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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 setuptime 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

5.

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. 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).