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 Are DJCs lower cost and apparently superior performance than ACC a result of pursuing different 

strategy, or are they derived from more efficient operation capability? Compare the two firms 

operating systems, costs and performance.

1.)  Contexta.  DJC

-  Japanese company

-  strategy: supply narrow range of high volume connectors

-  cost-advantage over ACC in American market??

-  among the top 10 worldwide players

-  market share of 4%

-  served electronics industry in Japan

-  historical margin about 50%

-  costs per 1000 connector pieces = $20 

b.  ACC

-  US based company

-  overall aim: broad product range and customization (customized designs)  

needs flexibility in operations

-  top 10 competitors in USA (mid-1990s) 

-  sales = $1 billion (mid-1990s) 

-  gross margins declined by >20% (last 10 years) to 40% (late 1990s) 

-  costs per 1000 connector pieces = $34

c.  Product / Market (USA) 

-  electrical connectors

-  average cost of connectors = 2% of total product cost

-  intensely competitive-  more than 700 competitors

-  declining total sales volume

-  OEMs try to cut down connector suppliers: ask for cost cuttings, discounts,

improved quality, faster delivery

2.)  Operating systems

DJCs overall aim is to manufacture its products at the lowest possible costs . 

Therefore the company incrementally cuts its expenses in several areas. One big cost

reduction could be received at the incoming goods. Since the company invested in

redesigning the product, fewer raw material is now in use. Simultaneously, the

company improved the automation of its processes and the working range of its

employees. Hence, costs for resources sank. In order to follow its low-cost-strategy,

the company furthermore emphasized to improve its efficiency. Therefore the

running costs of manufacturing should be reduced . DJC achieved this goal through

not only improving its processes step-by-step but also by automating them on their

own. Processes that are individually designed and fit to the companies overall goals

can sustainably support such long term strategies. 

Their American competitor ACC followed the strategy of customizing its product by

offering a large number of SKUs as well as customized designs. Hence, the operating

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processes need to be flexible and low automated. Short production runs lead toa

higher number of change over and simultaneously require a large number of steadily

present workers. 

In order to follow its strategy, DJC only offered a small variety of products. Therefore,

its range of SKUs was lesser than at ACC, but the company was able to operate

longer runs without inventory stocks in between. Moreover and due to the narrow

product variety, DJC could schedule its production by combining an MRP andJIT

systems which helped them to quickly produce the demanded amounts with fewer

delays. Since ACC based its production layout on the strategy of customization and

therewith flexibility, they were only able to use a MRP-based system to control their

production. Demands needed to be forecasted therewith and led to an uncertain

projection of the material requirements which often led to delivery delays. 

Thus, DJC met the customers requirements faster than ACC and was able to produce

at lower expenses. The basis for this can be seen in their overall approach of 

manufacturing a cheaper product which they implemented in all main process steps,

such as design of lavout, materials control system, technology and workforce skills. 

3.)  Costs

a.  DJC

-  raw material product = 36%

-  labour = 20% (-62% in last 6 years!) 

b.  ACC

-  raw material product = 28%

-  labour = 30% (+21% in last 6 years!) 

4.)  Performance

a.  DJC

-  shorter mftg lead time due to product-focused layout

-  lesser SKUs: longer runs without building in-process inventory stocks

b.  ACC

-  lower capacity utilization (emphasizing customization higher capacity

cushion) 

-  short production runs increased number of changeovers & lead time

-  higher overheads due to larger number of SKUs

-  common: delivery delays