american connector company
DESCRIPTION
case analysisTRANSCRIPT
7/17/2019 American Connector Company
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Abhishek Sharma 14PG
Bora KiraN Kumar 14P
Abhay Ray 14PGP
Somal Kant 14PG
Amit hou!hory 14PG
han!an Kumar 14PG
Group - 5
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Some As"e#ts o$ both the #om"a2
%uality an! ustomi&ation'i(hly e)#ient ma
*on+t !o #ustom
*on+t $ollo,s "rs#he!
Attention to #ustom
-2. to 43. !e#rease in (ross mar(in$rom 1/41//1
*esi(n an! Per$orman#e
A
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Production Type Average Production Rate Competitive Strategy
Production Planning Lead Time Capacity Utilization
om"letely
ontinuous lo,
700 million units
500 million unitsmaimum
8o, #ost
"ro!u#tion9stan!ar!i&ation
an! su"erior
!esi(n
4
:
'
A
<"erates 16hours=,eek on a24 hour "er !ay9330 !ays a year
short lea!times9lar(e >nishe!
(oo! in?entory
100. utili&ation
!"C# $a%asa&i plant 'anu(acturiStrategies
Aho$#n
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Production Type Average Production Rate Competitive Strategy
Production Planning Lead Time Capacity Utilization
;aCority Bat#h
Pro#ess9 rest obPro#ess
420 million units
5600 million unitsmaimum
leibility an!
#ustomi&ation
-
:
P
;
:
<"erates 120hours=,eek on a 3shi$t "er !ay9 -!ay "er ,eeks#he!ule9 -0,eeks o$ the year
Relati?ely lon( lea!
times9 short
"ro!u#tion runs
5a?era(in( 1@- to 2
!ays9 an! small
>nishe! (oo!s
in?entory 53 !ays@
only $rom -0-.<!
e
#
e
ACC# Sunnyvale plant 'anu(acturStrategies
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)*+o% serious is t,e t,reat o( American Connector Compa-
Sales may $urther !e#line in"essimisti# situation
a"art $rom 1-.
Sales 5..
ustomi&e!Pro!u#t 1-.
Remainin(sales 42- D E1-1-F16
ost o$ Pro!u#tioby hal$ as ra% m
,al( in USA "apan ,hi#h ,oumore as th!ierentiation hasthe #ost is the o$a#tor
USA
Ra,;aterial #ost
6@-1
Ra,;aterialPa#ka(in(
3@27
:otal Ra,;aterial
ost
/@7
* is not currently t,reat to t,eACC as it is ha?in( 4-00 SKHs ,hereas * is ha?in( 600 SKHs@ * #ant#a"ture the all the market o$ A !ue
to its limite! oerin(s
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/uality
Production
Sc,eduling
Supplier Relations,ip
0rganisational
Structure
As the in#rease! rate o$ !e$e#t rates almost 26000"er the *9 it may "ossible that uality #ons#ious #ustome
some "erio! o$ time@
As * in?estin( in su""liers $or im"ro?in( in uality
te#hni#al su""ort9 it ,ill hel" the * to ha?e #om"!i)#ult time as #om"are! to the #om"etitors
As the or(anisational stru#ture o$ * #or"oration #om"are! to the A ,hi#h is ha?in( hierar#hi#al able to take $ast !e#ision in the #han(in( en?ironmen
)*+o% serious is t,e t,reat o( American Connector Company
A is ha?in( "roblem ,ith mana(in( JP as ,ell as in!ue to 4-00 SKHs
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1* +o% 2ig are t,e cost di3erences 2et%een !"C4American Connector4s Sunnyvale plant Conside
per(ormance in $a%asa&i and it4s potential in tStates*
Ra% 'aterial Product 6 Pac&aging7#
Present ra, material #ost o$ "ro!u#t an! "a#ka(in( inrelati?ely@
Ra, material #ost ,ill re!u#e i$ * set u" there "lant in!i#es HS ?=s a"an is lo,er 50@6L1@
* 5Ka,asaki #ost in!i#es HS ?=s a
Ra, ;aterial Pro!u#t 12@13 0@6
Ra, ;aterial Pa#ka(in( 2@76 0@6
:otal ost 14@/
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/*1 -La2our Cost #
JP an! >nishe! (oo!s in?entory is hSunny?ale "lant in #om"arison to Ka,asaki
;an"o,er reuirement to han!le this e#es"a#e is also in#rease!@
n#rease! #om"leity o$ the "lant en?irolabour #ost@5;aterial han!lin( #ost o$ Ka,as10@4. o$ Sunny?ale@
But9 * ,ill ha?e to "ay 10. more in HSlabour ,a(es@
:his in#rease in #ost ,ill (et oset by less o$ labours !ue to automation@
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Pac&aging Cost
n #om"arison to Sunny?ale9 the "a#ka(in( #ost o$ Ka,asaki "lana!a"tability o$ stan!ar!i&e! "ro!u#t "a#ka(in( te#hnolo(y@
Electricity Cost n #om"arison to Sunny?ale+s "lant the ele#tri#ity #ost o$ "ro!u#
Ka,asaki as ele#tri#ity #ost in!i#es o$ HS ?=s a"an is 0@L 1@
Runtime (or molding process
*ue to hi(h bat#h o$ housin(s assemble! !urin( "latin( o"eralo,er runtime $or mol!in( o"erations ,hi#h ,as alrea!y !o,n to $urther re!u#tion ,oul! ae#t #osts@
!epreciation
'i(h re!u#tion in #ost $rom 1/6 to 1//1 $or * ,as !ue to !e#r
!e"re#iation o?er in?estment@
*e"re#iation is a maCor #ontributor to #ost $or A@ ost !ieren#ean! A ,ill re!u#e a$ter a "erio! ,hen A ,ill rea#h its BP $or !one !urin( the "erio! 1/3 to 1/6
/*1
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ost o$ manu$a#turin( o"erations o$ * in HS ,oul! re!u#"ro!u#tion #ost o$ 819*). by 1:; to 81.*15
/*1
1/6 1//1
*5Ka,asaki A 5HS
*5Ka,asaki A 5HS
#ost in!?=s a
Ra,material"ro!u#t 14@32 10@4 12@13 /@3/ 0
Ra,material
"a#ka(in( 3@27 2@2- 2@76 2@1 0
labor !ire#t 7@63 0 3@02 1labor
in!ire#t 2@3 0 0@7- 1
total labo /@/3 @-3 3@77 10@3 1
ele#tri#ity 2@47 1@ 1@4 0@ 0
!e"re#iation 7@63 -@-2 1@ -@1 1
other 4@12 4@41 4@24 6@1 1
total 41@74 32@/1 26@1 33@7/
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Number o$ !e$e#ts "er millionin A is ?ery hi(h as#om"are! to the *
Ra, materiais t,i#e as HSA
* o"erate!
throu(hout the maimum asse7-@4. as #om30@2. asset uti
/uality issues# Ra%
Production Process# <i=ed Ass
/:# >,at accounts (or t,ese di3erenc
*ue to the Bat#h "ro!u#tiona!o"te! by the A nee!s$reuent #han(es in "ro!u#tionline as #om"are! to * ,hi#h isha?in( ontinuous "ro!u#tionline@
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12
3@'o, mu#h o$ the !ieren#es is inherent in thethe t,o #om"anies #om"eteM
ui"ment
* relian#e oninhousete#hnolo(y!e?elo"ment,hereas Arelian#e onbuyin(te#hnolo(yeui"ment
Geo(ra"hi# 8o#ation
* establishe!its "lant near thesu""liers an!maCor eui"ment#om"anies@
ost o$ n?entory
* maintaine! ?eryless ra, materialin?entory as#om"are! to A@
But in terms o$>nishe! (oo!s9 *+s>nishe! (oo!in?entory is hi(ho$-6 !ays #om"arin(to A ,hi#h isha?in( 3!ays@
Pro!u#tion
* is ha
600 SKHs,hereas ha?in( 4SKHs ,hmakin( A"roblemsmana(inin?entory
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:*+o% muc, is due strictly to di3eret,e e?ciency o( t,e operations13
:hou(h the "ro!u#tion
s#he!ule $or any (i?en!ay ,as su""ose! tobe !one 30 !ays be$orebut in realty theyroutinely #han(e! to,eekly or !aily basis$or the im"ortant#ustomers@
* is ha?in(or(anisational stru#ture
,here s"e#i># "eo"le arethere to (ui!e "ro!u#tion@
Jhereas Amana(ement is more$o#usin( on marketin(
an! sales an! they !on+tha?e any s"e#i># "eo"le$or mana(in( "ro!u#tion
:hou(h
#om"eta!?antauality9 ha?e no"er mill"ro!u#tunits o$
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@*>,at s,ould American Connectors manat,e Sunnyvale plant do
:hey shoul! (o $or the !e#reasin( #ost o$ "ro!u#tiothe #urrent !e$e#t rate@ :hey shoul! (o $or "ro
instea! o$ rea#ti?e uality@ Proa#ti?e uality ,ill result in re!u#tion o$ time
reuirement $or monitorin( an! ins"e#tion o$ in?entory@
:hey shoul! (o $or #ollaborati?e relationshi" ,ith thi(h uality "ro!u#ts an! make sure that uality sho
at the su""liers en!@
:hey shoul! (o $or re!u#tion o$ some o$ SKHs by?aluea!!e! !esi(ns ,hi#h ,ill hel" in mana(in( "ro!u#tion s#he!ulin(
n?estment reuire! $or the u"(ra!ation o$ te#hhouse R * as no u"(ra!ation has been !one sin#e
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Re#ommen!ation ont@@
A nee!s to #han(e or(anisational hierar#hy $rom m
or(ani# ,hi#h ,ill (i?e more autonomy to their "romana(er@ :his ,ill hel" $ast ta#ti#al o"erational !e#isio
!enti$y bottlene#k in the "ro!u#tion "ro#ess 5e@(@ Plaan! try to e"loit an! ele?ate it@ t ,ill result in asset u
<nly 1-. o$ the total "ro!u#t "ort$olio are the
"ro!u#ts@ :hey shoul! (o $or stan!ar!i&ation o$ the restan!ar!i&e! "ro!u#t an! layout !esi(n@
o#us on #ross$un#tional inte(ration an! in$ormabet,een "ro!u#tion an! marketin( team@
1-