The Donner Company manufactured printed circuit boards to the specifications of a variety of electronics manufacturers. It was a production line. Even though in the first stage of manufacturing process, the artworks were provided by customers and the company would configure the boards according to customer specifications, the company would then produce the boards on a large scale.
The company was a factory because it manufactured a large quantity of circuit boards. It was also in batch flow because the stages of manufacturing process were discrete. (shown in Exhibit 1) The Donner Company now had problems in productivity, quality and delivery. First, the production bottleneck was very perplexing because it shifted almost daily from one operation to another without pattern. The cause was differences in order size, design and operations. The shop supervisor Flaherty didn’t when work would pile up or run out.
Second, the standard labor hour didn’t include time which was spent reworking parts which failed inspection or were returned by customers and time which was required to move boards from one operation to another. In addition, the standard didn’t reflect improvements which could be made in the shop. While the president Plummer could not change the standard for now because he was afraid that new problems would be created. Third, the qualities of boards decreased. The main cause were incomplete operations and subsequently reworking. In addition, actual deliveries in August, September and October had averaged ten, eight and nine days late.
According to the problems below, I have five suggestions for Mr. Plummer: First, the Donner Company can provide several template boards for customers. Because in 1987 the technology of drawing and designing was far behind, it would take a long time for people to design a picture of artwork. In addition, not everyone was good at designing and drawing. If Donner Company could prepare some templates in advance and give customers the chance to choose one which they thought was the best, it would save a lot of time. If customers had some specific requirements, they could just make some changes based on the template.
Second, the company could divide the work shop into two parts. One part was responsible for small order sizes( fewer than 100), the other was responsible for large order sizes( more than or equal to 100). In addition, assign every worker’s own task. One could not be responsible for two order sizes at the same time. When there was rush order, select some workers and ask them to only work for the rush order. Third, change the standard labor hours. The new standard should include lost time in reworking parts and returning from customers. Finally, unify the quality standard.
Unless customers had specific requirements about the qualities, the company should complete the operations very carefully and avoid returned boards. Part 2 Analysis of EIIC EIIC inspected and insured a wide range of industrial equipment, ranging from small compressed air tanks to large steam turbines. In the U. S. boiler and machinery industry, 80% of the total annual premiums were accounted for by the top five companies. The competition was very fierce while EIIC was able to build its premium income to over $65 million a year. EIIC provided inspection and insurance services for its customers.
EIIC was a job shop and service operation. Job shops are typically small manufacturing businesses that handle job production, that is, custom manufacturing processes such as small to medium size customer orders or batch jobs. EIIC now faced many problems: First, problems caused by industry trends. 1 There had been increasing trend towards consolidation among agents. So if one policy was delayed, the agent could not wrap it up with other coverage. EIIC would take the loss of a large amount of money. 2 There had been a trend towards self-insurance as insurance costs increased.
Therefore, EIIC would lose some resources of customers. 3 There had been a trend that many companies started underselling and drove industry profits down. Because machinery insurance was EIIC’s main business while other companies’ subordinate business, underselling had no big important effect on other companies but for EIIC, it was a heavy blow. Second, problems caused by organization: 1 The turnover of inspectors was very high besides inspector’s high salary. The inspectors’ salary level in EIIC was competitive within the insurance industry. I think the high turnover had three reasons.
First, EIIC didn’t hire college graduates as inspectors. The company didn’t think graduates could bear hardships. While college graduates were easy to manage and they were loyal to the company compared to people who always changed jobs. In addition, their salary was relatively low. They could improve their skills after one or two months’ training. EIIC only saw the harm of hiring college graduates and ignored the benefits. Second, there was no strict management on inspectors. EIIC allowed inspectors to have their part-time jobs if only their part-time jobs would not influence their day work.
I think one person’s part-time job would definitely have some effects on his full-time job. If one person found that he could earn more money on his part-time job, he would resign his full-time job. Therefore, the turnover increased. Third, chief inspectors thought highly of themselves. They were a group of pretentious people and they had the veto power. So sometimes they didn’t work carefully and mocked salesmen and underwriters. 2 The high turnover of underwriters was caused by frustration of underwriters, their deficiency of decision-making responsibility and their belief of no long term career path. In the engineering area, there was little coordination, flexibility or planning. Many branches could not meet the delivery goal set by home office. Inspectors could not finish inspections on time. Interpersonal conflicts often arose. According to problems below, I have three suggestions for EIIC: First, hire some college graduates as junior inspectors and train them to be senior inspectors in the future. In addition, prohibit inspectors to find part-time jobs. Fire anyone who breaks the rule. Second, help underwriters build their confidence about their careers Finally, regulate the relationships between inspectors of different regions.
Part 3 Conclusion: The Donner Company( hereinafter referred as DC) vs. EIIC Differences: 1 DC was a factory and production line. It was in batch flow. But EIIC was a job shop and in service sector. It was in continuous flow. They were in different businesses. DC manufactured printed circuit boards to the specifications of a variety of electronics manufacturers while EIIC inspected and insured a wide range of industrial equipment. 2 Some problems faced by the two companies were different: Problems faced by DC were mainly caused by manufacturing process.
First, the production bottleneck was very perplexing because it shifted almost daily from one operation to another without pattern. The cause was differences in order size, design and operations. Second, the standard labor hour didn’t contain all the time. Finally, the low productivity led to late delivery and no unitized quality standard caused decreased quality. Problems faced by EIIC were mainly administrative issues. The high turnover of inspectors was caused by three reasons. First, the company didn’t want to hire college graduates. Second, the company allowed inspectors to find part-time jobs.
Third, the company paid no attention on the arrogance of inspectors. The company didn’t take any action to solve the problem of high turnover of underwriters or help moderate the relationships of inspectors of different regions. Similarities: 1 The two companies both had problems caused by industry trend: For DC, the increasing use of electronics in all aspects of people’s lives left the printed circuit board industry vulnerable to the frequent upturns and downturns of these industries. For EIIC, it had losses of consolidation of agents, self-insured and industry’s underselling. They both needed changes to solve the current problems. Exhibit 1 Manufacturing Process of Donner Company: The SMOBC process consists of three stages: Name of Stage| Description| Preparation| Artworks and computer control tapes are produced while raw materials are prepared for processing. | Image transfer| The conductor pattern is transferred to dielectric base stock. | Fabrication| The base stock is cut and shaped to create the individual printed circuit boards. | Exhibit 2 The supervisors of Donner Company: Diane Schnabs: the expediter; report to the president