Case: Donner Company
The Donner Company is a manufacturer of printed circuit boards. They need to address several issues in their supply chain operations to improve their service level because net income in the month of September has drastically decreased. Before September, growth was steadily increasing every month. They found that the major problems include unpredictable bottlenecks in manufacturing, lower than expected productivity and lower than expected quality and delivery. After addressing these major issues, I find that investing in more CNC’s and phasing manual drilling out of the manufacturing process can go a long way to improve the service level of the company.
The Donner Company manufactures customized printed circuit boards. The market for electronic devices is increasingly favorable, so management is trying to figure out how to maximize profits in by tweaking their supply chain operations. There are several problems that will need to be addressed in the areas of manufacturing processes (preparation, image transfer, and fabrication), supervision, order processing, facilities and layout, current operating problems, productivity, and quality and delivery problems.
FACTS OF THE CASE
The three stages of the manufacturing process are preparation, image transfer and fabrication. In the preparation stage, a 12” by 18” standard panel has holes punched in it. Then, in the image transfer stage, the holes are drilled and then processed through a copper immersion bath, washed and dried and exposed to UV light. In the fabrication panel, each board is reduced to its desired size and shape.
The supervisors over the three phases are Diane Schnabs, Bruce Altmeyer and David Flaherty. Schnabs and Altmeyer report to the president and Flaherty reports to Altmeyer. Schnabs keeps track of orders processed an initiated. Altmeyer inspects the customer’s artwork requirements and looks to find design errors. Flaherty oversees all other aspects of managing from the beginning to the end of customer orders. Other employees are required to interrupt their tasks on average of six to twelve times per day to secure work for upstream processes, ask about a problem or deliver completed assignments.
The bottleneck in production shifts from one area of the production process to another, making it increasingly difficult to track the source of the problem. Flaherty had no way of predicting where work would pile up or run out. Flaherty also noted that only the small orders posed minimal problems.
The president felt that job methods could be substantially improved upon, however, Plummer is having trouble effectively analyzing the productivity of the shop. Fifteen percent of a plater’s time was spent walking between tasks. This time could be used for productive work.
Searby has noted that Donner Company has had trouble maintaining quality standards and meeting delivery dates. This is clearly a service level issue. Average customer returns increased from one to three percent and shipments average nine days late.
ANALYSIS OF THE CASE
Looking at Exhibit 1 – Donner Company Summary of Profit and Loss, it looks as if business has gone well until the last month (September). I cannot be sure of this because I have no records of the previous months of September, or around September, which could indicate seasonal changes in demand. Net income has fallen significantly from the previous month, down $11.7 million from $14.8 million. It appears that this decrease is a result of major increases in direct labor and manufacturing overhead and smaller increases in selling and administrative expenses.
Exhibit 2 – Standard Process Flow illustrates the most common sequence of operations. Clearly, drilling is the most time consuming part of the manufacturing process. Manual drilling is the number one most time consuming process and CNC drilling is the second most time consuming process. The next two...
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