Donner Company

Donner manufactured printed circuit boards to the specifications of a variety of

manufacturers. It was essentially being managed by engineers, which meant that its
core competence was its technical expertise. On reviewing the profit and loss
statement for the company over the year 1987, we notice that the total sales till
August 1987 had already crossed the total sales in the previous year. Also we notice
that EBIT has continuously increased from -2.8% of net sales in 1985 to 10.29% of
net sales in August 1987. However the point of concern was triggered by the recent
prominent slump in the sales and profit of Donner in the month of September 1987.

1. Problem Analysis
Based on this trigger we try and analyze the problems which could have lead to fall
in profit of the company.
1.1. Varying production bottleneck: Depending on the type of circuit board to
be manufactured; the
company faced bottlenecks at different points in the
process flow. This was without any pattern and hence no solution till now had been
found of dealing with regular bottlenecks. Looking at some reasons which led to the
development of bottlenecksa. Rush orders Promised time of delivery for rush orders was 4 days and
hence these orders were given priority and replaced existing orders which were in
process; this lead to frequent bottlenecks at different stages. The rush orders had a
frequency of three a week.
b. Customer modifications Many a times customers requested
modifications after a board design and manufacturing process had started. This
stalled the production of the board as the modification needed to be worked upon
into the design and approved which resulted in almost two weeks delay. The
frequency of artwork modification requests ranged between 1-9 per week.
c. Cross training and constant shuffling of idle resources without
proper forecast of when they would be required back on their original task also
resulted in bottlenecks.
1.2. Factors hampering productivity:
a. Wrongly estimated working time It was found that the labor hours
did not correctly denote the additional time a resource spent on reworking on parts
which failed inspection or were returned by customer. Movement of boards between
operations was also not accounted for and method improvements lead to
bottlenecks at subsequent operations.

b. Task interruption Operators moved in between their task almost 6-12

times per day to seek advice, ask for work from upstream sources and for delivering
completed work; this primarily showcases the lack of set process flow and
communication between different operations and their workers.

1.3. Lack of quality standards:

a. Return rework - The quality standards ranged from client to client and
only an informal check was done at Donner manufacturing end this resulted in
almost 9 out of 10 deliveries lacking in quality in terms of missed parts or other
quality constraints.
b. Pre-shipment rework Out of the 7% reject rate at pre-shipment 6%
were due to incomplete operations.
Both these points highlight the need of specialized and organized quality check of
boards after production phase.
1.4. Delivery issues:
One of the major concerns may be because of procrastinating work till the end of
the month where prior work needs to be dispatched by month end. This affects
utilization in the earlier part of the month and also results in more overhead during
the end of month.

2. Manufacturing process analysis

From the given manufacturing process there are some bottlenecks which require the
modification
1) Breakeven point analysis to select CNC drill or manual drill.
2) Breakeven point analysis to select automated CNC router or manual punch
press.
3) Identify bottleneck in DFPR process.
Breakeven points to determine which one to use between CNC drill and manual drill
Set up time for 1 order
Run time for 1 circuit
board
Order size
Total time

CNC Drill
240
0.004*500

Manual Drill
15
0.080*500

X
240+2X

X
15+40X

Hence by equating the total time taken(setup time +run time) for both CNC Drill
and manual drill:
240+2X = 15+40X
38X = 225
X = 5.92, rounded off to 6
Thus,
If order size is more than 6, CNC Drill should be used
If order size is less than 6, manual drill should be used
Donner purchased the CNC drill for $80000 to drill the panels. Other available
option is 7 modified drill presses. So it is important to decide when to use manual
drill and when to use CNC drill. The setup time of both processes is fixed no matter
what the specification of product is only the run time varies. The breakeven analysis
suggests for order less than 6 panels manual drill should be used. For orders of
more than 6 panels the CNC drill should be used. Company policy now is to use CNC
drill only for orders of more than 100 panels.
Breakeven points to determine which one to use between CNC router and manual
punch press
Set up time for 1 order
Run time for 1 circuit
board
Order size
Total time

CNC Router
50
1

Punch Press
150
0.5

X
50+X

X
150+0.5X

Hence by equating the total time taken(setup time +run time) for both CNC Router
and Punch Press:
50+X = 150+0.5X
0.5X = 100
X = 200
Thus,
If order size is more than 200, CNC Router should be used
If order size is less than 200, Punch Press should be used
There are 2 options available for profiling while fabrication. It is important to analyze
and decide which option should be used and when. Breakeven point analysis

suggests that for orders of more than 200 panels CNC router should be used. CNC
is less expensive per board as compared to manual punch press router for orders of
more than 200 panels. For orders less than 200 panels it is less expensive to use
manual punch press router than CNC.
Capacity of the dry Film Photo resist area is also a bottleneck. It is critical to realize
the true capacity to prevent bottlenecks and work-overload. If maximum boards
DFPR area can handle is less than what other processes then it becomes bottleneck.
If the order sized is more than bottleneck capacity then the order will pile up at
DFPR. DFPR consists of 3 processes so understanding the capacity of all those
processes is important to determine the capacity of whole process.
Operation

Setup Time

Panel
Preparation

Laminate
and Expose
Develop

20
20

Run Time

Total
time
(order size
= 8)
0.2 (per 8 =5*1+0.2*
boards)
1
=5.2
2.0 (per 8 =20*1+2*1
boards)
=22
0.2 (per 8 =20*1+0.2
boards)
*1
=20.2

Total
Time
(order size =
80)
=5*1+0.2*1
0
=7
=20*1+2*10
=40
=20*1+0.2*
10
=22

Total Time
(order size =
800)
=5*1+0.2*10
0
=25
=20*1+2*100
=220
=20*1+0.2*1
00
=40

Considering an 8-hour daily shift, the capacities for each stage of the DFPR area can
be determined as follows:
Order
size
DFPR area
Panel Prep
Laminate
Expose
Develop

&

80

800

738.4

5485.6

15360

174.4

960

1744

190.08

1744.8

9600

Explanation of the table is that if the order size is 8 boards then to avoid bottleneck
the order should be of less than 174 boards per day. Same applies for the order size
of 80 boards, the maximum daily capacity of DFPR is 960 boards. Based on the
analysis we found that laminate and expose of DFPR process is the bottleneck.

3. Recommendations
3.1 Work on reducing average flow time of jobs:

The root cause of the problem was in longer flow time to complete different jobs and
for immediate recovery from the current late delivery problem this issue has to be
resolved. The basis to look can be the example that small orders being processed by
just one senior employee had no scheduling problems. This indicated that:
a. Cross training of workers and assigning those randomly to available
processes has lead to wastage of time by moving from one job task to another.
Instead efficiency can be improved if workers were trained for specific operations
and worked only on processes that were as per their capabilities. This would not
only save time in job transfer but also result in comparatively lesser failure rates.
b. Improving the facility layout could also lead to substantial reduction in flow
time. The processes which were one after the other were not strategically placed to
reduce the time in transfer of the process; this lead in some cases to almost 15% of
the work time going into transferring from one process to another.
c. Improve the organization structure such that there were separate teams
handling issues in the process flow, assisting and instructing workers, product
inspection and for customer change modifications. All these tasks are instrumental
in the process flow and lead to bottlenecks if not addressed adequately.
d. One fourth of the jobs delayed were because of the customer change
requests; Donner could look at charging extra per modification required which
would deter the consumers from making constant changes after the design has
been finalized. Also it would act as a cover for the process delay loss due to these
change requests.
3.2 Continue serving both large and small orders
Donner should continue taking both types of orders but should look at parallel
production lines for large and small volume production separately. Capacity is not
being fully utilized currently as the process in not optimized based on volume flow.
Each process line can be optimized to its requirement as per the volume and hence
reduce bottlenecks. Inventory policy can be worked upon to take cognizance of the
lack of inventory in case of rush orders. Inventory warehouse consisting of primary
inputs can be maintained which would reduce the pressure on inventory in case of
rush orders and rework.