OM-1 case Study assignment

Submitted By::
Tanushree Dwivedi 177
Tanvi Manek 178
Tanvir Raza 179
U Suman Sastry 180
Ved Prakash 181
Vishal Goel 182
Comparison of the manufacturing structures and strategies of DJC’S Kawasaki plant and ACC’S Sunnyvale
plant
Through the following bullet points we will try to highlight the major differences between the manufacturing
structure of DJC’S Kawasaki plant and ACC’S Sunnyvale plant
 Kawasaki : Planned from Initiation. Sunnyvale: Capacity and technology was added as and when required.
 Kawasaki had a dedicated production unit for each of the four types of connectors developed, thus in
effect having 4 production areas. In comparison, at Sunnyvale, the whole production area was used to develop
all products.
 In terms of packaging, the Sunnyvale plant was quite flexible whereas at Kawasaki, packaging was standard,
and was different from the industry standard.
 Sunnyvale plant maintained a finished goods inventory of 38 days, whereas Kawasaki maintained a finished
goods inventory of 56 days.
 In Kawasaki, the production schedule was fixed and would not change under any circumstance or for any
special order from customers. This gave them an upper edge, in terms of controlling costs. Whereas, in
Sunnyvale, although policy stated that the production schedule for any given day was to be decided upon 30
days in advance, actually the schedule was changed quite frequently to meet customer demands. Thus ,
while the buzz word for the Kawasaki plant was cost cutting, for the Sunnyvale plant it was flexibility.
 In terms of products, the Kawasaki plant stressed on continuous and reliable operations and low raw materials
cost. This was because, in Japan, the cost of raw materials was twice as high as in the United States. So while
the Kawasaki people studied and adapted designs from American companies, they did away with most of the
extras that they felt did not add any value for their customers. Thus, despite high difference in raw material
prices, Kawasaki cost per units were only slightly higher than Sunnyvale’s cost per unit connector.
 In terms of process, for Kawasaki, the idea was to concentrate on automation.
 At Kawasaki, technology used was old and reliable upgraded in-house, as compared with Sunnyvale, where
in the growth years heavy investment had been made into buying new technology as per requirements
Impact of manufacturing strategy of each plant on its ability to achieve different competitive objectives, such as
low cost, high reliability, flexibility and product innovation

DJC’s Kawasaki Plant

The chief goals of the Kawasaki plant are::
 The plant must achiever asset utilization of 100 %
 Yield on raw materials must reach 99 %
 Customer complaints should not exceed 1 per million units per output
Fulfillment of the above three goals would mean that Kawasaki plant would be the lowest cost producers in Japan.
Also the following factors would allow it to maintain low costs & strategic advantage :-
 Proximity to major Japanese electronics companies
 Proximity to major raw materials suppliers
 Availability of young, highly skilled workers
DJC Corporation, dedicated to process positioning and robust systems engineering, required that the Kawasaki
facility be highly automated. The pre-automation process helped analyze process flows, worker movements,
and raw material consumption. DJC also believed it better to utilize an older, more established process, rather
than implementing newer unproven processes. Continuous improvement of existing processes was highly
relied upon.
Flexibility-Kawasaki plant had complete control over its schedule and mix and refused to make changes for
unplanned orders.
-They used to ensure a smooth flow of materials
-Hold less raw material inventory
 
Product Innovation
-In-house technology development
- Made all proprietary design modification in-house
-It used to simplify production and reduce cost by packaging its connectors only on tape and reels.
-Pre-automation
-The technology development department coordinated various functions to improve product characteristics. It
removed any design feature that didn’t add value to the customer.
ACC’s Sunnyvale Plant
Flexibility
  They decide on the production schedule 1 month prior to the actual date. This helps to accommodate rush
orders and requests from more important customers. To maintain flexibility the company tried to expand
capacity ahead of expected growth in demand.
High reliability
 Till 1986 it used the latest production equipments to improve quality. After 1986,the finance people hasn’t let
the manufacturing people buy the latest equipments due to the fall in demand. The company used to ensure
that the defect shouldn’t exceed 1 defect per 1 million units. It met customer delivery requirements with
quality and on time.
Product Innovation
 It used to cater to computers, telecommunication equipments and scientific instruments sectors. The plant
produced 4500 different models in 1991 while in 1981, the plant produced 3000 models due to increase in
number of individual product manufactured. It used to buy latest technologies for its production channels. It
also used to cater to custom models.
Low Cost
 The company ensures that they get the raw material for product and packaging at a lesser costs making the
total cost lesser. Also, cheaper electricity costs.
If DJC builds a new plant in US then the factors on which they should focus more are

 They should drop that IN-HOUSE technology development strategy at least for the first few years till the time
they acquire substantial market share in the US and have sales to achieve break even for that.
 They have improve their flexibility as 15% of ACC’s production is from customization and the rest is from
four types of products that means 85%, which if divided equally among them is 21.25% of production .
Therefore one looking to compete with ACC in the US cannot ignore this sector.
 As one knows how fast electronic industry is growing and everyday or every weekend one can see a new
product in the market so to cater to fast changing environment they should also look for new technologies and
improve them with time too, which they have been ignoring.
If Sunnyvale plant doubles its production run length then it will be very difficult for them to schedule this much
complex production considering they at present are making more than 4500 different connectors. Moreover, it
WIP inventory will increase and finished goods inventory will increase, which will further aggravate the
situation.
DJC is a very serious threat to ACC as by their current at Kawasaki is able to compete them in international arena
when they are working on raw material which is double of the cost of raw material at which ACC is working.
Changes recommend in the operations of ACC’s Sunnyvale plant

 They need to change their plant layout and have a separate cellular layout for the mass production of all four
types of connectors which would be working 24*7 considering the demand and have a separate layout for
customization.
 They need to have a particular standard for packaging i.e. they are currently packaging at 10 piece plastic bag
to 1500 pieces of loaded reel, which would decrease the worker needed to handle packaging.
 They need to automate their process by which they can decrease their man power from 396.