadily increasing every month until operation, productivity, quality and delivery problems started to arise. The complexity of Donner s production process, high flexibility of its products combined with infrequent and variable demand, had posed a number of operational problems. As a result, Donner could no more efficiently and effectively meet their delivery deadlines and quality standards. Primary analysis of the operating process revealed unexpected bottlenecks in manufacturing, lower productivity, as well as quality and delivery problems. Soon, top management of the Donner Company has realized that these operating issues if not addressed, jeopardize the achievement of USD 3 million of forecasted revenue for the year of 1988. This report presents analysis of the Donner Company s operations and its flaws, provides recommendations for improved operations. The team working on the case analysis proposes to leverage bottlenecks by adding capacity to some, to amend resource allocation/utilization according to the nature and volume of specific processes. It is also being recommended to enforce the quality system as well as add an inprocess control system. Other recommendations included re-engineering of the processes according to the existing facility layout in order to decrease wasted time, improving information flow to speed up the process allowing Donner to meet deadlines, switching supply chain strategy from a transactional relationship to an integrative one.

Donner Company Case Study: Analysis of Operating Problems 4

Analysis and Recommendations 1. The Donner Company flow diagram

Manual Metallization Panel Prep Laminate/ Expose

Artwork Generation 1,450 min

Inspect & Shear 1,560 min

Punch Tooling Holes 960 min

38,205 min Drill CNC

1,140 min

444 min

2,640 min Develop

11,810 min

1,344 min

Electroplate Punch Press 7,621 min 3,573 min Inspect/Test/ Pack Profiling 11,342 min CNC Router 2,009 min 3,552 min Solder dip Soldermask Etch & Tin Strip 744 min Strip DFPR 444 min

3,066 min

Figure 1: Donner company process flow chart

2. Reflections on the Donner company manufacturing process Donner s operations are a multistage process of make-to-order. It is a job shop given the low volume of production is coupled with a high level of flexibility since the company is offers highly customized product designs. High flexibility in the process is appears in the multistep process depicted above. (see the flow chart). As a result an imbalanced

Donner Company Case Study: Analysis of Operating Problems process takes place due to the differences in the cycle times of each task. Therefore, this imbalance results in starvation and blocking in non-bottleneck tasks. The overall process suffers from a variety of bottlenecks, however, the most apparent one result from high flexibility and uncontrolled process, which lead to unpredictability and perplexity of the bottlenecks every day. Moreover, because orders vary in sizes not all of them undergo all the processes involved in the operations. In addition, some work gets delayed in the process of design, both of which cause the unpredictable bottlenecks. Unorganized processes lead to machines being idle for longer time than anticipated.

Productivity problem: lies in the frequent interruption of the work flow of operations, as the Donner Company executes different order sizes, specifications and designs. High flexibility is considered Donner s core competency, however, all these orders are being executed in the same process flow. Quality problem: lies in the lack of company formal inspection system, as well as lack of specific quality standards, as standards varied from customer to customer, and, from order to order.

Bottlenecks in the Donner process:

1. 2. 3. 4.

Drilling Dry Film Photoresist Profiling Inspection, Testing & Packaging

1. Drilling: Issue:

There are 2 options for drilling either manually or with the CNC automated drill; however there is a big difference in the lead time between the 2 options Table 1: mannual and CNC drilling lead time

Manual CNC Drill

Set up time 15 minutes 240 minutes

Run time 40 minutes 2 minutes

Lead time/Board 55 minutes 242 minutes

Donner Company Case Study: Analysis of Operating Problems The question here is to identify the decision rule of when to use each option according to the number of boards. Calculation

By calculating the lead time for each of the two drill options for a single order of different board sizes according to the following equation: Lead Time = Set up time + (Run time/board * Number of boards) Table 2: Mannual and CNC lead time as per number of boards showing the optimum number of boards to be operated by the CNC Drill

Number of boards 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Manual drill time (min) 55 95 135 175 215 255 295 335 375 415 455 495 535 575

CNC Drill time (min) 242 244 246 248 250 252 254 256 258 260 262 264 266 268

Result:

As we can see from table and graph: For an order of 6 boards and less it is better to use the manual drill For an order of more than 6 boards, it is better to use the CNC drill.

Donner Company Case Study: Analysis of Operating Problems 700 600 Time in minutes 500 400 300 200 100 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Number of Boards Manual Drill Time CNC Drill Time

Figure 2: Manual and CNC drill time Vs number of boards

Recommendation:

It is recommended that the company changes its shop floor policy and starts processing orders higher than 6 boards on the CNC drill instead of saving it for the 100 or more (boards) order. This initiative will save time. 2. Dry Film Photoresist

By looking at the DFPR process:

Table 3: Dry film photoresist area lead time

Panel Prep Laminate & Expose Develop

Setup time/board 5 minutes 20 minutes 20 minutes

Run time/board 0.025 minutes 0.25 minutes 0.025 minutes

Lead time/board 5.025 minutes 20.25 minutes 20.025 minutes 45.3 minutes Lead time/Panel of 8 boards 5.2 minutes 22.0 minutes 20.2 minutes 47.4 minutes

Setup time Panel Prep Laminate & Expose Develop 5 minutes 20 minutes 20 minutes

Run time/Panel of 8 boards 0.2 minutes 2.0 minutes 0.2 minutes

Donner Company Case Study: Analysis of Operating Problems 8 By applying the following assumptions: a) Each task starts after the end of the previous task lead time (Run time + Cycle time) b) Each task is performed by one operator (no overlapping) c) DFPR is operating for 8 hours/day

The capacity of the DFPR area can be calculated by applying the Gantt chart for the process Panel Preparation Laminate & Expose Develop Panel Preparation Laminate & Expose Develop

0.2

20

2 20 0.2

0.2

20

2 20 0.2

Figure 3: DFPR Gantt chart

Calculation:

By applying the formula: X + YN = T X: Un-overlapped times in Minutes Y: Bottleneck in Minutes N: Number of Panels T: Daily Available Time in Minutes 25.4 + 22.0N = 480 Therefore N = 21 panels approximately

Donner Company Case Study: Analysis of Operating Problems Result:

Although the capacity of the DFPR is about 21 panels, the panels may still pile up even if less than 21 panels are manufactured/day depending on the capacity of the following step which should also be considered. Recommendation: It is recommended that Donner Company re-engineers the work in the DFPR area, to accommodate overlapping tasks in order to fully utilize its maximum capacity. Meanwhile, it is recommended to add additional capacity to the following step to avoid piling of work. 3. Profiling

There are two options for profiling as there were for drilling: the punch press and the CNC router Table 4: Punch press and CNC router lead time

Punch Press CNC Router Issue:

Set up time 50 minutes 150 minutes

Run time/board 1 minute 0.5 minutes

Lead time/Board 51 minutes 150.5 minutes

The question here is to identify the decision rule of when to use each option according to the number of boards. Calculation:

By calculating the lead time for each of the two profiling options for a single order of different board sizes, we assumed the following equation: Lead Time = Set up time + (Run time * Number of boards)

Donner Company Case Study: Analysis of Operating Problems 10

Table 5: Punch press and CNC router lead time showing the optimum number of boards for the CNC router

Number of boards 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204

Punch Press time (min) 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254

CNC Router time (min) 245 245.5 246 246.5 247 247.5 248 248.5 249 249.5 250 250.5 251 251.5 252

Result:

The following graph shows that to make best use of available resources: For an order of 200 boards and less it is better to use the punch press; For an order of more than 200 boards, it is better to use the CNC router.

Donner Company Case Study: Analysis of Operating Problems CNC Router Punch Press

11

260 255 250 245 240 235 230 225 220 215 180 182 184 186 188 190 192 194 196 198 200 202 204 206 208 210 212 214

Time in Minutes

Number of Boards/Order

Figure 4: CNC router and Punch press lead time Vs number of boards

Recommendation: Process orders of 200 and more boards on the CNC router in order to reduce cycle time and increase production capacity. 4. Inspection, Testing and Packaging

This bottleneck is primarily attributed to the fact that the load is placed on a single senior employee due to his/her qualifications/importance in the process; however, it proved to be insufficient to impart the required control on the process emphasized by the unsatisfactory productivity of the company. Complaints arising from returned boards due to the quality problems, orders incompliance with specifications led to reworks to remedy the defected boards. This process of rework in turn increases cost, decreases efficiency and imparts an additional non-value added work load on the operators that could have been avoided if the Donner process was operating right in the first place. Recommendations:

Adding additional inspection stations with more trained and experienced operators to do the job as the senior sole employee doing the job will surely suffer from quality fatigue due to the high inspection load on him; the extra stations will dilute the load and improve the quality of the inspection process; Installing automated solutions that can perform the inspection procedure; Formulating accurate specifications that are a reflection of the customer design needs and applying these specs in the inspection process.

Donner Company Case Study: Analysis of Operating Problems Donner Company Economies of Scale

Will the time taken to make 1, 8 or 200 boards have a difference? Absolutely as shown in the table: Table 6: Donner company econoies of scale

12

Task Preparation Artwork Generation Inspect & Shear Punch Tooling Holes Image Transfer Drill Manual CNC Drill Metallization DFPR Panel Prep Laminate & Expose Develop Electroplate Strip DFR Etch & Tin Strip Fabrication Soldermask Solder Dip Profile Punch Press CNC Router Inspect, Test, Pack TOTAL MINUTES TOTAL MINUTES/BOARD

1 Board 29 20.5 10.5

8 Boards 29 20.5 10.5

200 Boards 29 32.5 22.5

55.0 10.1 5.0 20.0 20.0 26.0 5.0 10.0 45.2 30.1 51.0 46.5 256.0 10.8 5.2 22.0 20.2 33.5 5.2 10.2 46.6 30.5 58.0 57.0 250.0 345 640.0 28.8 10.0 70.0 25.0 237.5 10.0 15.0 82.5 42.5

383.9 383.9

615.2 76.9

1840.3 9.2

It is obvious that the Donner company achieves economies of scale on high volume orders as the time taken to manufacture 1 board drops significantly from 383.9 minutes to 9.2 minutes if the order is for 200 boards. Recommendation:

This should encourage Donner to focus on winning orders of high volume to increase its efficiency and offer competitive advantage in price competition.

Donner Company Case Study: Analysis of Operating Problems However, it may be the case that the cost of manufacturing the boards is not constant and is dependent on the type of the board. I.e. probably a board type from a certain customer may be 13 more profitable than 200 board types from another customer. Quality Control System in the Donner Company:

It is apparent from the case that Donner Company has problems in its current QC system. Currently, there is only a formal checking system of the raw materials and final products that are available. There are no in-process controls on the manufacturing stages in between. Operating process instead is dependent on the informal inspection done by the workers. Variability of workers experience and knowledge impacts the level of output, presents variations of level of quality. Recommendations:

There should be a formal inspection system that would apply through all stages of manufacturing process coupled with standard specifications for each type of product or group of products that share certain characteristics. These specs should be approved by the customer; Another set of standards should be available that are internal specs that assure the quality of each work in progress intermediate at an acceptable level before approving its transfer to the following step; A formal sampling scheme should be implemented by the management using a statistical measure to subject the inspection process to scientific basis; the samples will be inspected and tested against the standards already agreed upon, either with the customer or with the internal quality management; By applying the previous set of recommendations, this could probably increase Donner s productivity by at least 6% as per September data, as 6% of September s output was reworked due to incomplete operations that were not caught by

the current quality system; by decreasing reworks, cost will be decreased and profit will be increased that will finally improve the efficiency of their operations.

Donner Company Case Study: Analysis of Operating Problems 14 Facilities, Layout and Operation Flow

The production layout was considered to minimize installation costs, preserve expensive machines and isolate the diverse operations environments; i.e. cost minimization was the objective. This objective proved its usefulness as after a year and a half, the machines didn t show any deterioration and no contamination happened from the dust in machining areas. However, the management ignored an important aspect during the facilities and layout design which is the process flow optimization to eliminate waste. From the case it was noted that the usual workflow was routinely interrupted from 6 to 12 times a day to do other jobs as seeking advice or to deliver completed work. Also some operations as the plating operation required the operator to interrupt the routine work and leave his work spot to go to another area to inspect the panels in one of the tanks. This wasted 15% of the plater s time. It becomes clear that there are many non-value adding activities performed in the workplace resulting from the inappropriate layout. Alternative Solutions

1- Re-engineer the processes to suit the existing layout so as to minimize the unwanted waste; 2Change the layout of the facility but this time considering both the cost reduction as well as process flow optimization; 3- Provision of a dedicated work center for sophisticated designs and returned work to reprocess while keeping the existing one to focus on the conventional boards. Recommendations:

It is recommended to re-engineer the process as this will be less costly. In addition, it is recommended to instill a dedicated work center for handling special designs and returned orders.

Donner Company Case Study: Analysis of Operating Problems 15 Information Flow

Donner Company has also some issues related to the information flow. Flaherty, the manufacturing supervisor, receives the factory order and the blueprint four days after the bid has been accepted by the customer. Meanwhile, only Flaherty has a possession of the blueprint which makes anyone who faces any kind of problems associated to get back to Flaherty to check the blueprint, which undoubtedly impedes the information flow. In addition, Flaherty would delay the scheduling of the order for several days until the raw materials arrive which take at least another 2 days of delay. This results in a minimum of a week delay which represents 30% of the delivery time of an order of 1000 orders or less. Improving the speed of the information flow appears essential for increase of efficiency. Addressing this critical element would enable the company to keep its delivery time within the 3 weeks which in turn will be a step forward in achieving the sales target of USD 3 million. Recommendations:

To speed up the information flow, it is recommended that as soon as the bid is accepted, all involved levels be informed in parallel (Purchasing, Manufacturing, etc.); A blueprint copy including all relevant data (Design, specs,ect.) should move along with the order being processed at all stages enabling the operators needing information to refer to the data on the spot without having to get back to Flaherty and eliminating waste of valued time. A checklist listing the required processing steps could also circulate with the blueprint, and each operator fulfilling the required steps should check them out as well as a means of assuring that the critical steps are performed as required which will allow avoidance of missing any steps. Another option is to install electronic screen panels showing the relevant data for the operators in the job floor so that this screen acts as the information source, however, this initiative may incur extra cost.

Supply Chain & Logistics

There are number of suppliers dealing with the Donner Company, probably many of these suppliers are redundant for convenience. However, this large number leads to a delay of 2 days after the order bid is accepted by the customer until the lowest cost supplier can be located. Probably this is due to that the relationship between the suppliers and the Donner Company which is a transactional relationship that does not enable long term plans.

Donner Company Case Study: Analysis of Operating Problems 16 Recommendations:

The Donner Company could consider an option of shifting its relation with some selected suppliers into an integrative relationship from which plans can be made between them and those suppliers, prices negotiated, delivery times optimized and even some return policies may be implemented. These plans will be supported by a weekly or even monthly forecast for the materials required, so that they can arrange together for supplying the materials on the spot. Even a small inventory for the raw materials (mostly used) can be initiated so as to save the time of ordering these materials as well as the ordering process for infrequently used raw materials. Late Delivery Problem

Delivery used to be one of the company s core competencies as it quoted three weeks delivery on orders of less than 1000 circuit boards while competitors quoted 4 weeks. However, the company is facing late deliveries problem due to several reasons as bottlenecking, orders requiring rework, and orders pending customer s delivery of artwork modifications or a design change. Recommendations:

Re-design the delivery policy to include not only order size but also customizability of products and the number of operations included and distribute evenly shipments over the whole month.

Implementation and Risks As discussed earlier, in the analysis section, one of the prevailing issues in the Donner s manufacturing process are the four bottlenecks. As it has been proposed, bottlenecks need improvement, and as this step is performed, work piles up at the next stage of the operations. Adding capacity, however, to avoid piling of work might remedy the risk but also will incur costs. Adding additional inspection stations with trained and experiences operators and/or automated technological solutions might seem costly at the first glance, however, on the long run will yield return on investment because quality is one of the crucial elements with regards to competitiveness. On the other hand, load that is being removed will inevitably reflect on the overall operations process.

Donner Company Case Study: Analysis of Operating Problems Economies of scale, another ingredient that has been looked at appeals to many, however, this might not be the perfect solution for the Donner s Company or at least needs more thorough 17 research and investigation. As had been mentioned before, in case of Donner it is about 80-20 rule whereby 80% of revenue comes from few high-revenue-generating orders. With regards to facilities and layout improvement re-engineering the process is less costly, however, adding a dedicated work center for handling special designs and returned orders will off-load the overall system and therefore, increase efficiency and effectiveness, and as is known in the market, speed and agility are the two key components of success. The factory may run two lines in parallel, or undertake the improvement sequentially. In both cases it is worthwhile of an investment. Another key element which is communication needs to be tackled immediately. This does not include much cost and resources. It is ready for implementation and carries no risk provided the top management undertakes proper steps, and cascades information and allocates authority to the right units.

Conclusion This section summarizes all the recommended solutions for improvement of Donner s operating process.

The company should focus on working on its bottlenecks to improve the process. - By changing its shop floor policy and starting processing orders higher than 6 boards on the CNC drill. Re-engineering the work in the DFPR area, to accommodate overlapping tasks in order to fully utilize its maximum capacity. Adding additional capacity to avoid piling of work.

- Adding additional inspection stations with more trained and experienced operator - Installing automated solutions that can perform the inspection procedure; - Formulating accurate specifications reflecting customer s design needs Consider applying economies of scale in the process - Focusing on winning orders of high volume to increase its efficiency and offer competitive advantage in price competition. Enhance Quality Control system - By implementing a formal inspection system that would apply through all stages of manufacturing process coupled with standard specifications for each type of product or group of products that share certain characteristics.

Donner Company Case Study: Analysis of Operating Problems Introducing a set of internal standard specs that assure the quality of each work in progress intermediate at an acceptable level before approving its transfer to the 18 following step. Implementing a formal sampling scheme using a statistical measure to subject the inspection process to scientific basis. Re-engineer process in facilities and layout - by instilling a dedicated work center for handling special designs and returned orders. Enhance Information flow in the organization - By ensuring that as soon as the bid is accepted, all involved levels are informed in parallel (Purchasing, Manufacturing, etc.); - By circulating blueprint copy with all relevant data along with the order at all stages of the process. - By installing electronic screen panels sowing the relevant data for the operators in the job floor. Shifting relations with suppliers for supply chain and logistics improvement - shifting its relation with some selected suppliers into an integrative relationship - creating an inventory for the raw materials (mostly used) can be initiated so as to save the time of ordering these materials as well as the ordering process for infrequently used raw materials. Donner should also focus on its delivery problem by re-designing its delivery policy that would include not only order size but other parameters such as customizability, number of operations included etc.

Donner Company

Introduction:

Donner Company is a contract manufacturing company. It is into the business of production of printed circuit boards. The company basically has two kinds of orders: 1. Standard PCB s: These orders have same kind of large number of PCB s. 2. Specialized circuit boards for experimental designs and for pilot production runs: These have lesser number of PCB s per order. However, Donner charges a high premium on these orders.

The market is very competitive with number of companies operating in the same field. Donner enjoys the reputation of producing highly complex and quality PCB s. The Company has quality overall manpower. Also Donner has a MLT of approximately 4 weeks on special orders, which sets it apart from its competitors.

The specialization for Donner was to produce circuit boards for experimental devices and for pilot production runs. The president and the design engineer at Donner believed that Donner was more adept then its competitors at anticipating and resolving the problems inherent in new designs and prototype production techniques. We could imply the above statement as the major competitive advantage of Donner Company. Despite the competitive advantage that Donner had, the company was facing with operating problems concerned with three aspects of its operation: productivity, quality, and delivery. These problems resulted in unstable gross profit in percentage as seen in exhibit 1 Donner Company Summary of Profit and Loss in the original case.

The quick look at the current production reveals that it is more like a production line with a sequence of tasks to be performed one after the other. Presently, customers provide PCB specifications and design engineers at Donner analyze the customer requirement and provide them cost estimates. After customer acceptance of the bid, Design Engineer places the purchase order and then the production is scheduled as shown in Exhibit 1.

Donner used soldermask over bare copper or SMOBC as its manufacturing process. This SMOBC process could yield to denser circuit pattern and greater reliability. The process consisted of three stages: preparation, image transfer, and fabrication. Altogether, there were 15 operations in the overall manufacturing process (exhibit 3). However, some operations could be added or skipped depending on the design of circuit boards. In the SMOBC process, each task was lined up in sequence. The order had to follow each operation in the process from Artwork Generation to Inspect, Test, Pack. Thus, the production process at Donner was considered a production line and had a batch flow process. However, Donner would have to do the different setup for different specifications received from customers. Therefore, the setup time of the process would increase in correlation with the increase in the number of orders. In other words, the more order they took, the slower they could produce.

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Symptoms and reasons of the occurrence of symptoms.

1. Change orders: Customers often change their requirements (like design, quantity and dates) before the production starts. These result in delay and uncertainty in production Planning.

2. Urgent orders: Very frequently Donner accepts urgent orders. Also, Mr. Arthur Dief often carries small orders on himself from one process to another. This creates unnecessary line problems. Donner takes their rush order over the telephone without checking out the ground realties of the manufacturing conditions or consulting with the floor supervisor who is undoubtedly is the key person regarding resource allocation.

3. Quality Challenge: The Donner Company has to adhere with a wide range of quality standards as different customers have different quality and cost requirements. So this makes production planning difficult.

4. Customer Requirements: Some requires goods at the end of two weeks, some at four and some have urgency so it be comes very difficult to plan and execute accordingly.

5. Timely delivery: One of the biggest problems that Donner is facing is delivery on time. This is a big issue keeping in mind the competition prevalent in the kind of business they are in.

6. Custom made orders or special orders: The orders are considerably different in sizes from one another. Since each process in the production sequence has different setup-time and run-time, it causes problems in production line balancing.

Problems needs attention: (Business v/s Organizational)

The roles of design engineer Shop supervisor are not properly defined. There seems to be a lot of overlapping and conflicts. Seems both does production scheduling. This creates unnecessary confusion and duplication of work. There should be a clear hierarchy and clearly defined work so we suggest that production supervisor work under the instructions of production manager/design engineer. By doing this we will not have overlapping of work and both the people can concrete on what they are doing the best. Purchase manager is not in the current organization structure which itself is a big fault. Every production/manufacturing company needs specialized purchase department so that the production people can focus on their job. Purchase is a very important part of the organization and people in this department needs special skill set. Company with proper purchase department can save huge amount by planning the purchases they require in advance and one need a person with the knowledge of market and should have good relations building skills. So we think that company should have one purchase manager who concentrates on purchase, so design engineer can pass on the required martial list and focus on production planning. By this way logical flow will be created in the organization. The new structure should have the president and all the managers below the managers, there is a need for Production manager, Purchase Manger and sales/marketing manager. Under each manger there will be respective supervisor and under supervisor there will be workers and material handlers. The fluctuation in order size and batch size also caused the idle time for workers since the workers in other departments had to wait for the work from Drilling department when the more Manual work had to be done. This is not the efficient use of the manpower available. This reflects that Donner doesn t have sound management team as management is making the max possible form the available resources which we don t think Donner does.

Guidelines to solve the problems.

1. If we look at the September s Total Standard Production from Exhibit 2 Standard Process Flow from the original case, it is obvious that the Drill operation takes the most time from the overall process. Manual and CNC Drill took 50,015 minutes in total to finish the operation. That is approximately 54.42% (of the total 91,904 minutes process). If we break the figures into more detail, we can see that Manual Drill was the longest operation in the process flow. It took 38,205 minutes to finish the operation. To be more specific, Manual Drill takes 335 minutes per panel (8 boards * 500 holes * 0.08 minute + 15 minutes set up time) and CNC takes 256 minutes (8 boards * 500 holes * 0.004 minute + 240 minutes set up time) to finish the task. As mentioned in the case, shop floor policy indicates that only orders more than 100 boards be drilled on the CNC equipment. If Donner received many order with the size less than 100 units, it had to go to Manual Drill. Thus, it would take longer time for the whole process. If most of the orders were more than 100 units, the bottleneck was still in the Drill operation since the CNC Drill was the second longest operation. However, the total time for the process would be less than in the situation which the majority of the orders were less than 100 units. 2. Poor Planning: It takes 4 days for Design engineer to purchase materials, but it is only after receiving the raw materials that Shop supervisor actually schedules the production. However, the scheduling must begin when the customer confirms the order. But according to the new organization plan, it s the task of purchase department to purchase the material and design engineer to give the list of martial and shop supervisor to schedule the production. So by this we save lot of time in production planning and better focus on the job. 3. The present workflow involves a lot of production breaks as employees have to carry the PCB s from one process to another themselves. This results in unnecessary loss of capacity. We suggest that company should purchase some Forklifts in order to speed up the work and production blockages. This will also reduce the idle time problem that Mr. Edwards has frequently observed. 4. The present Shipping Policy must also be altered. As can be seen from Exhibit 5 in the case, a lot of shipping is done in the last week of the month. This monthly policy should be changed to daily policy so that the all the orders completed on a particular day are shipped on that particular day. 5. The emphasis must pay attention on parallel verses sequential operational and on line versus off line setup.

7. Donner is presently facing severe quality problems. About 6% of its orders are getting rejected as one or the other job work is missed while production. They should make changes in the organizational structure by opening up the purchase department and providing the 3 dedicated supervisors for the 3 of its process. They should also make inspection standards rigorous, we suggest that they should opt for ISO certificationthis will ensure the consistency in the quality standards. Should also use the checks and balances and internal marks developed by the supervisors to ensure that the product passes through every stage before it takes the form of final product.

8. The Financial figures show that the company is doing well in terms of sales increase and gross profits. Net Sales have drastically increased from 1985 to 1987 by about 270%. As compared to this the gross profit increased by nearly 308%. We suggest that company should plan to quickly expand its capacity and cater other markets, if necessary should hire and outside financial consultant or an experienced financial manager. The company should focus on the smaller orders as it has been noticed that company get more profit on the smaller orders than that of larger ones.

Recommendations:

We as a group suggest that Donner should make changes in the organization structure and hire a specialized Purchase manger by doing this the company will not only save on purchasing cost but will also allow design engineer to focus on his jog=b and duplication of job will be reduced.

We also think that if company is doing well and have money to invest Installation of ERP system will be a good idea by this company will save a lot on man power and the change of error will also drastically go down, but as we all know that change in the most difficult part in any organization, it will face difficulties in changing from traditional method to the electronic method. (Exhibit 4).