Donner-Company-Case

DonnerCompanyCaseOverviewDonnerCompanymanufacturesprintedcircuitboardsforbothlargeandsmallcompanies,specializinginexperimentaldevicesandforpilotproductionrunsinthelate1980s.Thecircuitboardsthatitproducesaremadefromthinsheetsofnarrowmetalstripsandinsulatingmaterial.Theprocesstoproduceeachcircuitboardisverymeticulousandinvolvesmanyintricatesteps.Theirprocess,otherwiseknownasthe“soldermaskoverbarecopper”(SMOBC)processincludesthepreparationstage,imagetransfer,andfabrication.TheDonnerCompanyfacesproblemswithboththephysicalflowofproductionaswellasinformationflowwithinthecompany.Itdoesnothaveaconsistentpatternofhowitsfactoryoperatesasvariableschangesfromdaytodaybecauseofproblemsthatdealwiththefabricationandthedesignofthecircuitboards.Morespecificallythevaryingordersizesignificantlychangesthe“WorkinProcess”andinventoryateachstep.Becauseofthis,itisunabletoproperlyidentifythebottlenecksinceitchangesfrequently.Asaresultofthisshiftinbottleneck,employeesthatarequalifiedinmorethanonedepartmentareusuallyshiftedtodifferentjobsthroughouttheday.Therewasevenoneinstancewhere15%oftheemployees’timewerespentwalkingbetweenthedeskandthetanks.AnotherproblemDonnerCompanyisforcedtodealwithisthepressuretofillorders,whichdoesnotallowittofocusonissueswithinformationflowsuchasproductivityandqualitycontrol.Forexample,duringseveralmonthswhentheDonnerCompanywasinoperation,onetenthofthecircuitsboardsthatwerereturnedweredamaged,andtheremainingninetenthwerereturnedbecauseDonnerfailedtoaccomplishoneortwotheessentialoperations.InadditionsomeoftheDonnerCompany’sordersaresentlaterduetothispressuretotakelargeordersfromcompanies,whichtranslatesintothecompanynotfollowingaproperschedule.KeyProblemsOneofthedimensionsthatDonnercompetesonisitsvariety,andwhentheprocessitundertakesisefficient,itcanalsobeveryresponsivetotheircustomersneeds.OneparticularthingthatDonnerdoesisduringthestageofimagetransfer.TheprocessesthataredoneduringthisstageareextremelymeticulousandDonnercaterstoeachofitsclientsbycustomization.Donnerfocusesongratifyingallofitscustomersneedsisaveryflexiblecompanytoworkwith.AnotherdimensionthatDonnercompetesonisthefactthatitofferafastershipmenttimeofthreeweeksforordersunder1000,whileitscompetitorsofferalongershipmenttimeoffourweeks.Forordersthatarelargerthan1000circuits,Donnerpromisesashipmenttimeoffiveweeks.Althoughithastheseoffers,thecompanybarelyshipsitsproductsontimeandinAugust1987,itsshipmentsaveragedaboutninedayslaterthanitspecified.Ontheotherhand,oneofthesupervisors,Schnabs,wouldgivespecialattentiontospecificcustomerswhowereinneedofarushorder.Shewouldnegotiatewithboththesalesmanagerandthepresidenttodeterminehowmanysmallrushordersthecompanywouldbeabletoprocess.Onthisnote,Donnercompanywouldcatertotheneedsofcompaniesthaturgentlyneededtheirorderofcircuitboardsratherthanevenlydistributingworktoallofitsorders.DonnerCompanydefinitelydoesnotcompeteonitsquality,sincemanyofitsboardsthatarereturnedweredamaged,outoftolerance,ormissedkeyoperationsduringitsproduction.TheturnoverrateofthecircuitboardsincreasedfromlessthanonepercentinAugust1987toalmostthreepercentinthesamemonth.ThepresidentofDonner,Mr.Plummer,wasalsoconcernedaboutthequalitycontroloftherawmaterialsfromthebeginningoftheprocessallthewaytothefinishedboardsattheendoftheprocess.Hefeltliketherewasnowaytohaveastandardizedprocessofexaminingtheboardsduringitsproductionsinceitscustomersallvalueddifferentthingsandtheirorderswereallsodifferentaswell.AsforDonnerCompany’spricingcomparedtoits’competitors,therewasnomentioninthecasethatexplicitlyshowedthatDonner’spricingwaslower.ThisisprobablybecausepriceisnotsomethingthatDonnercompetedon.FromExhibit1,thenetsalesthatDonnerCompanyhadwereveryirregularfrom1985-1987andfluctuatedfrommonthtomonth.ProcessTheprocessthatDonnerCompanyusesisknownas“soldermaskoverbarecopper”(SMOBC)process.Thisthree-stepprocessconsistsofthepreparationstage,imagetransferstage,andthefabricationstage.Thepreparationstageconsistsoftheproductionofartworkandcomputercontroltapes,whiletherawmaterialsneededarepreparedforprocessing.Duringthisstage,holesarealsopunchedandtheseholesareusedlaterforalignmentpurposes.Fortheimagetransferstage,theboardsareconfiguredaccordingtocustomerspecifications.About500holesaredrilledforeachcircuitboardandthentheboardsareprocessedthroughacopperimmersionbath.Afterwards,thepanelsarecleanedoffandthecustomerartworkisduplicatedontotheboardssothatthecoppersurfacethatcorrespondstothedesiredconductorsisbare.Thesebareareasarethenelectroplatedandbytheendoftheprocess,thedesiredcircuitpatternisonbothsidesoftheboard.Inthenextstep,fabrication,thecircuitboardsarecutandshapedtoitsindividualsizeandinspectedbyasenioremployee.OneoftheconsequencesDonnerCompanyfacesisthatitsqualityissubstandard.Itoftenshipoutuncompletedorevendamagedcircuitboardstoitsclients.Italsodeliveritsproductsatanaverageofninedayslate,morethanaweeklaterthanitpromises.Alltheseunfavorableaspectsdecreasecustomersatisfaction,makingthesecompanieslesslikelytoworkwiththeDonnerCompanyagaininthefuture.Ifthistypeofnegativer