Donner Company

Professor Ganesh Janakiraman

1
 Questions
• PLEXUS Strategy Article
• How does Donner compete?
• What do you notice about sales at Donner?
– Sales volume
– Order Sizes
• What are the biggest problems (NOT REASONS) Donner is facing, if any?

2
 Key Questions We Should Answer

• Is the operating system (equipment characteristics,

operating policies…) consistent with the sales
pattern?
• How should Donner position itself?

How do you think we can answer these questions?

3
 Strategy
To answer strategic questions about Donner, it is
necessary to
(a) understand the current operating system,
(b) understand the competition and
(c) understand the market needs.

It is not possible to address strategic issues

- positioning in the market (volume, variety,
lead time competence, pricing)
- capital investment
without analyzing the operational issues.
4
 Process Analysis: Process Flow Diagram

• What are set-up times and run-times?

– Example: Automobile Plants: Paint-shops
• Let us now trace a board or a panel through the manufacturing
system.
• Can you draw the process flow diagram for the Preparation Stage
(artwork generation, inspect and shear, punch tooling holes)?

5
 Process Flow Diagram: Preparation Stage (Order for 1
Panel)
20 0.5/panel 10 0.5/panel
29 0/panel
Sequential Artwork
Generation
Inspect and
Shear
Punch Tooling
Holes
activities
Throughput time for a panel in the preparation stage = [?]
= 29 + 20 + 0.5 + 10 + 0.5 = 60 minutes
29 0/panel
Artwork
Generation
Parallel 20 0.5/panel 10 0.5/panel
activities Inspect and Punch Tooling
Shear Holes

Sequential activities
Throughput time for a panel in the preparation stage = [?]
max(?, ?) = ? minutes. A Gantt Chart will make
this calculation clearer: should we draw one now?. 6
 Concept
The throughput time can be reduced by
performing some activities in parallel.

What about the capacity of the Preparation

stage in the Parallel case? (Assume an
infinite input of orders of size 1 panel.)

7
 Preparation Stage: (Orders of size = 1 Panel)
29 0/panel 20 0.5/panel 10 0.5/panel

Sequential Artwork
Generation
Inspect and
Shear
Punch Tooling
Holes
activities
Cycle time = [?]
? minutes per panel. Capacity = ? panels per hour.
29 0/panel
Artwork
Generation
Parallel 20 0.5/panel 10 0.5/panel
activities Inspect and Punch Tooling
Shear Holes

Sequential activities
Cycle time = [?] minutes per panel.
Capacity = ? panels per hour. A Gantt Chart will make this
calculation clearer: should we draw one now?.
8
 Concept
By parallelizing some activities, we reduced
throughput time but did not alter the
capacity.

Note
Our capacity and throughput time
calculations assumed orders for 1
panel. If all orders were for 2 panels, we
would get a different capacity and
throughput time.
9
 Process Flow Diagram (continued)
29 0/panel
Artwork 15 40/board
Generation
Manual
20 0.5/panel Drill (7)
10 0.5/panel 10 0.75/panel
Raw Inspect and Punch Tooling Metallize
Material Shear Holes 240 2/board
CNC Micronic
Drill

Dry Film Photoresist (DFPR)

5 0.2/panel 20 2/panel 20 0.2/panel 25 8.5/panel 5 0.2/panel

Panel Laminate and Develop Electroplate Strip DFPR

Preparation Expose to UV

50 1/board
Punch
10 0.2/panel 45 1.5/panel 30 0.5/panel Press 45 1.5/board
Etch and Solder Solder Inspect, Test
Tin strip Mask Dip 150 0.5/board and Pack
CNC
Router

Rewor
k 10
 Process Analysis: Technology Choice at the Profiling
Operation
50 1/board
Punch
Press

150 0.5/board
CNC
Router

For a given order (of some number of boards), which option

should we choose?

11
 Technology Choice: Breakeven Analysis
Let us say the order is for x boards.
On the punch press, it takes (50+x) minutes.
On the CNC Router, it takes (150+0.5 x) minutes.
Break-even Analysis

600 So, we could

Minutes to process order

500 use the CNC

400 Router for
300
Punch Press orders larger
CNC-Router
200 than 200
100
boards.
0
40

120

200
240
280
320
0

80

160

360
400
440
480

Number of boards

Note: The break-even point 200 can also be found by

solving the equation 50 + x = 150 + 0.5 x. 12
 Concepts Seen So Far

• Sequential vs Parallel Activities

– Parallelization reduces throughput time
– Need not increase capacity
• Technology Choice and Break-Even Analysis

13
 Process Analysis: Technology Choice at the Drilling
Operation
15 40/board
Manual
Drill

240 2/board
CNC Micronic
Drill

For a given order (of some number of boards), which option

should we choose?

Break even analysis:

15 + 40 x (Manual) = 240 + 2x (CNC-Micronic).
So, 38x = 225, x = 225/38 = 5.9 .
14
 Process Analysis: Technology Choice at the Drilling
Operation

Break-even Analysis

600
So, we could
use the CNC
Minutes to process order

500
Drill for orders
400
larger than 6
300
boards.
200

100

0
0 1 2 3 4 5 6 7 8 9 10 11 12
Number of boards

Is this the policy used by Donner? Why?

15
 Utilization of Equipment (from Exhibit 2) [20 Days a
month; 8 hours a day]
Standard Production September's September's Total Standard Production
Times (in minutes) Production ( in minutes ) (in hours)
Operation Setup Run Orders Boards Setup Run Total Total Utilizn %
PREPARATION
Artwork Generation 29 0 50 799 1,450 0 1,450 24.2 15.1
Inspect & Shear 20 0.5/panel 60 5,761 1,200 360 1,560 26.0 16.3
Punch Tooling Holes 10 0.5/panel 60 5,761 600 360 960 16.0 10.0

IMAGE TRANSFER
Drill Holes
Manual 15 0.08/hole 51 936 765 37,440 38,205 636.8 56.9
CNC Drill 240 0.004/hole 9 4,825 2,160 9,650 11,810 196.8 123.0
Metallization 10 0.75/panel 60 5,761 600 540 1,140 19.0 11.9
Dry Film Photoresist
1. Panel Prep 5 0.2/panel 60 5,761 300 144 444 7.4 4.6
2. Laminate & Expose 20 2/panel 60 5,761 1,200 1,440 2,640 44.0 27.5
3. Develop 20 0.2/panel 60 5,761 1,200 144 1,344 22.4 14.0
Electroplate 25 8.5/panel 60 5,761 1,500 6,121 7,621 127.0 79.4
Strip DFPR 5 0.2/panel 60 5,761 300 144 444 7.4 4.6
Etch & Tin Strip 10 0.2/panel 60 5,761 600 144 744 12.4 7.8

FABRICATION
Soldermask 45 1.5/panel 55 5744 2,475 1,077 3,552 59.2 37.0
Solder Dip 30 0.5/panel 55 5744 1,650 359 2,009 33.5 20.9
Profile
Punch Press 50 1.0/board 47 1223 2,350 1,223 3,573 59.6 37.2
CNC Router* 150 0.5/board 6 4331 900 2,166 3,066 51.1 31.9
Inspect and pack 45 1.5/board 60 5,761 2,700 8,642 11,342 189.0 59.1
16
Total 21,950 69,954 91,904 1,531.7
 Process Analysis: Technology Choice at the Drilling
Operation
• Do you think they would have had overtime production on the
CNC Drill when the manual drills were being run at 57 %?
• How else could we explain the 123 % utilization of the CNC Drill?
• We will discuss this at the end.

17
 Process Analysis: Technology Choice at the Drilling Operation
• Currently, when an order for 90 boards is received, it is
processed by manual drills.
• Processing time = 15 + 40*90 = 3615 minutes = 60.25 hours
• Of course, multiple manual drills can split an order: throughput
time will decrease because of this. [Can an order be split using
Donner’s current processes?]
• However, the total amount of time spent by all the drilling
machines on this order is approx. 60 hours.
• If this order had been processed in the CNC Drill, it would have
taken (240+2*90)=420 minutes = 7 hours!
(which is < (60/# manual drills)!)
• Let us look at the order sizes in September (Exhibit 4).
• What does this tell you? Is this a problem?
• Is Drilling the bottle-neck area? 18
 Finding the Bottleneck for Different Order-Sizes
29 0/panel
Artwork 15 40/board
Generation
Manual
20 0.5/panel Drill
10 0.5/panel 10 0.75/panel
Raw Inspect and Punch Tooling Mettalize
Material Shear Holes 240 2/board
CNC Micronic
Drill

Dry Film Photoresist (DFPR)

5 0.2/panel 20 2/panel 20 0.2/panel 25 8.5/panel 5 0.2/panel

Panel Laminate and Develop Electroplate Strip DFPR
Preparation Expose to UV

50 1/board

Punch
10 0.2/panel 45 1.5/panel 30 0.5/panel Press
45 1.5/board
Etch and Solder Solder Inspect, Test
Tin strip Mask Dip 150 0.5/board and Pack
CNC
Router

Can you identify “non-bottlenecks”? Rework

19
 Dominated by Solder-mask
29
Artwork 15
0/panel
Generation Manual
20 40/board
Drill
10 10
Raw Inspect and Punch Tooling Mettalize
0.5/panel
Shear 0.5/panel 0.75/panel
Material Holes 240
CNC Micronic
2/board
Drill

Dominated5
20 20 25 5

by Panel
0.2/panel
Preparation
Laminate and
2/panel
Expose to UV
Develop
0.2/panel
Electroplate
8.5/panel
Strip DFPR
0.2/panel

Inspect.
50
Punch
1/board
10 45 30 Press 45
Etch and Solder Solder Inspect, Test
0.2/panel 1.5/panel 0.5/panel 150 1.5/board
Tin strip Mask Dip and Pack
CNC
0.5/board
Router
Rewo
rk
The circled operations cannot be bottlenecks for any order size because
there is some other operation with a larger set-up time and a larger run-
time. (That is, the cycle time of another operation will be larger for any order
20
size).
 Finding the Bottleneck for Different Order-Sizes

• Therefore, the only possible bottle-neck areas are

- Drill
- Soldermask
- Profile (Punch press or CNC Router)
- Inspect, Test and Pack.

21
 Capacity of Drill Operation
Drilling Stage:
- Order Size = 1 board
15 40/board -(15+40) = 55 mins per board
Manual - (480/55) = 8.7 boards per day per drill.
Drill
-Capacity = 7 * 8.7 = 61 boards per day
240 2/board - If the CNC is also used, the capacity is 63
CNC Micronic
boards/day.
Drill - Order size = 6 boards:
- CNC: 252 mins per order: approximately 2 orders
per day = 12 boards per day.
- Manual: 15+40*6 = 255 mins per order: 1.9 orders
per day: 7 drills: 7*1.9*6= 79 boards per day
- Total capacity = 12+79 = 91 boards per day.
- The capacity in boards per day can be calculated for
any given order size.

22
 Capacity of Donner for Different Order Sizes

• Using similar calculations for the other potential bottle-

necks, we find the capacity of the other operations.
• For each order size, the operation with the least capacity
is the bottle-neck.
• The table on the next slide is based on these calculations

23
 Monthly Capacity of Donner for Different Order Sizes
Average Capacity
Order_Size in Boards Per Month Name of Bottleneck Process
1 212 Soldermask
5 914 Inspect-Pack
9 1,477 Inspect-Pack
16 2,206 Drill
50 3,079 Drill
100 3,856 Drill
200 4,677 Drill
500 5,550 Drill
1,000 5,965 Drill
1,500 6,124 Drill
1,680 6,160 Drill

• Assume there is “unlimited” demand for orders of 200 boards at a

“margin” of 5 $/board. This market is expected to be steady.
• Assume the market for medium orders (say 16 boards) is also steady.
• Approximately, how much should we charge these smaller orders?
[Assume labor costs and equipment costs are fixed in the short term.]
24
 Concepts
• The bottleneck shifts depending on order
characteristics.
• When the bottleneck includes relatively
large set-up times (in this case, the CNC
drill does), the capacity in units per month
increases dramatically as the order size
increases.

25
 Strategy

• What are the expectations of a customer

whose order sizes are small? [?]
• What are the expectations of a customer
whose order sizes are large? [?]
• In what segment did Donner start?

26
 Strategy
• If Donner wants to take only small orders,
what should it do: equipment choice,
marketing? [?]
• If Donner wants to take only large orders, what
should it do: equipment choice, marketing? [?]

27
 Concept

Capital investment and equipment choice

depend on strategic positioning or market
needs.

28
 Small and Rush Orders
• Who handles small orders? How?
• Arthur Dief – track record? Is his role valuable to
Donner?
• Any problems caused by Arthur Dief’s actions? [?]
• Schnabs’ rush orders?

29
 Strategic Position

Are there any problems at Donner caused by the

mix of small and large orders? [?]

30
 Business Process Issues
• What do you think about the information flow design at
Donner? Obvious problems? [?]
- blueprints, order ticket on the first tray?
Recommendations?
• Time spent on supervision – high or low?
• How does Flaherty schedule orders?
– “Flaherty spent much of his time determining when to move
jobs ahead of others in the process and when to shift
workers from one operation to other.”

31
 Business Process Issues
• What do you notice about the purchasing
activity? [?]
• Recommendations? [?]
- (See Exhibit 4)

32
 Strategic Choices
• Be a premium, rapid-delivery, supplier for special,
small orders.
• Be an inexpensive, reliable, high-volume supplier.
• Broader focus: both small orders and large
orders.
– Significant managerial challenge
– Recommendations? [?]

33
 Summary

A careful analysis of operational issues is

required to answer questions of strategic
importance.

34
 Process Analysis: Technology Choice at the Drilling
Operation
• Do you think they would have had overtime production on the
CNC Drill when the manual drills were being run at 57 %?
• How else could we explain the 123 % utilization of the CNC Drill?
• What does the set-up operation at the CNC Drill involve?
-Exhibit 2: “this time is…preparation of computer tape that
digitizes hole locations”.
-So, this could perhaps be done off-line. (What are on-line and
off-line set-ups?)
- Exhibit 2: CNC Drill
- 9 orders on CNC Drill : 4 hours per set-up
- 36 hours on set-ups in September
- Notice that 196.8 – 36 = 160.8 : so, the CNC drill was,
perhaps, running only at 100% utilization! 35
 Lever for Increasing Capacity: Offline Set-ups
Set-up = 240 mins.
CNC Micronic Drill
Run-time = 2 minutes/board
Let us say all orders are for 150 boards.
If the set-up had to be on-line, the capacity of the CNC Drill = ?
Cycle time = 240+2*150= 540 minutes/order = 9 hours / order
Capacity = (8 hours/day) / ( 9 hours per order) = 0.9 orders per
day.

If the set-up is off-line, the capacity of the CNC Drill = ?

Cycle time = 2*150 = 300 minutes/order = 5 hours / order.
(Gantt Chart?)
Capacity = (8 hours/day) / ( 5 hours per order) = 1.6 orders per
day.
End of Donner Case Discussion 36