AMERICAN

CONNECTOR
COMPANY (A)
GROUP 10
SUMIT VAISHNAV

13PGP114

1.
How serious is the threat of
DJC to American connector
company?

INDIAN INSTITUTE OF MANAGEMENT RAIPUR

11/15/2014

COMPETITIVE ANALYSIS OF US MARKET

Intensity of Rivalry
1200 competitors
Fragmented market
Matured market

Bargaining of
suppliers

Bargaining power
of Buyers

Low (assumption)

Low switching cost

Threat of New
entrant
New moulding
technology is easily
available

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Substitutes
Market declining
indicating higher
threat of substitutes

11/15/2014

Sr.

Features

ACC

DJC

Competitive advantage Customization

Mass manufacturing

Customer base

Excellent technical solutionscustomers feedback

Existent 2nd tier player

New player in US market

Effective Utilization

30.2%

75.4%

Production flexibility

Marketing & sales is

dominating over production

Production is dominating over

Marketing & sales

Technology

Outsourced

In house development

Contribution in
revenues

85% by standard products

15% by customized products

100% by standard products

Process

4500 SKU, frequent changeover

640 SKU

Packaging

Wide range

Standard

2.
How big are the cost differences
between DJC's plant and
American connector's Sunnyvale
plant? Consider both DJC's
performance in Kawasaki and its
potential in the United States.
INDIAN INSTITUTE OF MANAGEMENT RAIPUR

11/15/2014

 Total Cost Per year

DJC Japan Plant = $1899330
DJCs US plant = $47314.1
ACC US Plant = $ 70613.7

Cost difference = $23299.7 = 33% (Between DJC US Plant

& ACCs US Plant)

INDIAN INSTITUTE OF MANAGEMENT RAIPUR

11/15/2014

What accounts for these

differences?
How much of the differences is
inherent in the way each of the two
companies compete?
How much is due strictly to
differences in the efficiency of the
operations?
INDIAN INSTITUTE OF MANAGEMENT RAIPUR

11/15/2014

DJC
Mass Manufacturing
In-house mold technology
Customer & Supplier relationship
Proximity to supplier & Customer
JIT inventory management
High finished goods inventory
Job-Rotation system
High level autonomy from corporate
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Regular maintenance
High effective utilization
Continuous improvement
Removal of waste
Removal of non-value added
activities

Pre-automation
Inter-functional coordination
Quality control
11/15/2014

ACC
Customization based strategy
Close customer relationship
Low finished good inventory
High raw material inventory and
WIP inventory

Outsourced mold technology

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Marketing & sales domination

Software system for production
schedule

4500 different models

Responsive to customers needs
High quality

11/15/2014

Cost Difference Reasons

Low raw material, electricity costs and high labor cost in US
Raw material inventory and WIP inventory is low for DJC compared to
ACC

High finished goods inventory for DJC

Depreciation is high for ACC because average useful life for mold is 8
years compared to 3 years of DJCs

Regular preventive maintenance of mold enables 99.99% mold yield for

DJC

High defects rate 26000 per million of products for ACC because of new
product designs
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11/15/2014

10

4.
What should American
connector's management at the
Sunnyvale plant do?
INDIAN INSTITUTE OF MANAGEMENT RAIPUR

11/15/2014

11

 Cellular layout-Flexibility, WIP inventories

Dependability-Vertical integration, In-house product
development

Automation-to reduce labour cost

Quality-inspection after every process level instead
of final product inspection

Activity based costing- To segregate low profit and

high profit margin products
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11/15/2014

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THANK YOU

INDIAN INSTITUTE OF MANAGEMENT RAIPUR

11/15/2014

13