Improving organizational productivity and quality are issues that have been showing for some time and

will
continue to be important to any business and production organization. All types of organizations need to be as
productive as possible to best utilize their important resources, to meet the needs and demands of their consumers,
and to stay competitive with similar business organizations. In todays fast-changing and dynamic way of life, many
organizations come up with different strategies and ideas to improve and develop their products. The development of
science and technology has led to the improvement of many companies in terms of product development and
research. The use of technology has become an essential part of the strategies of companies to increase production
and to check the quality of the product. Similarly, with the role of technology in their development and growth,
companies can properly evaluate the performance of their employees and the opinions of their consumers regarding
their products. As such, this essay aims to discuss and analyze the problems of the Donner Company, particularly of
Mr. Edward Plummer, the president of the company. It also provides recommendations or possible solutions for the
problems to be discussed based on the situation and the concepts in operations management.

Problems of the Donner Company

As reported, the Donner Company manufactures printed circuit boards to the specifications of its different
customers, the electronic manufacturers. It employs new designs and prototype production techniques that enable
the company to become more adept in anticipating and resolving the problems of its consumers, over its competitors.
However, despite the effective maintenance of the companys workers over its operations, several problems have
been encountered in sustaining the operations of the company, which become the source of its loss of profit and
sales. The problems identified and described by Mr. Plummer include problems related to operations, productivity,
quality and delivery.
Primarily, the operation of the company is declining, due to production bottleneck. The shifting of workload
from one operation to another without pattern causes this bottleneck. The company is having a hard time anticipating
the workload pile up in the shop daily because individual orders from clients impose varying workloads on each
operation. The variation in the workload depends upon the differences in the size of the order that bypass some
operations and from the differences in circuit designs. In addition, the company entertains four-day rush orders, which
require rework at one or two operations, thus, delaying the process of delivering artwork modifications of a client. This
is because the companys workers are shifted from one work operation to another depending on the demand of the
operation. In this sense, some workstations are left vacant, while some workstations are overloaded. Moreover,
disturbance in the operations of the company is may be attributed to telephone calls from the customers engineers
who had encountered a design problem. As a result, the customer would be requiring redesigning and rework on the
products. For the past months, the companys supervisor, David Flaherty, has been having a hard time predicting
work pile up or run out daily, thus, resulting to the continuous transfer of workers from one workstation to another.

This problem is only encountered in the production of bulk orders, while in short orders, with eight circuit boards or
less, a senior employee, Arthur Dief does the work alone successfully.
Another problem of the company can be encountered in terms of its productivity, as some machines are left
idle more often that expected. Another source of this problem is that the standard labor hours do not include time
spent in reworking parts that have failed inspection or have been returned by clients. In addition, the time used for
moving from one station to another adds to the idle time used by workers, thus, further lessening their time for
production. Plummer also believes that the job strategies used in the company are far from ideal, thus, not reflecting
improvements in its operations. This leads to the realization that operations and productivity method improvements
are not being implemented due to the pressure for output, the constant shifting of workers from one job to the next,
and in inhibiting experimentation with new ideas. Furthermore, the introduction and implementation of new ideas and
methods has led to further confusion, as the increase in the production of a particular station resulted to the piling up
of work in another, thus, rescheduling orders and reassigning workers. This further impeded the productivity of the
company.
Aside from operations and productivity problems encountered, the company also encounters problems and
failures in maintaining the quality standards of products and in meeting promised delivery dates. The companys
sales manager, Lloyd Searby reported that since August, the company has been receiving customer returns, which
increased from under one percent to about 3%, and delay in product delivery, which averaged 9 days late. This would
result to the continuous loss of sales, as the companys competitors are able to promise four-week deliveries on small
orders. In addition, the company fails to inspect the quality of their products more effectively, thus, resulting to
increase in returns and reprocessing. The problem occurs as the president feels that a more strict inspection system
would not be possible, as product standards vary from customer to another and from one order to another. In
September, the companys preshipment reject rates increased, resulting to a 6% total loss due to incomplete
operations and subsequent reworking and reprocessing of circuit boards. Moreover, due to the delay of production
and the increase in the reworking of products, the company has fewer shipments, with actual deliveries delayed with
an average of 9 days. This forced the company to hire an addition of eight employees assigned in the production
force. However, it would still take some time before making the additional employees skilled in the business. (From ,
1998)

Possible Recommendations on the Problems

Possible recommendations must be made in order for the company to regain the loss of their sales. Primarily,
as a solution to the problem of the company regarding the production bottleneck and the work pile up and run out in
its operations system, the company should only be accepting orders that are feasible to do and to deliver in time. In

this way, the company would be able to focus on the project and the specific demands of the client. Accepting
feasible orders from clients would also allow the production line of the company to focus on the quality of the
products, with due consideration of the amount of time required by the client. With this, the idle time of employees
would be reduced, because all of them have a particular task to do, enough for the time and resources provided to
them. This would also reduce the shifting of workers from one job to the next, as each worker in the production line
would have something to do, given the enough number of orders compensating the enough time and resources
provided to them.
Another possible recommendation that can increase the productivity, quality and delivery of products is by
separating the production line into two departments, where one department would be responsible for processing new
orders from client, while the other department would be responsible for the rework and the redesign of previously
done or accomplished projects. More workers would be assigned to the department that would be responsible for
processing new orders, and less workers would be assigned to the department that would reworking and redesigning
the previously done products. The separation of the production line into two departments would be hitting two birds
with one stone, as both departments would be simultaneously doing their jobs. This also reduces the idle time of
employees, the piling up of work, and the run out of things to do. This serves to be beneficial for the
company because employees would be more focused in doing their jobs, thus, ensuring the quality of the products,
the increase in productivity of the company, and the on-time delivery of products to clients.
It has been mentioned that Diane Schnabs, the companys expediter is in-charged of tracking orders in
process and the initiation of action if a particular order failed to progress through manufacturing. She is also
responsible for the investigation of delay, in determining the number of rush orders, in securing missing supplies or
instructions, and in calling the clients to advise them of possible delay in delivery. With this, it can be deliberately
observed that the load of work of Schnabs is more than she can actually handle. Thus, in this regard, it can be
recommended that the company can hire or pull out an employee who would be assisting her in accomplishing her
responsibilities. Schnabs and her assistant can divide the work themselves, thus, one would be in-charged of the
manufacturing of new orders, and the other in the processing of rework. Both of them would also be separately
handling calls from clients, such that one would be entertaining new orders and the other would be entertaining
rework or redesign. In this way, a system would be developed between them, in turn, scheduling all orders
simultaneously. This recommendation would be most effective if the company would be able to divide the production
line into two, as discussed previously. In relation to this, the company can also assign someone to assist Bruce
Altmeyer, who is responsible for the products quality control. Having two individuals to be assigned for the inspection
of quality of products, it would be easier for the company to detect mistakes in production and to comply with the
requirements of the clients, given the separation of the two production lines. They can divide their tasks between
them, thus, one would be responsible for inspecting the quality of the new processed products, while the other one
would be responsible for inspecting the quality of the reworked or redesigned products based on the requirements
and demands of the clients. Moreover, the company can also assign an assistant for David Flaherty, the companys

supervisor, and who is responsible for the manufacturing and shipping of products. Flaherty and his assistant can
divide their tasks between them, thus, one would be responsible for the manufacturing and shipping of new
processed products, and the other would be responsible for the manufacturing and shipping of the reworked or
redesigned products.
Once these has already taken place in the company, then this would be the proper time to implement and
introduce method improvements, including employee training and development programs that would further enhance
and develop the skills and talents of workers. In terms of organizing, the company can introduce the strategies under
Total Quality Management (TQM) or Six Sigma. Total Quality Management is a management approach that improves
the effectiveness and flexibility of businesses by involving every department, every activity, and every single person
at every level of the organization (, 2002). It creates a quality culture where the aim of every member of the
organization is to delight their customers, and where the structure of their organization allows them to do so, thus,
moving with changing customer expectations, to fashion and design products that meet and exceed their demands (,
2002). On the other hand, the Six Sigma approach can also be inculcated in the employees, wherein it is defined as a
disciplined, data-driven approach and methodology for eliminating defects in any process, from manufacturing to
transactional and from product to service (, 2007). With such approaches, the employees of Donner Company
would be able to adopt the strategies under them, which could increase their productivity, creativity, quality of work
and delivery. Moreover, because the problems of the company have already been determined, it can be
recommended that the company can have its SWOT analysis, which aims to identify critical strategic factors and to
build on core strengths, to eliminate undermining weaknesses, to take quick advantage of significant opportunities,
and to circumnavigate or mitigate threats (, 2003). The SWOT analysis would give the company relevant information
on the strengths and weaknesses it has and matches it with the competitive environment it engages in. It would help
the company create strategic plans that would help the company once it had encounter any problem or threat from
competitors. These possible recommendations would be helpful in addressing the operational problems of the
Donner Company. However, it would still be essential if careful study and planning would be done, depending on the
changes that are continually happening in the company.

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Donner Company Case Study: Analysis of Operating Problems

Donner Company Case Study: Analysis of Operating Problems 2 Contents

Executive
Summary......................................................................................................................
................. 3 Analysis and
Recommendations .......................................................................................................
............ 4 1. 2. The Donner Company flow
diagram ................................................................................................. 4 Reflections
on the Donner company manufacturing
process .......................................................... 4 Bottlenecks in the Donner
process: ...................................................................................................... 5 1. 2. 3.
4.
Drilling: ........................................................................................................................
.................. 5 Dry Film
Photoresist ...................................................................................................................
... 7
Profiling ........................................................................................................................
................. 9 Inspection, Testing and
Packaging .............................................................................................. 11

Donner Company Economies of

Scale ................................................................................................ 12 Quality
Control System in the Donner
Company: ............................................................................... 13 Facilities, Layout
and Operation Flow .................................................................................................
14 Alternative
Solutions.......................................................................................................................
.... 14 Information
Flow..............................................................................................................................
... 15 Supply Chain &
Logistics .....................................................................................................................
15 Late Delivery
Problem .......................................................................................................................
.. 16 Implementation and
Risks ..........................................................................................................................
16
Conclusion ...................................................................................................................
................................ 17

Donner Company Case Study: Analysis of Operating Problems 3

Executive Summary
Since the start of its operations in 1985, the Donner Company managed to compete
in the business of printed circuits for a while, having a competitive advantage
producing customized circuit boards based on its customers design. Before
September 1987, growth was steadily increasing every month until operation,
productivity, quality and delivery problems started to arise. The complexity of
Donners production process, high flexibility of its products combined with
infrequent and variable demand, had posed a number of operational problems. As a
result, Donner could no more efficiently and effectively meet their delivery
deadlines and quality standards. Primary analysis of the operating process revealed
unexpected bottlenecks in manufacturing, lower productivity, as well as quality and
delivery problems. Soon, top management of the Donner Company has realized that
these operating issues if not addressed, jeopardize the achievement of USD 3
million of forecasted revenue for the year of 1988. This report presents analysis of
the Donner Companys operations and its flaws, provides recommendations for
improved operations. The team working on the case analysis proposes to leverage
bottlenecks by adding capacity to some, to amend resource allocation/utilization
according to the nature and volume of specific processes. It is also being
recommended to enforce the quality system as well as add an in-process control
system. Other recommendations included re-engineering of the processes according
to the existing facility layout in order to decrease wasted time, improving
information flow to speed up the process allowing Donner to meet deadlines,
switching supply chain strategy from a transactional relationship to an integrative
one.

Donner Company Case Study: Analysis of Operating Problems 4

Analysis and Recommendations

1. The Donner Company flow diagram

Manual Metallization Panel Prep Laminate/ Expose

Artwork Generation 1,450 min

Inspect & Shear 1,560 min

Punch Tooling Holes 960 min

38,205 min Drill CNC

1,140 min

444 min

2,640 min Develop

11,810 min

1,344 min

Electroplate Punch Press 7,621 min 3,573 min Inspect/Test/ Pack Profiling 11,342
min CNC Router 2,009 min 3,552 min Solder dip Soldermask Etch & Tin Strip 744
min Strip DFPR 444 min

3,066 min

Figure 1: Donner company process flow chart

2. Reflections on the Donner company manufacturing process

Donners operations are a multistage process of make-to-order. It is a job shop given
the low volume of production is coupled with a high level of flexibility since the
company is offers highly customized product designs. High flexibility in the process
is appears in the multistep process depicted above. (see the flow chart). As a result
an imbalanced

Donner Company Case Study: Analysis of Operating Problems

process takes place due to the differences in the cycle times of each task.
Therefore, this imbalance results in starvation and blocking in non-bottleneck tasks.
The overall process suffers from a variety of bottlenecks, however, the most
apparent one result from high flexibility and uncontrolled process, which lead to
unpredictability and perplexity of the bottlenecks every day. Moreover, because
orders vary in sizes not all of them undergo all the processes involved in the
operations. In addition, some work gets delayed in the process of design, both of
which cause the unpredictable bottlenecks. Unorganized processes lead to
machines being idle for longer time than anticipated.

Productivity problem: lies in the frequent interruption of the work flow of operations,
as the Donner Company executes different order sizes, specifications and designs.
High flexibility is considered Donners core competency, however, all these orders
are being executed in the same process flow. Quality problem: lies in the lack of
company formal inspection system, as well as lack of specific quality standards, as
standards varied from customer to customer, and, from order to order.

Bottlenecks in the Donner process:

1. 2. 3. 4.

Drilling Dry Film Photoresist Profiling Inspection, Testing & Packaging

1. Drilling: Issue:

There are 2 options for drilling either manually or with the CNC automated drill;
however there is a big difference in the lead time between the 2 options
Table 1: mannual and CNC drilling lead time

Manual CNC Drill

Set up time 15 minutes 240 minutes

Run time 40 minutes 2 minutes

Lead time/Board 55 minutes 242 minutes

Donner Company Case Study: Analysis of Operating Problems

The question here is to identify the decision rule of when to use each option
according to the number of boards.
Calculation

By calculating the lead time for each of the two drill options for a single order of
different board sizes according to the following equation: Lead Time = Set up time +
(Run time/board * Number of boards)
Table 2: Mannual and CNC lead time as per number of boards showing the optimum
number of boards to be operated by the CNC Drill

Number of boards 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Manual drill time (min) 55 95 135 175 215 255 295 335 375 415 455 495 535 575

CNC Drill time (min) 242 244 246 248 250 252 254 256 258 260 262 264 266 268

Result:

As we can see from table and graph: For an order of 6 boards and less it is better to
use the manual drill For an order of more than 6 boards, it is better to use the CNC
drill.

Donner Company Case Study: Analysis of Operating Problems

700 600 Time in minutes 500 400 300 200 100 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Number of Boards Manual Drill Time CNC Drill Time

Figure 2: Manual and CNC drill time Vs number of boards

Recommendation:

It is recommended that the company changes its shop floor policy and starts
processing orders higher than 6 boards on the CNC drill instead of saving it for the
100 or more (boards) order. This initiative will save time.
2. Dry Film Photoresist

By looking at the DFPR process:

Table 3: Dry film photoresist area lead time

Panel Prep Laminate & Expose Develop

Setup time/board 5 minutes 20 minutes 20 minutes

Run time/board 0.025 minutes 0.25 minutes 0.025 minutes

Lead time/board 5.025 minutes 20.25 minutes 20.025 minutes 45.3 minutes Lead
time/Panel of 8 boards 5.2 minutes 22.0 minutes 20.2 minutes 47.4 minutes

Setup time Panel Prep Laminate & Expose Develop 5 minutes 20 minutes 20
minutes

Run time/Panel of 8 boards 0.2 minutes 2.0 minutes 0.2 minutes

Donner Company Case Study: Analysis of Operating Problems 8

By applying the following assumptions: a) Each task starts after the end of the
previous task lead time (Run time + Cycle time) b) Each task is performed by one
operator (no overlapping) c) DFPR is operating for 8 hours/day

The capacity of the DFPR area can be calculated by applying the Gantt chart for the
process
Panel Preparation Laminate & Expose Develop Panel Preparation Laminate & Expose
Develop

0.2

20

2 20
0.2

0.2

20

2 20
0.2

Figure 3: DFPR Gantt chart

Calculation:

By applying the formula: X + YN = T X: Un-overlapped times in Minutes Y:

Bottleneck in Minutes N: Number of Panels T: Daily Available Time in Minutes 25.4 +
22.0N = 480 Therefore N = 21 panels approximately

Donner Company Case Study: Analysis of Operating Problems

Result:

Although the capacity of the DFPR is about 21 panels, the panels may still pile up
even if less than 21 panels are manufactured/day depending on the capacity of the
following step which should also be considered.
Recommendation: It is recommended that Donner Company re-engineers the work
in the DFPR area, to accommodate overlapping tasks in order to fully utilize its
maximum capacity. Meanwhile, it is recommended to add additional capacity to the
following step to avoid piling of work. 3. Profiling

There are two options for profiling as there were for drilling: the punch press and the
CNC router
Table 4: Punch press and CNC router lead time

Punch Press CNC Router

Issue:

Set up time 50 minutes 150 minutes

Run time/board 1 minute 0.5 minutes

Lead time/Board 51 minutes 150.5 minutes

The question here is to identify the decision rule of when to use each option
according to the number of boards.
Calculation:

By calculating the lead time for each of the two profiling options for a single order of
different board sizes, we assumed the following equation: Lead Time = Set up time
+ (Run time * Number of boards)

Donner Company Case Study: Analysis of Operating Problems 10

Table 5: Punch press and CNC router lead time showing the optimum number of
boards for the CNC router

Number of boards 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204

Punch Press time (min) 240 241 242 243 244 245 246 247 248 249 250 251 252
253 254

CNC Router time (min) 245 245.5 246 246.5 247 247.5 248 248.5 249 249.5 250
250.5 251 251.5 252

Result:

The following graph shows that to make best use of available resources: For an
order of 200 boards and less it is better to use the punch press; For an order of
more than 200 boards, it is better to use the CNC router.

Donner Company Case Study: Analysis of Operating Problems

CNC Router Punch Press

11

260 255 250 245 240 235 230 225 220 215
180 182 184 186 188 190 192 194 196 198 200 202 204 206 208 210 212 214

Time in Minutes

Number of Boards/Order

Figure 4: CNC router and Punch press lead time Vs number of boards

Recommendation: Process orders of 200 and more boards on the CNC router in
order to reduce cycle time and increase production capacity. 4. Inspection, Testing
and Packaging

This bottleneck is primarily attributed to the fact that the load is placed on a single
senior employee due to his/her qualifications/importance in the process; however, it
proved to be insufficient to impart the required control on the process emphasized
by the unsatisfactory productivity of the company. Complaints arising from returned
boards due to the quality problems, orders incompliance with specifications led to
reworks to remedy the defected boards. This process of rework in turn increases
cost, decreases efficiency and imparts an additional non-value added work load on
the operators that could have been avoided if the Donner process was operating
right in the first place.
Recommendations:

Adding additional inspection stations with more trained and experienced operators
to do the job as the senior sole employee doing the job will surely suffer from
quality fatigue due to the high inspection load on him; the extra stations will dilute
the load and improve the quality of the inspection process; Installing automated
solutions that can perform the inspection procedure; Formulating accurate
specifications that are a reflection of the customer design needs and applying these
specs in the inspection process.

Donner Company Case Study: Analysis of Operating Problems

Donner Company Economies of Scale

Will the time taken to make 1, 8 or 200 boards have a difference? Absolutely as
shown in the table:
Table 6: Donner company econoies of scale

12

Task Preparation Artwork Generation Inspect & Shear Punch Tooling Holes Image
Transfer Drill Manual CNC Drill Metallization DFPR Panel Prep Laminate & Expose
Develop Electroplate Strip DFR Etch & Tin Strip Fabrication Soldermask Solder Dip
Profile Punch Press CNC Router Inspect, Test, Pack TOTAL MINUTES TOTAL
MINUTES/BOARD

1 Board 29 20.5 10.5

8 Boards 29 20.5 10.5

200 Boards 29 32.5 22.5

55.0 10.1 5.0 20.0 20.0 26.0 5.0 10.0 45.2 30.1 51.0 46.5 256.0 10.8 5.2 22.0 20.2
33.5 5.2 10.2 46.6 30.5 58.0 57.0 250.0 345 640.0 28.8 10.0 70.0 25.0 237.5 10.0
15.0 82.5 42.5

383.9 383.9

615.2 76.9

1840.3 9.2

It is obvious that the Donner company achieves economies of scale on high volume
orders as the time taken to manufacture 1 board drops significantly from 383.9
minutes to 9.2 minutes if the order is for 200 boards.
Recommendation:

This should encourage Donner to focus on winning orders of high volume to

increase its efficiency and offer competitive advantage in price competition.

Donner Company Case Study: Analysis of Operating Problems

However, it may be the case that the cost of manufacturing the boards is not
constant and is dependent on the type of the board. I.e. probably a board type from
a certain customer may be 13 more profitable than 200 board types from another
customer.
Quality Control System in the Donner Company:

It is apparent from the case that Donner Company has problems in its current QC
system. Currently, there is only a formal checking system of the raw materials and
final products that are available. There are no in-process controls on the
manufacturing stages in between. Operating process instead is dependent on the
informal inspection done by the workers. Variability of workers experience and
knowledge impacts the level of output, presents variations of level of quality.
Recommendations:

There should be a formal inspection system that would apply through all stages of
manufacturing process coupled with standard specifications for each type of
product or group of products that share certain characteristics. These specs should
be approved by the customer; Another set of standards should be available that are
internal specs that assure the quality of each work in progress intermediate at an
acceptable level before approving its transfer to the following step; A formal
sampling scheme should be implemented by the management using a statistical
measure to subject the inspection process to scientific basis; the samples will be
inspected and tested against the standards already agreed upon, either with the
customer or with the internal quality management; By applying the previous set of
recommendations, this could probably increase Donners productivity by at least 6%

as per September data, as 6% of Septembers output was reworked due to

incomplete operations that were not caught by the current quality system; by
decreasing reworks, cost will be decreased and profit will be increased that will
finally improve the efficiency of their operations.

Donner Company Case Study: Analysis of Operating Problems 14

Facilities, Layout and Operation Flow

The production layout was considered to minimize installation costs, preserve

expensive machines and isolate the diverse operations environments; i.e. cost
minimization was the objective. This objective proved its usefulness as after a year
and a half, the machines didnt show any deterioration and no contamination
happened from the dust in machining areas. However, the management ignored an
important aspect during the facilities and layout design which is the process flow
optimization to eliminate waste. From the case it was noted that the usual workflow
was routinely interrupted from 6 to 12 times a day to do other jobs as seeking
advice or to deliver completed work. Also some operations as the plating operation
required the operator to interrupt the routine work and leave his work spot to go to
another area to inspect the panels in one of the tanks. This wasted 15% of the
platers time. It becomes clear that there are many non-value adding activities
performed in the workplace resulting from the inappropriate layout.
Alternative Solutions

1- Re-engineer the processes to suit the existing layout so as to minimize the

unwanted waste; 2- Change the layout of the facility but this time considering both
the cost reduction as well as process flow optimization; 3- Provision of a dedicated
work center for sophisticated designs and returned work to re-process while keeping
the existing one to focus on the conventional boards.
Recommendations:

It is recommended to re-engineer the process as this will be less costly. In addition,

it is recommended to instill a dedicated work center for handling special designs
and returned orders.

Donner Company Case Study: Analysis of Operating Problems 15

Information Flow

Donner Company has also some issues related to the information flow. Flaherty, the
manufacturing supervisor, receives the factory order and the blueprint four days
after the bid has been accepted by the customer. Meanwhile, only Flaherty has a
possession of the blueprint which makes anyone who faces any kind of problems
associated to get back to Flaherty to check the blueprint, which undoubtedly
impedes the information flow. In addition, Flaherty would delay the scheduling of
the order for several days until the raw materials arrive which take at least another
2 days of delay. This results in a minimum of a week delay which represents 30% of
the delivery time of an order of 1000 orders or less. Improving the speed of the
information flow appears essential for increase of efficiency. Addressing this critical
element would enable the company to keep its delivery time within the 3 weeks
which in turn will be a step forward in achieving the sales target of USD 3 million.
Recommendations:

To speed up the information flow, it is recommended that as soon as the bid is

accepted, all involved levels be informed in parallel (Purchasing, Manufacturing,
etc.); A blueprint copy including all relevant data (Design, specs,ect.) should move
along with the order being processed at all stages enabling the operators needing
information to refer to the data on the spot without having to get back to Flaherty
and eliminating waste of valued time. A checklist listing the required processing
steps could also circulate with the blueprint, and each operator fulfilling the
required steps should check them out as well as a means of assuring that the
critical steps are performed as required which will allow avoidance of missing any
steps. Another option is to install electronic screen panels showing the relevant data
for the operators in the job floor so that this screen acts as the information source,
however, this initiative may incur extra cost.

Supply Chain & Logistics

There are number of suppliers dealing with the Donner Company, probably many of
these suppliers are redundant for convenience. However, this large number leads to
a delay of 2 days after the order bid is accepted by the customer until the lowest
cost supplier can be located. Probably this is due to that the relationship between
the suppliers and the Donner Company which is a transactional relationship that
does not enable long term plans.

Donner Company Case Study: Analysis of Operating Problems 16

Recommendations:

The Donner Company could consider an option of shifting its relation with some
selected suppliers into an integrative relationship from which plans can be made
between them and those suppliers, prices negotiated, delivery times optimized and
even some return policies may be implemented. These plans will be supported by a
weekly or even monthly forecast for the materials required, so that they can
arrange together for supplying the materials on the spot. Even a small inventory for
the raw materials (mostly used) can be initiated so as to save the time of ordering
these materials as well as the ordering process for infrequently used raw materials.
Late Delivery Problem

Delivery used to be one of the companys core competencies as it quoted three

weeks delivery on orders of less than 1000 circuit boards while competitors quoted
4 weeks. However, the company is facing late deliveries problem due to several
reasons as bottlenecking, orders requiring rework, and orders pending customers
delivery of artwork modifications or a design change.
Recommendations:

Re-design the delivery policy to include not only order size but also customizability
of products and the number of operations included and distribute evenly shipments
over the whole month.

Implementation and Risks

As discussed earlier, in the analysis section, one of the prevailing issues in the
Donners manufacturing process are the four bottlenecks. As it has been proposed,
bottlenecks need improvement, and as this step is performed, work piles up at the
next stage of the operations. Adding capacity, however, to avoid piling of work
might remedy the risk but also will incur costs. Adding additional inspection stations
with trained and experiences operators and/or automated technological solutions
might seem costly at the first glance, however, on the long run will yield return on
investment because quality is one of the crucial elements with regards to
competitiveness. On the other hand, load that is being removed will inevitably
reflect on the overall operations process.

Donner Company Case Study: Analysis of Operating Problems

Economies of scale, another ingredient that has been looked at appeals to many,
however, this might not be the perfect solution for the Donners Company or at
least needs more thorough 17 research and investigation. As had been mentioned
before, in case of Donner it is about 80-20 rule whereby 80% of revenue comes from
few high-revenue-generating orders. With regards to facilities and layout
improvement re-engineering the process is less costly, however, adding a dedicated
work center for handling special designs and returned orders will off-load the overall
system and therefore, increase efficiency and effectiveness, and as is known in the
market, speed and agility are the two key components of success. The factory may
run two lines in parallel, or undertake the improvement sequentially. In both cases it
is worthwhile of an investment. Another key element which is communication needs
to be tackled immediately. This does not include much cost and resources. It is
ready for implementation and carries no risk provided the top management
undertakes proper steps, and cascades information and allocates authority to the
right units.

Conclusion
This section summarizes all the recommended solutions for improvement of
Donners operating process.

The company should focus on working on its bottlenecks to improve the process.
- By changing its shop floor policy and starting processing orders higher than 6
boards on the CNC drill.
Re-engineering the work in the DFPR area, to accommodate overlapping tasks in
order to fully utilize its maximum capacity. Adding additional capacity to avoid piling
of work.

- Adding additional inspection stations with more trained and experienced operator Installing automated solutions that can perform the inspection procedure; Formulating accurate specifications reflecting customers design needs Consider
applying economies of scale in the process - Focusing on winning orders of high
volume to increase its efficiency and offer competitive advantage in price
competition. Enhance Quality Control system - By implementing a formal
inspection system that would apply through all stages of manufacturing process
coupled with standard specifications for each type of product or group of products
that share certain characteristics.

Donner Company Case Study: Analysis of Operating Problems

Introducing a set of internal standard specs that assure the quality of each work in
progress intermediate at an acceptable level before approving its transfer to the 18
following step. - Implementing a formal sampling scheme using a statistical
measure to subject the inspection process to scientific basis. Re-engineer process in
facilities and layout - by instilling a dedicated work center for handling special
designs and returned orders. Enhance Information flow in the organization - By
ensuring that as soon as the bid is accepted, all involved levels are informed in
parallel (Purchasing, Manufacturing, etc.); - By circulating blueprint copy with all
relevant data along with the order at all stages of the process. - By installing
electronic screen panels sowing the relevant data for the operators in the job floor.
Shifting relations with suppliers for supply chain and logistics improvement - shifting
its relation with some selected suppliers into an integrative relationship - creating
an inventory for the raw materials (mostly used) can be initiated so as to save the
time of ordering these materials as well as the ordering process for infrequently
used raw materials. Donner should also focus on its delivery problem - by redesigning its delivery policy that would include not only order size but other
parameters such as customizability, number of operations included etc.

Donner Company

Introduction:

Donner Company is a contract manufacturing company. It is into the business of

production of printed circuit boards. The company basically has two kinds of orders:
1. Standard PCBs: These orders have same kind of large number of PCBs.
2. Specialized circuit boards for experimental designs and for pilot production
runs: These have lesser number of PCBs per order. However, Donner charges a high
premium on these orders.

The market is very competitive with number of companies operating in the same
field. Donner enjoys the reputation of producing highly complex and quality PCBs.
The

Company has quality overall manpower. Also Donner has a MLT of approximately 4
weeks on special orders, which sets it apart from its competitors.

The specialization for Donner was to produce circuit boards for experimental
devices and for pilot production runs. The president and the design engineer at
Donner believed that Donner was more adept then its competitors at anticipating
and resolving the problems inherent in new designs and prototype production
techniques. We could imply the above statement as the major competitive
advantage of Donner Company.
Despite the competitive advantage that Donner had, the company was facing
with operating problems concerned with three aspects of its operation: productivity,
quality, and delivery. These problems resulted in unstable gross profit in percentage
as seen in exhibit 1 Donner Company Summary of Profit and Loss in the original
case.

The quick look at the current production reveals that it is more like a production
line with a sequence of tasks to be performed one after the other. Presently,
customers provide PCB specifications and design engineers at Donner analyze the
customer requirement and provide them cost estimates. After customer acceptance
of the bid, Design Engineer places the purchase order and then the production is
scheduled as shown in Exhibit 1.

Donner used soldermask over bare copper or SMOBC as its manufacturing

process. This SMOBC process could yield to denser circuit pattern and greater
reliability. The process consisted of three stages: preparation, image transfer, and
fabrication. Altogether, there were 15 operations in the overall manufacturing
process (exhibit 3). However, some operations could be added or skipped
depending on the design of circuit boards.
In the SMOBC process, each task was lined up in sequence. The order had to
follow each operation in the process from Artwork Generation to Inspect, Test, Pack.
Thus, the production process at Donner was considered a production line and had a
batch flow process. However, Donner would have to do the different setup for
different specifications received from customers. Therefore, the setup time of the
process would increase in correlation with the increase in the number of orders. In
other words, the more order they took, the slower they could produce.

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Symptoms and reasons of the occurrence of symptoms.

1. Change orders: Customers often change their requirements (like design,

quantity and
dates) before the production starts. These result in delay and
uncertainty in production Planning.

2. Urgent orders: Very frequently Donner accepts urgent orders. Also, Mr.
Arthur Dief often carries small orders on himself from one process to another. This
creates unnecessary line problems. Donner takes their rush order over the
telephone without checking out the ground realties of the manufacturing conditions
or consulting with the floor supervisor who is undoubtedly is the key person
regarding resource allocation.

3. Quality Challenge: The Donner Company has to adhere with a wide range of
quality standards as different customers have different quality and cost
requirements. So this makes production planning difficult.

4. Customer Requirements: Some requires goods at the end of two weeks, some
at four and some have urgency so it be comes very difficult to plan and execute
accordingly.

5. Timely delivery: One of the biggest problems that Donner is facing is delivery
on time. This is a big issue keeping in mind the competition prevalent in the kind of
business they are in.

6. Custom made orders or special orders: The orders are considerably different in
sizes from one another. Since each process in the production sequence has different
setup-time and run-time, it causes problems in production line balancing.

Problems needs attention: (Business v/s Organizational)

The roles of design engineer Shop supervisor are not properly defined. There
seems to be a lot of overlapping and conflicts. Seems both does production
scheduling. This creates unnecessary confusion and duplication of work. There
should be a clear hierarchy and clearly defined work so we suggest that production
supervisor work under the instructions of production manager/design engineer. By
doing this we will not have overlapping of work and both the people can concrete on
what they are doing the best.

Purchase manager is not in the current organization structure which itself is

a big fault. Every production/manufacturing company needs specialized purchase
department so that the production people can focus on their job. Purchase is a very
important part of the organization and people in this department needs special skill
set. Company with proper purchase department can save huge amount by planning
the purchases they require in advance and one need a person with the knowledge
of market and should have good relations building skills. So we think that company
should have one purchase manager who concentrates on purchase, so design
engineer can pass on the required martial list and focus on production planning. By
this way logical flow will be created in the organization.

The new structure should have the president and all the managers below the
managers, there is a need for Production manager, Purchase Manger and
sales/marketing manager. Under each manger there will be respective supervisor
and under supervisor there will be workers and material handlers.

The fluctuation in order size and batch size also caused the idle time for
workers since the workers in other departments had to wait for the work from
Drilling department when the more Manual work had to be done. This is not the
efficient use of the manpower available. This reflects that Donner doesnt have
sound management team as management is making the max possible form the
available resources which we dont think Donner does.

Guidelines to solve the problems.

1.
If we look at the Septembers Total Standard Production
from Exhibit 2 Standard Process Flow from the original case, it is obvious that the
Drill operation takes the most time from the overall process. Manual and CNC Drill
took 50,015 minutes in total to finish the operation. That is approximately 54.42%
(of the total 91,904 minutes process). If we break the figures into more detail, we
can see that Manual Drill was the longest operation in the process flow. It took
38,205 minutes to finish the operation. To be more specific, Manual Drill takes 335
minutes per panel (8 boards * 500 holes * 0.08 minute + 15 minutes set up time)
and CNC takes 256 minutes (8 boards * 500 holes * 0.004 minute + 240 minutes set
up time) to finish the task. As mentioned in the case, shop floor policy indicates that
only orders more than 100 boards be drilled on the CNC equipment. If Donner
received many order with the size less than 100 units, it had to go to Manual Drill.
Thus, it would take longer time for the whole process. If most of the orders were
more than 100 units, the bottleneck was still in the Drill operation since the CNC
Drill was the second longest operation. However, the total time for the process
would be less than in the situation which the majority of the orders were less than
100 units.
2.
Poor Planning: It takes 4 days for Design engineer to purchase materials,
but it is only after receiving the raw materials that Shop supervisor actually
schedules the production. However, the scheduling must begin when the customer
confirms the order. But according to the new organization plan, its the task of
purchase department to purchase the material and design engineer to give the list
of martial and shop supervisor to schedule the production. So by this we save lot of
time in production planning and better focus on the job.
3.
The present workflow involves a lot of production breaks as
employees have to carry the PCBs from one process to another themselves. This
results in unnecessary loss of capacity. We suggest that company should purchase
some Forklifts in order to speed up the work and production blockages. This will also
reduce the idle time problem that Mr. Edwards has frequently observed.
4.
The present Shipping Policy must also be altered. As can be
seen from Exhibit 5 in the case, a lot of shipping is done in the last week of the
month. This monthly policy should be changed to daily policy so that the all the
orders completed on a particular day are shipped on that particular day.

5.
The emphasis must pay attention on parallel verses sequential
operational and on line versus off line setup.

7. Donner is presently facing severe quality problems. About 6% of its orders are
getting rejected as one or the other job work is missed while production. They
should make changes in the organizational structure by opening up the purchase
department and providing the 3 dedicated supervisors for the 3 of its process. They
should also make inspection standards rigorous, we suggest that they should opt
for ISO certificationthis will ensure the consistency in the quality standards. Should
also use the checks and balances and internal marks developed by the supervisors
to ensure that the product passes through every stage before it takes the form of
final product.
8. The Financial figures show that the company is doing well in terms of sales
increase and gross profits. Net Sales have drastically increased from 1985 to 1987
by about 270%. As compared to this the gross profit increased by nearly 308%. We
suggest that company should plan to quickly expand its capacity and cater other
markets, if necessary should hire and outside financial consultant or an experienced
financial manager. The company should focus on the smaller orders as it has been
noticed that company get more profit on the smaller orders than that of larger ones.

Recommendations:

We as a group suggest that Donner should make changes in the organization

structure and hire a specialized Purchase manger by doing this the company will not
only save on purchasing cost but will also allow design engineer to focus on his
jog=b and duplication of job will be reduced.

We also think that if company is doing well and have money to invest Installation of
ERP system will be a good idea by this company will save a lot on man power and
the change of error will also drastically go down, but as we all know that change in
the most difficult part in any organization, it will face difficulties in changing from
traditional method to the electronic method. (Exhibit 4).