Djc’s Strategy

DJC’s Strategy

• Standardization- Produced only standard products (Produced only 640 SKUs). Standard packaging. No customization available to customers

• High operational efficiency- Focus on operational efficiency rather than responsiveness. Fixed production schedules

• Simplicity and variety over innovation- To increase efficiency and smooth operations at low cost DJC relied on old reliable technology rather than new less reliable technology

• Variety based strategy- Produced a standard sub-set of products

• Process oriented- Highly focused on continuous process improvement rather than product improvement

• Low cost production- Keeping production cost low through low raw material inventory, Low WIP inventory, high fixed asset utilization, low process change over and longer product runs

• High Quality- High quality control standards, low defect rate and using high quality molds.

• In house technology development

ACC’s Strategy

• Customization- Custom orders, 4,500 different models, customized packaging

• Responsiveness- Highly responsive, flexible production schedules

• Needs based strategy- Producing wide range of products

• Product oriented- High focus on product development rather than process development

• Flexibility

• Innovation- Use of latest machines and technology

• Emphasize on quality

Activity System Charts for DJC and ACC are given below:

Fig No. 1

Fig No. 2

Is DJC a threat to American Connector Company?

The calculations shown in Exhibit 1 for the Cost of goods sold for standard Chip to Board connector (dollars per 1000 units) shows that if DJC starts its production in USA and if it is able to maintain its operating efficiency at the same level that of Kawasaki plant the cost comes out to be $20.24 per 1000 units which is significantly lower than the cost of $ 33.79 at which ACC is currently producing the connectors. Considering the above cost analysis DJC may pose a serious threat to ACC if it starts production in USA. However, DJC is able to produce connectors with such a high efficiency at Kawasaki because of its operation strategy of