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American Connector Company (ACC) and DJC Corporation (DJC) were both mid
level competitors in the highly fragmented and highly competitive electrical
connector industry. ACC and DJC each had distinct strategies and practices
related to the operations and manufacturing within their respective corporations.
Like most of the Japanese corporations DJC relied mostly upon efficient
manufacturing processes as the basis for their competitive strategy and as the
means to achieve their annual profit goals.
ACC relied mostly upon their ability to offer customized connector solutions and
high end products. DJC recently announced the construction of an US-based
manufacturing facility located near ACC¶s facility. Faced with the threat of a
highly efficient competitor launching a nearby production facility, ACC must
develop a plan of action to limit DJC¶s intrusion into their established North
American market. By answering the questions mentioned in the following slides
we will try to explore the above mentioned issue.
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÷hrough 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. ÷his 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. ÷hus , 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. ÷his 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. ÷hus, 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.
÷hus a lot of pre-automation work was performed, in order to perfect the
efficiency of the automated process. ÷his was different from Sunnyvale.
£ 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, which would lose its edge
in a few years¶ time.
£ Kawasaki identified moulding as a key area, and investments were accordingly
made. Required experts were hired for the moulding technology group, the moulds
received regular maintenance, besides basic daily maintenance. At Sunnyvale, this
was merely bought from vendors as standards and requirements changed.
£ ÷here was a dedicated ³÷echnology development division ³ at Kawasaki to co-
ordinate between various divisions in product planning. In terms of hierarchy, the
senior management took long term decisions, but staff was given freedom in day
to day decisions. In Sunnyvale, each division was headed by a supervisor who
reported to a director.
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÷he chief goals of the kawasaki plant are::
£ ÷he 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. ÷he 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.
-÷hey 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
-÷he technology development department coordinated various functions to improve
product characteristics. It removed any design feature that didn¶t add value to the
customer.




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£ ÷hey decide on the production schedule 1 month prior to the actual date. ÷his
helps to accommodate rush orders and requests from more important customers.
÷o maintain flexibility the company tried to expand capacity ahead of expected
growth in demand.
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£ ÷ill 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. ÷he 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.
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£ It used to cater to computers, telecommunication equipments and scientific
instruments sectors. ÷he 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.
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£ ÷he 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.
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£ ÷hey 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.
£ ÷hey 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 . ÷herefore 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.
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£ ÷hey 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.
£ ÷hey 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.
£ ÷hey need to automate their process by which they can decrease their man power
from 396.