What customer need?

IBM, AT&T and Digital Equipment - When large quantities of simple techno logy boards, or small quantities of fast turnaround prototype boards were requir ed, these customers would usually subcontract production to contract manufacture rs. Smaller firms - small lots of special boards were needed About Donner Company Employees: Most of the company's managers were engineers with substantial e xperience in the electronics industry Firm had patented applications, processes, and modifications of some commercial machinery adept than its competitors at anticipating and resolving the pro blems inherent in new designs and prototype production techniques Main Process Preparation Stage: Artwork Image Transfer Drilling Manual - seven modified drill presses OR Automatic - CNC ($80000) - Bought recently Metallization copper immersion bath - deposits a thin (.00005") layer of copper in the drilled holes Washed, scrubbed and coated DFPR Lay Cust Artwork & exposed to ultraviolet (UV) light Wash away DFPR (non exposed to UV) & Some more processing Fabrication Some work Inspection - visually inspected, electrically tested, packaged a nd shipped one senior Donner employee was assigned to this final st ep sequence of operations was modified - for specific requirements - severa l customer orders each week special boards often required additional steps Supervision Schnabs - Altmeyer - Flaherty Schnabs - Hired in August 1987 - track of orders - investigate the delay s told the supervisor to start the job moving again, or called cus tomers to advise them of possible late delivery Avg - 2 to 3 slow oders each day decide on rush order with Sales Mgr & President Altmeyer - Primary duty - inspect the customer's artwork and requirement s for errors prepare CNC controls, in lookout for prod problems, engg feedbac k 10 Hrs Flaherty - n charge of all other aspects of manufacturing from the time he received a shop order and blueprint until the order was shipped Supervised 22 production employees- in which 4 assistant supervi sors - 10% time instructing people in their areas or advising Flaherty * 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 a

nother. Shop Employees Non Union, Used Manual & Automated M/C each department, operators were cross- trained and capable of running mo st process steps Many employees were qualified in more than one department 6 - 12 times/day interruption - secure more work from the upstream proce ss, to seek advice on a problem, or to deliver completed work Judgment and experience were important Order Processing 1. Estimate - Plummer and Altmeyer estimated labor and material costs 2. preparing a bid for the customer 3. Cust accepts bid - Donner Comp. promise delivery 3 weeks < 1000 board s or 5 weeks for >1000 boards 4. Write detailed material Spec - Altmeyer 5. Oder sent to purchasing agent - need one/two days to locate raw mater ial at a low price and to order it 6. Send order to Supervisor (Flaherty) Most orders reached Flaherty about four days after the bid had b een accepted -> Rush orders, 4 days to please cust, expedited by Schnabs, parallel wr ks, Flaherty got order following day 7. Order scheduling scheduling delayed for several days until the raw material arriv ed He, estimated the labor required in each step, examined the work in process, estimated the difficulties in meeting deadline, weighed the sales p ossibilities of these orders being held up, and then decided when to schedule th e order Facilities and Layout production layout - minimized installation costs, preserved the life of expensive machines, and isolated the operations' diverse environments not been able to attract outside capital Cost had been an important consideration because the company had committ ed most of its funds for equipment In October 1986, the company was fully utilizing the space in the existi ng plant. An 1800 square foot addition was due to be completed in November, 1987 Current Operating Problems production bottleneck was perplexing - shifted almost daily from one ope ration to another, without pattern individual orders imposed varying workloads on each operation differences in order size, from orders bypassing some operations, and from differences in circuit designs the four-day rush orders - 3 a week orders requiring rework at one or two operations work delayed in process pending a customer's delivery of artwork modific ations or a design change (1-9 a week) Delay due to cust - 1/4 of the jobs, resolved aft 1 day to 2 weeks, job restarts after that IMP - During the past several months, Flaherty had found compensating fo r these variations increasingly difficult because he had no accurate way of pred icting where work would pile up or run out, or of assessing the future effects o f any corrective action.

Small orders, <8 boards, no scheduling problems, always assigned to a se nior employee, Arthur Dief consistently met delivery deadlines even on four-day rush orders, and his reject rate was usually ze ro Productivity Plummer realized that it was impossible to evaluate shop productivity pr ecisely everal of the machines were idle more often than he would have e xpected standard labor hours did not include time which was spent reworking parts which faile d inspection or were returned by customers time required to move boards from one operation to another was n ot adequately reflected In preparing time estimates for a bid preparation, Plummer actua lly used figures which were substantially above those standards job methods in use were far from ideal 15 percent of the plater's time was spent simply walking between the desk and the tanks methods improvements were not being introduced current pressure for output, the constant shifting of workers fr om job to job problems that inhibited experimentation with new ideas Quality and Delivery Problems Lloyd Searby, sales manager in April 1987 failures in maintaining quality standards and in meeting promise d delivery dates Since AUG - customer returns had increased from under 1% to 3% shipments had averaged nine days late fail to exceed $2 million in 1988 the sales manager predicted that volume would fail to exceed $2 million in 1988 if he had to begin promising four-week deliveries on small order s, as four of Donner's competitors were doing regain its pre-August delivery performance, and continue to (rel iably) promise three- week delivery the company should continue to bid only for low-volume, special circuit board business sales estimates - order size profile similar to that actually produced i n September 1987 Quality concerned about the present inspection system - each worker's informal e xamination of the units as they moved through processing specify quality standards more exactly - not be feasible because the sta ndards varied from customer to customer and even from order to order past months - ONLY 1/10 boards returned - damaged or out of tolerance remainder - missed or failed to complete one or two of the requi red operations reprocessed and shipped within one or two days preshipment reject rate in September amounted to 7% - 1% total losses, 6 % due to incomplete operations, and subsequently reworked Deliveries shipping policy - clearing all the work possible out of the shop prior t o the end of each month

substantially fewer shipments were made in the first half of eac h month than in the second half Actual deliveries in August, September, and the first part of October ha d averaged ten, eight, and nine days late, respectively. In Aug, >$32000 pending, eight new people had been added to the production force ISSUES >>>>> 2. Productivity problems management did not prepare a breakeven analysis to be able to objectivel y determine which method (Manual / CNC) to use with which kind of order