Operations Case Study: American Connector Corporation
American Connector Corporation (ACC)
CASE OVERVIEW
American Connector Corporation (ACC) is one of the 28 suppliers of electrical connectors, worldwide with sales greater than $100 million. ACC manufactured Electrical Connectors from Sunnyvale, California since 1961. Electrical connectors are devices made to attach wires to other wires, attach wires to outlets, attach wires, components or chips to PC boards, or to attach PC boards to other boards. Connectors were used in a variety of product applications, ranging from military and aerospace equipment to consumer electronics and appliances. Each application and often each producer called for different connector specifications. In 1990, there were over 700 standard connector product lines in North America alone. Standard designs were established mainly by International Institute of Connectors and Interconnect Technology (IICIT), the National Electronics Distributors Association (NEDA) or by the end use industries.
In USA, the connector industry was characterized as a hostile environment. The 1991, sales had fallen by 3.9% over the last year and the industry was seeing a downward trend since 1987, with 1986 being the peak year. Consequently, ACC’s last major expansion occurred in 1986 bringing its capacity to 600 million units per year. The 1991 utilization was 70% and was expected to reach 85% by 1996. Because of the depressed market conditions, the Sunnyvale plant made no major investments in capacity or new technology since 1986.
DJC Corporation of Japan was a dominant supplier of electrical connectors in Japan. It was rumoured to be one of the most efficient connector plants in the world. Despite its success in Japan, DJC had not established itself in the US. It had no plants in the US and only a small sales force. There have been rumours in the last few years that the DJC would build a new plant in USA to launch an attack on the US market.
Denise Larsen, the Vice President of Operations at ACC felt
CASE OVERVIEW
American Connector Corporation (ACC) is one of the 28 suppliers of electrical connectors, worldwide with sales greater than $100 million. ACC manufactured Electrical Connectors from Sunnyvale, California since 1961. Electrical connectors are devices made to attach wires to other wires, attach wires to outlets, attach wires, components or chips to PC boards, or to attach PC boards to other boards. Connectors were used in a variety of product applications, ranging from military and aerospace equipment to consumer electronics and appliances. Each application and often each producer called for different connector specifications. In 1990, there were over 700 standard connector product lines in North America alone. Standard designs were established mainly by International Institute of Connectors and Interconnect Technology (IICIT), the National Electronics Distributors Association (NEDA) or by the end use industries.
In USA, the connector industry was characterized as a hostile environment. The 1991, sales had fallen by 3.9% over the last year and the industry was seeing a downward trend since 1987, with 1986 being the peak year. Consequently, ACC’s last major expansion occurred in 1986 bringing its capacity to 600 million units per year. The 1991 utilization was 70% and was expected to reach 85% by 1996. Because of the depressed market conditions, the Sunnyvale plant made no major investments in capacity or new technology since 1986.
DJC Corporation of Japan was a dominant supplier of electrical connectors in Japan. It was rumoured to be one of the most efficient connector plants in the world. Despite its success in Japan, DJC had not established itself in the US. It had no plants in the US and only a small sales force. There have been rumours in the last few years that the DJC would build a new plant in USA to launch an attack on the US market.
Denise Larsen, the Vice President of Operations at ACC felt