Case Analysis of Donner Company and Eiic

The following sample essay is a case study of Donner and Eiic. To read the introduction, body, and conclusion of the essay, scroll down.

The Donner Company manufactured printed circuit boards to specificaiton of a variety of electronics manufactures. It produces and sells goods to its customers. While EIIC is an insurance company which focus mainly on engineering insurance. It produces and sells service to customers. Problems for Donner Company: 1. For operation problem, there is a production bottleneck exist in company’s operation, the shifting bottleneck.

The shifting of process changed frequently from one to another in the manufacturing system.

Every individual orders of different customers always change details because variable request or unqualified items. That will definitely bring our workers and workload a lot of trouble. At the same time, we have the pattern of four-day rush orders. This item will delay the process as it sometimes needs rework at one or two operations. It is due to workers are shifted from one operation to another one as demand’s changing so that some workstations are overloaded.

But this situation only happened during bulk orders, while in short orders such as less than 8 circuit boards, Arthur Dief can finish it solo and perfect. Also, when the customer’s engineers have design problems, they are permitted to make a call to operation part which can interrupt normal production. That can be one problem which bothered the process. There is a policy that the shipment should be finished before end of a month, which directly lead to the big amount of shipment at the end of the month.

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This will not only bring big pressure to transportation office, but also has a bad effect on sales. At the same time, workers are hurrying up for finishing shipment, they would not care more about products’ quality. Also, standards of order keep changing frequently will also bring us the same result. 2. Plummer found that some machines are idle very often, which definitely low down our output. This is related to the frequently moving.

Because, the time workers wasted on moving from one station to another can be counted as the idle time, which is equal to shorten the time for producing. According to these we can see, the job strategies are not as well performed as it should be. Also, we need to develop new ideas which can be used to improve our strategy, such as rescheduling orders and reassigning workers, which can bring up our productivity in further days. 3. For managerial problem, I don’t think company did good job on inspection of products’ quality because heir returns and reprocessing are keeping increasing. Although it is very difficult to inspect stricter as their orders are different from each other, they still need an effective policy to keep their products’ good quality. As in September, because of incomplete operations and reworking of circuit boards, company’s preshipment reject rates increased and lead to a 6% loss on profit. Also the company as fewer shipments due to production delayed for 9 days and reworking increased.

Although hired 8 new workers for helping former work, the company still need to train them and it would take some time for them to getting familiar with this work. Recommendations: 1. IN order to solve the problem of production bottleneck, the work pile up and run out in the operation system, the company should only be accepting orders that are feasible to do and those can be delivered on time. So that the company can focus on the special demands or detailed request of customers, also build up their reputation by finish order without delay.

In this situation, the idle times can be reduced as all workers need to finish their task. The most important is, they must reduce the shifting of workers from one operation to the next. Even though every worker knows more than one skill, it is better for them to stay in one station and finish one single process as it can stop waste so much time and reduce turnover. 2. For the producing process, we should pick up a better and more economic way as several process has two or more producing method or tools. As Drill process, they use Manual and CNC drill working at same time.

Actually, it is better to use CNC Drill all the process when producing number is equal or greater than 6, and manual when lower than 6. For Profile, when bigger than 200, use CNC Router, and if less, use Punch Press. Exhibit 2. 3. For the long-run strategy, it is better for the company to set up two lines for production, one is for regular production and the other is fore special orders. Under this situation, we can set a minority number of workers produce on the regular line, on which we can improve our work efficiency as everyone is familiar with all the process.

Meanwhile, we can set a majority number of workers work on the new line that can redesign, rework of finish specific orders. It will not disturb the normal producing line as they are separated and workers will be more focus on their jobs, which can get better product quality and efficiency. Also, they will get used to the variable order situation, which can improve their resilience. 4. As returns and reprocessing are keeping high, we need to improve our managerial method. First we need to improve our inspection. We should bring out a detailed and clear standard for workers to refer to.

Also, we need to enhance our inspection by supervisors and divide them into each process and inspect every procedure, by which we can stop unqualified products as soon as possible and avoid further work on useless products. At the same time, we need to training our employees on producing skill and further knowledge, in order to get less rework or reprocessing. Problems for EIIC 1. It is the time for EIIC to improve their service efficiency. As we know, the basic processes for the company’s inspectors to finish their duty are showed in Exhibit 1-2.

The time for arriving at accident place is less than 1 hour. It is fast and the company’s employees are proud of this. But on the other hand, they need a very long time for preparing the FIO report, as a Medium-Sized branch’s average time is 26 days. This is the biggest bottleneck of process. As the company all employed very proficient inspectors, they should not work in such a slow condition. One of the most probable reasons is the moonlighting. Case told us that there are estimated nearly 50% to 70% of EIIC’s inspectors had part-time job.

Even though it is permitted in the company, I think that will definitely lower the efficiency and effect of their original work in EIIC as moonlighting will cost several physical force and time which should be put into the EIIC’s work and get the FIO process faster finished. We use the average percentage of out-working people: (50%+70%)/2=60%. If these capacity are all being used to prepare for the FIO report, the time spending on that will at least reduce to: 26/(1+60%)=16. 25 days, which is a big progress. 2. EIIC’s market strategy needs to be modified.

From the case we found that EIIC’s profit is decreasing these years while they used to win the market. As we know, EIIC is a insurance company which is focus only on manufacturing insurance. While most of other insurance companies have all kinds of insurance such as life insurance and medical insurance, this is a vast market. The company is specific and professional on engineering, most of EIIC’s facility and employees are in engineering background and experience. It is impossible for the company to convert its market to different species of insurance. The nly effective short term strategy for the company is to build up itself as an upper level engineering insurance company which is the best and famous for its good service quality to attract more customers. 3. Colleagues have conflict between each other during working. The main reason for chief inspectors’ having conflict with managers is they have several similar jobs or functional authority but don’t have similar rules for solving them. Actually, these two roles have different things to perform. Manager is more financial and managerial but the chief inspector is more engineering and technical.

Manager is more focus on operating business fluently, getting more profit and optimize whole company. While inspector wants to make sure every problem is solved completely and without any doubt. They insist different views so that will lead to different action, as one of them regards the other as “went by book”. 4. Turnover of employee is too high. Two main reasons for its high turnover are: the salary level in EIIC is comparably lower among the same business company; professional inspectors are highly expected in the human resource markets.

Either because of hunters ‘action or workers’ own willing, once there is a better salary, they will leave EIIC. At the same time, EIIC provided their workers a good platform to practice themselves, similar to IBM, and get them more attractive to other company. As underwriting, most of them believed there was no long term career path on it. Obviously EIIC’s staffs have a serious problem of career planning. Recommendation: 1. Change the former marketing strategy for the company. As EIIC is famous for the engineering insurance, it is more effective for EIIC to keep going on with this target in short term.

But they need to improve the current strategy as more upper level. We can locate the company as a highly specific and professional one. No matter how difficulty and troublesome the situation is, you can be not upset anymore by EIIC’s job. In this situation, EIIC must stop cutting down price. On the contrary, the company should raise the price level for making sure that our service is the best. People always love good quality service. 2. For long term plan, in order to keeping pace with changing market requirements, we need to develop more market and provide more kinds of service.

It is another bottleneck of EIIC. Based on the profit earned by improving our service, we can create more departments about insurance and make our company more totpotent. 3. We need to improve our working efficiency and change salary policy for workers. At the FIO stage, inspector spends to much time which should be shorten. So that we should stop permitting moonlighting for all workers. Suppose there are total 60% (50%+70%/2=60%) staffs has a second job and now don’t work for that anymore, our productivity will be brought up by at least 60%, which will be more attractive to our customers.

At the same time, we raise salary level for 50%, that is $27000*1. 5+($31000-$27000)=$44500, it looks nicer to staffs, and also we can earn 10% productivity. At the same time, we can employ several green hands with very low salary. Let them to help our work and get training at the same time. Once there are well performed people, we can rehire them in normal salary policy. Also, we can sell company’s shares to our staffs. It can be some kind of decreasing turnover. 4. Modify relationship between employees. As manager and inspector are in charge of different areas and have different views, it is unavoidable for them to get conflict.

In order to finish this situation, it would be better to change the managerial organization for the two leaders. One method is to let chief inspector be controlled by manager and cancel inspector’s special authority. As manager working on much more general things and inspector is only on technique, it is possible for technique to be a branch of general management. In general, this situation can be regard as “has 2 leaders in one place”. We must identify every subordinate relationship for every place in avoid of noncooperation and conflict.

Based on the analysis before, we can identify that Donner Company is a job shop company and EIIC is a production line company. Because every part of EIIC has almost the same product, also, has different labor division during which changed a little. From these two companies we can see, there are several general aspects that should be pay attention to when operating companies. 1. Human resource. Companies are operated my people. It is very significant for a company to own smart staffs, good relationship and proper work attitude.

As a manager, we should provide them a good circumstance for working; include proper management organization, useful communication method and satisfied payment. 2. Process design. This part determines the whole company’s profit situation. We should bring out a process which will not waste material, human labor or time that can bring us best profit. It is unavoidable that every process has bottlenecks. We should change strategy according to our current situation, to meet our final needs. 3. Service and Physical products. It is different when operating these two products. Service contains more human action.

It is easier to be modified and improved but difficult to be managed. In order to improve that we need to set a model as simulation and find out what’s the best solution, then apply it. For physical products, it is a kind of permanent for producing speed as it is difficult to improved but easy to be managed. For improving this we should pay more attention on how to manage the people who produce them. To get the most efficient way for raising production. 4. Production line and job shop. They are totally different on managing by us. We should first recognize the pattern of company and then start operation.