How is Donner doing? What problems do you see? Why do these problems exist?
Donner has to improve its production methods in order to compete effectively with other printed circuit boardmanufacturers. It has to reduce the delay period of deliveries and percentage of orders rejected or returned due tooperational mistakes. It is growing rapidly with increase in net sales. But it needs to address the productionproblems in order to achieve the desired growth targets (3 million US$ by 1988).We see following problems with the company
(i) Raw Material Related
Dependent upon outside suppliers for raw material supply.b.
No definite estimates as different orders need different raw materials.c.
Several days delay between order reaching a supervisor and raw materials reaching him.
(ii) Order Process Related
a. Different order sizes from different customers.b.
Four day rush orders disrupt other work flows. These gain priority over existing work flow and createbottlenecks as they hold up operators working on previous orders.c.
Re-working of orders rejected by customer or requiring minor changes
. This eats into operator’s time and takes
them away from normal work.d.
Work delayed due to late delivery of customer artwork modification or design changes (caused 1/4
of delayed jobs in a process)
(iii) Production Related
Operators disrupted frequently on the job (6-12 times) to secure more work from an upstream process, to seekadvice on a problem and to deliver completed work.b.
Flaherty delayed scheduling decision until the arrival of raw materials.c.
Work piles up with some operators even as others are free. The bottleneck keeps shifting for each differentproduct or work flow.d.
Resources are tied up in bottlenecks, which is not definite and hence a mitigation strategy cannot be workedout without changing the current workflow process.
(iv) Quality Related
Differing quality expectations with different ordersb.
Boards were returned because of failure to perform all the required operations.c.
Pre-shipment reject rates of 7%, which consists of total losses (15% of reject) and incomplete operations (85%of reject). This was probably because of bottleneck tying up some operations and some boards missing theseoperations in the confusion.d.
All these issues have led to recent failures in maintaining quality standards and meeting delivery deadlines.Customer returns have increased to 3% from 1% and shipments are 9 days delayed on average.
4 of Donner’s competitors are promising 4
week delivery on small orders (<1000), and if Donner performancedelivery continues to fall then it will fail to reach its sales target of 3 million US$, as it will lose its competitivestrength of promising delivery in 3 weeks (pre-August performance).
Layout and Plant Design Related
Different processes of the work flow are separated (in order to extend the equipment lifetime) and this causesa lot of operator time to be wasted in walking between the different work stations.
Labor Efficiency Related
No defined role, work flow requirements lead them to different stations, causing significant loss of productivitycompared to a situation where one worker was handling only one defined task.