Custom Chip, Inc. is a semiconductor manufacturer specializing in custom chips for use in radio frequency devices such as satellite transmitters. Cost reduction had become a priority because corporate growth had stopped from a downturn in the industry. Wafer fabrication takes 8 to 12 weeks and assembly takes 4 to 6 weeks. At each step operations are subject to considerable operator and machine error, resulting in an average product yield of 60-70 percent. Note that “yield” refers to the ratio of finished products that meet specifications relative to the number that initially entered the manufacturing process. Whenever yield falls in the 35-50 percent range, the company runs the risk of not being able to complete the order on time or of having too much waste.

In this case, students see the dynamics between product engineering, applications engineering, and manufacturing. Product engineers may stop their work to respond to six questions from the manufacturing floor and four calls to testing stations. Applications engineers, who feel that they get little recognition for solving manufacturing problems, are also called to manufacturing for resign when there are problems. Manufacturing, under the gun for output, feels that they suffer for lack of adequate documentation of the manufacturing steps. Each department has its separate goals, although it is evident that those separate goals are not yet brought together in the form of unified corporate goals.

Critical Thinking Questions:

Based on your analysis, what recommendations would you give to management and would you recommend a change in the organization’s design?