JOHN INNES and FALCONER MITCHELL, University of Edinburgh
Jack Watson, an electrical engineer, established Electronic Boards plc as a ‘one-man’ company in the early 1970s. From small beginnings, the company earned a reputation for the quality and reliability of its products, and grew rapidly and consistently until, by 2003, it employed over 200 people and had achieved a turnover of £26 million and a profit after tax of £1.9 million. In addition to Jack Watson the managing director, the board consists of a production director, a research director and a marketing director. Market Circumstances
The company produces customized batches of electronic circuit boards for approximately 15 major customers in the defense, computer, electrical goods and automotive industries. The market is highly competitive in respect of both price and quality. Market price has fallen steadily in recent years. In addition to several other independent firms both from the UK and Far East, many of their larger customers have ‘in-house’ facilities for the production of circuit boards. These latter firms deliberately subcontract a portion of their circuit board requirements for strategic reasons. In a recession they can cease or reduce their subcontracting and bring the work ‘in-house’, so stabilizing their own employment levels. Operational Circumstances
The production process for circuit boards is complex, multi-stage and highly automated. Production flows continuously through the various processes and any hold-up quickly affects the flow of work at all production stages. Experience has shown that a proportion of the final output contains faults and has to be scrapped. These scrap levels typically vary between 10 and 25 per cent of good output, a considerable learning effect is apparent and the yield on repeat orders is usually significantly improved. At present faulty production units are identified on completion, although action has been instigated...