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nurissah arshad

on 26 May 2015

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Transcript of DANSHUI PLANT NO 2

Presented By:
Ripkah B Seba
Teoh Chia Ying
Nur Issah Arshad
Feldikadewi Effendi
Zainor Asyikeen Mohamad

The Story
Danshui was a contract manufacturer that assembled electronic products.

The largest contract manufacturer in China was Faxconn, with 800,000 workers and contracts to supply

Hewlett Packard

Danshui received a one-year contract assemble 2.4 million units on new iPhones 4.

Expected to assemble 200,000 units of iPhones per month.

In the 3rd month,only 180,000 units were produced.
Complex assembly process based on handwork of 325 workers for each unit.

Danshui had raised the factory wages by almost 30% but still unable to hire qualified workers.

Danshui operating at a loss since they unable to fulfill the expected monthly production for the contract.
The Issues
Danshui Plant No.2 was not able to fulfil the demand for the contract

need to produce 200,000 units per month of Apple iPhone 4 but actual produce of 180,000 units iPhone per month.

shortage 10% has result them
to face loss about $672,000
rather than profit $100,000.
production probleM
difficulty in finding enough people to match their production despite raising wages by almost 30%

higher chances of errors as the assembly process was handled by different workers with different skills and working styles

cause a lot wastes in term of cost and time due to the carelessness and the lack of skill of the workers

Samsung flash memory was too fragile and damaged 1000 flash memories during installation process.

Samsung has begun to install a shield
to prevent some of the damage

Samsung raised the price of each
unit increase by $2.00

Problem with Samsung flash memory installation
Lack of qualified labor force

Data Analysis
Break-even Point

Cost Per Unit

Flexible Budget

Variance Analysis
break- even point
cost per unit
flexible budget
variance analysis
production problem
This approach is appropriate to use as to overcome the productivity problem in a
short term period.

engage the outsourcing contract with Foxconn, the largest contract manufacturer in China.

With the high amount of labors, Foxconn will have the capacity to produce the iPhone on time

Engaged outsourcing, Danshui can
save the material, labor, overhead
and also recruitment costs.

Overcome the disadvantages from the labor forces.
This approach is appropriate to use as to overcome the productivity problem in a
long term period.

improve the worker’s salary policy.
motivate workers by setting a basic salary and offering bonus if they complete their jobs well

provide professional training for labors
labors can learn how to handle with care on the parts to avoid the wastage that will happen

Lack of qualified labor force
Danshui Company should also improve the quality of production supervision

hire a more professional supervisor who is familiar with the production process

skilled supervisors able to response to the problems arises and know how to motivate the labor to achieve the goal.

Problem with Samsung flash memory installation
There are few recommendation have been highlighted in order to overcome this problems

Outsourcing to Foxconn, training program, and improve the quality of production supervision should be implemented in achieving production target.

Break-even analysis, cost per unit analysis, flexible budget and the variances analysis will help the manager to have useful information in order to control the performance

Plant manager should quickly consider the appropriate action so that they will earn the required profits from the contract.
Full transcript