GROUP 11

• SINJAN PATHAK | 1811348

• AMIT PRAKASH | 1811349
• CHIRAG M RAMESH | 1811351

AMERICAN •
•
•
SHREYAS RASEGAONKAR | 1811353
MANASA REDDY | 1811355
HARSHAL WANKHEDE | 1811368

CONNECTOR Date of Submission: 28th November, 2018

COMPANY
[Document subtitle]
1) What is the strategy of DJC and American Connector?
DJC and American Connector differ variably in terms of strategy. Some of the points
of differentiation are:
a) Mode of Operation:
The mode of operation for DJC is continuous whereas American connector works
on batch processing. This leads to lesser start up and shut down costs for DJC.
However, American connector enjoys advantage in terms of number of variety of
connectors produced (4500 in1991) due to batch processing.
b) Capacity utilization:
Due to continuous mode of operation, DJC enjoys higher productivity of 7.45 in
terms of connector output per employee (in millions of units) compared to 1.06 of
American connector. Also, effective utilization is higher for DJC (75.4%) as
compared to American connector which has only 30.2% utilization. (Refer Exhibit
6)
c) SQC vs SPC:
Sunnyvale follows SQC whereas DJC focusses on SPC. As a result, the defects in
Sunnyvale are 1.6% as compared to 0.7% in Kawasaki plant. (Refer Exhibit 6)
d) Technology:
Sunnyvale and DJC both bought standard machinery. But, DJC relies on in-house
R&D to customise the machines as per the requirements coupled with high degree
of automation. This gives them advantage over other competitors.
e) Proximity to Suppliers:
DJC’s plant in Kawasaki was closer to its suppliers. This helped them to have
maintain close relationships with them. Also, most of the raw materials were
procured on a daily basis. This helped them to maintain lower raw material
inventories thus saving costs.
f) Relationship between Production and Sales:
DJC Kawasaki was dominated by production department whereas Sunnyvale was
dominated by Sales and marketing department.

2) How serious is the threat of DJC to American Connector (ACC)?

(a) What accounts for the differences between the two plants?
(b) What factors are responsible for that?
If DJC opens a plant in America, the threat is serious for the American Connector
company. DJC is more focused on improvement of process and making them
efficient. This results in ultimate quality improvement for them. On the other
hand, to discuss this let’s discuss the following parameter.
1. Raw Material Cost: As mentioned in the case, right now the raw material cost of DJC
is a $14.89 which higher than ACC ($11.49). This is due to the higher raw material cost
in Japan, which they will overcome if their plant is in Japan. Addition to that, as they
have superior process technology in reducing the cost of raw material, there is high
chance the cost will be lesser than ACC. Also, DJC have proved themselves as highly
focused process improvement company which will reduce the overall working of the
plant
2. Labor Cost: As DJC is highly focused on automated process, their overall labor cost
less than half of ACC which is added advantage. Also, the cost of electricity is less for
DJC than ACC even after producing more units of connector than ACC.
Due to this reason, there is high chance that overall cost of manufacturing is lower for
DJC than ACC if they open a plant in America.
 (a) As discussed above, raw material and other operating cost are low for DJC as
compared to ACC. Also, the direct and indirect labor utilization rate for both the plant
is different. With this following are the factors which differentiate both of the plant:
Running the plant: DJC plant focused more on achieving 100% utlisation of assets.
While in case of ACC the utilization is lower, compared to DJC. DJC plant operates
24x7 which reduces the changeover and star-up cost. While ACC Sunnyvale plant
runs 5 days a week only, hence higher start up and time required.
Plant layout and productivity: DJC plant is divided into 4 layouts which are
designed to reduce the material flow and handling time. Hence
higher productivity was maintained in the plant.
Product & Process Technology: DJC prime focus was on product simplicity and
raw material optimization. Also, all the product process is optimized in a way which
didn’t affect the product quality. Through design and process optimization, DJC is
able to replace gold with tin which reduces the cost. As they have efficiently were
automated processing lead time for DJC was just 2 days on the other hand ACC’s lead
time was 10 days.
SKU’s: DJC used focused approach by restricting themselves on 640 SKU’s and due
which they can standardize most of the process. ACC have 4500 SKU’s due to
ultimate standardization is not possible.
Production Planning: DJC production schedule were smooth and pre-decided due to
which execution of plan were easier for the employee. ACCs planning were frequent
changed as per the customer requirement.

(b) Factors responsible for the differences

1. Due to design optimisation, DJC plant is able to reduce the cost, where
such optimisation were not done by ACC.
2. Number of Employee in DJC plant is very less (one fourth) of ACC.
3. Manufacturing process: DJC plant is able to reduce the start-up cost by
making the process continuous. Also production plan were made 2 months before
and not changed time to time.
4. Due to excess of inventory, ACC plant have more inventory holding cost (38
days) as compared to DJC (5 days).
5. ACC was more focused on elimination the defective pieces from the batch
and providing superior quality to customer. DJC was more focused on not
producing defective pieces by simplifying the product design. Hence defect rate at
DJC was less than ACC.

2) How serious is the threat of DJC to American connector?

a) What accounts for the differences between the two plants?
b) What factors are responsible for that?

3) What should American Connector’s management at Sunnyvale do?

1) Defect rates at Sunnyvale are quite high (26000 per million units of production).
They should put better quality control systems in place to reduce the rate.
2) Sunnyvale should try to opt for Statistical Process control instead of Statistical
quality control. Intermediate quality control checks could be placed in place of
checks at the end point.
3) Process lead time which is currently 10 days needs to be reduced to simplify order
management and reduce finished goods inventory (currently 38 days).
4) Management could look into investing into R&D and developing in-house
machinery to reduce cost and thereby gain advantage over competitors.
5) Sunnyvale could reduce costs on packaging by standardizing the packaging formats
instead of proving wide variety of packaging formats.
6) Batch processing at Sunnyvale is leading to increased start-up and shut down costs.
Switching the mode of production to continuous would help them in saving these
extra costs.
7) From exhibit 6, it is clear that fixed assets utilization for Sunnyvale is quite low.
They should try to increase assets utilization by controlling costs on start-up and
shut down.