Part 2 Supply Issues Case 1 CJ Industries and Heavey Pumps Case 2 Credit Suisse: Sourcing IT Services Case 3 Don't Shoot the Messenger Case 4 Early Supplier Integration in the Design of the Skid-Steer Loader Case 5 John Deere and Complex Parts, Inc. Case 6 Service Purchasing at the Sunny Hotel Case 7 Supplier Development at Deere & Company Case 8 A Supplier Partnering Agreement at the University of Las Vegas Case 9 The VW Resende Modular Consortium Case 10 Heartland & Company 1 1 CJ Industries and Heavey Pumps 1 In October 2007, CJ Industries (CJI) had just been awarded a 5-year contract with Great Lakes Pleasure Boats amounting to U.S. $10 million per year, commencing in July 2008. CJI would be providing a number of key engine components for Great Lakes' luxury line of pleasure boats. The award marked an important milestone for CJI, in that it was the culmination of several years of hard work and dedicated service, supplying Great Lakes parts for their boats on an as-needed basis. The contract had significant longterm follow-on potential as well, if they could continue to show Great Lakes they had the capabilities to be one of their valued, alliance partners. In addition, with this contract Great Lakes would represent approximately 30 percent of CJI's annual sales, so performing adequately on this contract had a significant long-term financial impact on CJI. One of the parts, a bilge pump, was an item that CJI had been purchasing from one of their suppliers, Heavey Pumps, a small local specialty pump manufacturer, on an informal, non-contract basis. The remaining items were all built in-house by CJI and supplied to Great Lakes from one of their two finished goods warehouses located near the Great Lakes production facilities. Heavey Pumps was producing and delivering 50 bilge pumps at a time at a cost of U.S. $1500 per unit and built to Great Lakes' specifications, to one of the CJI warehouses, whenever an order was telephoned in by CJI. The delivery costs (about U.S. $500 per 50 pump shipment, depending on the carrier used) were included in the U.S. $1500 per unit price. This scenario typically occurred about every four to six months. Normally, CJI would order another batch of 50 about eight to ten weeks ahead of time, and Heavey had always been able to supply the pumps before CJI's stock was depleted. Though CJI had sufficient excess capacity to ramp up production on the parts to be supplied in the Great Lakes contract, they were not sure about the ability or willingness of Heavey to increase their production of the bilge pumps. The new demand for bilge pumps starting in July would be 50 pumps per month, and potentially more, depending on Great Lakes' demand, and the ability of CJI to perform on the contract. There were a number of issues that Nik Grams, the purchasing manager who put the contract together with Great Lakes, needed to work out with both Heavey and the production manager at CJI, in order for this contract to be met with as few problems as possible. The issue with Heavey Pumps was whether or not they could guarantee delivery of 50 pumps per month to one of the CJI warehouses. This had been the one item that had \"slipped through the cracks\" on the contract with Great Lakes, and it now loomed as something that could conceivably put the contract in jeopardy. There were potentially additional equipment, labor, and other production costs for Heavey associated with the extra demand for bilge pumps, not to mention extra delivery costs as well. Heavey had 1. Joel Wisner, PhD, C.P.M., University of Nevada, Las Vegas (joel.wisner@unlv.edu). This case was prepared solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The author has disguised names and other identifying information to protect confidentiality. 3 4 Part 2 Supply Issues been a reliable supplier for CJI for a number of years, but nothing else had ever been purchased from them. In addition, because the demand for these pumps was rather low and the deliveries were sporadic, no performance records had ever been kept for them. Mr. Grams had also not known specifically about the quality history of the Heavey bilge pump, although he could not remember ever getting one returned by Great Lakes for any reason. Up until now, the pump issue did not seem like anything to worry about. Another possibility for CJI would be to make these pumps in-house. Nik Grams knew that CJI had the capability to make this pump, but it would require an initial capital investment of about U.S. $500,000 according to the CJI production manager, along with the clearing out of some space, and the hiring of three additional employees. With only about nine months remaining until the contract start date, it would be tight, but the production manager had assured Nik that they could do this, if needed. While Mr. Grams didn't doubt the production manager's assurances that the production line could be ready, he wasn't sure that going to this added expense was a good investment for CJI, given their lack of pump manufacturing experience. There were also at least two other bilge pump manufacturers that Mr. Grams knew of, but both of them were about 500 miles farther away from the CJI warehouses, and he had never used either of these firms in the past. This whole thing seemed to Nik like an ideal job for his special project buyer, Bob Ashby. He figured he had maybe a week or two to hammer out a plan to assure contract compliance with Great Lakes, and Bob was known for his ability to put things together quickly. So, he called Bob. Discussion Questions 1. What are all the issues here, from both CJI's and Heavey's perspectives, that need to be researched by Mr. Ashby? 2. Should CJI continue to use Heavey to supply pumps, should they make them in-house, should they consider one of the other suppliers, or should they do some combination of these alternatives? Discuss the advantages, disadvantages, and risks of each of these alternatives. 3. How can CJI assure continued contract compliance and additional contract business from Great Lakes in the future? OUTLINE FOR CASE ANALYSIS Title Page (APA formatted) Case Name: I. II. III. IV. V. Major Facts (State here the major facts as you see them. Make statements clear and concise for your own understanding as well as for the understanding of the other students and the instructor.) Major Problem (State here the major problem as you see it. Emphasize the present major problem. You may wish to phrase your statement in the form of a question. In a few cases, there may be more than one major problem. A good problem statement will be concise, usually only one sentence.) Possible Solutions A. (List here the possible solutions to the major problem. Let your imagination come up with alternative ways to solve the problem. B. Do not limit yourself to only one or two possible solutions. These solutions should be distinct from each other. C. However, you may wish to include portions of one solution in another solution, as long as each solution stands alone. Only in this manner will your subsequent choice be definitive. D. Briefly note advantages and disadvantages of each possible solution.) etc. Choice and Rationale (State here your choice, A or B or ___ and the detailed reasons for your choice. You may also state your reasons for not choosing the other alterative solutions.) Implementation (Prepare a plan to implement your choice) Appendix (Answer case study questions) Reference Page (APA formatted) APUS Assignment Rubric Undergraduate Level 300-400 FOCUS/THESIS EXEMPLARY LEVEL 4 Student exhibits a defined and clear understanding of the assignment. Thesis is clearly defined and well constructed to help guide the reader throughout the assignment. Student builds upon the thesis of the assignment with welldocumented and exceptional supporting facts, figures, and/or statements. ACCOMPLISHED LEVEL 3 Establishes a good comprehension of topic and in the building of the thesis. Student demonstrates an effective presentation of thesis, with most support statements helping to support the key focus of assignment. CONTENT/SUBJECT KNOWLEDGE Student demonstrates proficient command of the subject matter in the assignment. Assignment shows an impressive level of depth of student's ability to relate course content to practical examples and applications. Student provides comprehensive analysis of details, facts, and concepts in a logical sequence. Student exhibits above average usage of subject matter in assignment. Student provides above average ability in relating course content in examples given. Details and facts presented provide an adequate presentation of student's current level of subject matter knowledge. CRITICAL THINKING SKILLS Student demonstrates a higher-level of critical thinking necessary for 300400 level work. Learner provides a strategic Student exhibits a good command of critical thinking skills in the presentation of material and supporting DEVELOPING LEVEL 2 Student exhibits a basic understanding of the intended assignment, but the thesis is not fully supported throughout the assignment. While thesis helps to guide the development of the assignment, the reader may have some difficulty in seeing linkages between thoughts. While student has included a few supporting facts and statements, this has limited the quality of the assignment. The assignment reveals that the student has a general, fundamental understanding of the course material. Whereas, there are areas of some concerning in the linkages provided between facts and supporting statements. Student generally explains concepts, but only meets the minimum requirements in this area. Student takes a common, conventional approach in guiding the reader through various linkages and connections presented in BEGINNNIG LEVEL 1 Exhibits a limited understanding of the assignment. Reader is unable to follow the logic used for the thesis and development of key themes. Introduction of thesis is not clearly evident, and reader must look deeper to discover the focus of the writer. Student's writing is weak in the inclusion of supporting facts or statements. Student tries to explain some concepts, but overlooks critical details. Assignment appears vague or incomplete in various segments. Student presents concepts in isolation, and does not perceive to have a logical sequencing of ideas. Student demonstrates beginning understanding of key concepts, but overlooks critical details. Learner is unable to TOTAL POINTS ORGANIZATION OF IDEAS/FORMAT WRITING CONVENTIONS (GRAMMAR & MECHANICS) approach in presenting examples of problem solving or critical thinking, while drawing logical conclusions which are not immediately obvious. Student provides wellsupported ideas and reflection with a variety of current and/or world views in the assignment. Student presents a genuine intellectual development of ideas throughout assignment. Student thoroughly understands and excels in explaining all major points. An original, unique, and/or imaginative approach to overall ideas, concepts, and findings is presented. Overall format of assignment includes an appropriate introduction (or abstract), well- developed paragraphs, and conclusion. Finished assignment demonstrates student's ability to plan and organize research in a logical sequence. Student uses at least of 5-7 references in assignment. Student demonstrates an excellent command of grammar, as well as presents research in a clear and concise writing style. Presents a thorough, statements. Assignment demonstrates the student's above average use of relating concepts by using a variety of factors. Overall, student provides adequate conclusions, with 2 or fewer errors. assignment. However, student presents a limited perspective on key concepts throughout assignment. Student appears to have problems applying information in a problem-solving manner. apply information in a problem-solving fashion. Student presents confusing statements and facts in assignment. No evidence or little semblance of critical thinking skills. Student explains the majority of points and concepts in the assignment. Learner demonstrates a good skill level in formatting and organizing material in assignment. Student presents an above average level of preparedness, with a few formatting errors. Assignment contains less than 5 resources. Learner applies some points and concepts incorrectly. Student uses a variety of formatting styles, with some inconsistencies throughout the paper. Assignment does not have a continuous pattern of logical sequencing. Student uses less than 3 sources or references. Assignment reveals formatting errors and a lack of organization. Student presents an incomplete attempt to provide linkages or explanation of key terms. The lack of appropriate references or source materials demonstrates the student's need for additional help or training in this area. Student needs to review and revise the assignment. Student provides an effective display of good writing and grammar. Assignment reflects student's ability to select appropriate word usage Assignment reflects basic writing and grammar, but more than 5 errors. Key terms and concepts are somewhat vague and not completely explained by Topics, concepts, and ideas are not coherently discussed or expressed in assignments. Student's writing style is weak and needs USE OF COMPUTER TECHNOLOGY/ APPLICATIONS TOTAL POINTS extensive understanding of word usage. Student excels in the selection and development of a wellplanned research assignment. Assignment is error-free and reflects student's ability to prepare a high-quality academic assignment. Student provides a highcaliber, formatted assignment. Learner exhibits excellent use of computer technology in the development of assignment. Quality and appropriateness of stated references demonstrate the student's ability to use technology to conduct applicable research. Given assignment includes appropriate word processing, spreadsheet and/or other computer applications as part of the final product. and present an above average presentation of a given topic or issue. Assignment appears to be well written with no more than 3-5 errors. Student provides a final written product that covers the above-minimal requirements. Assignment presents an above-average use of formatting skills, with less than 3 errors. Students has a good command of computer applications to format information and/or figures in an appropriate format. Student uses at least two types of computer applications to produce a quality assignment. student. Student uses a basic vocabulary in assignment. Student's writing ability is average, but demonstrates a basic understanding of the subject matter. improvement, along with numerous proofreading errors. Assignment lacks clarity, consistency, and correctness. Student needs to review and revise assignment. Student demonstrates a basic knowledge of computer applications. Appearance of final assignment demonstrates the student's limited ability to format and present data. Resources used in assignment are limited. Student may need to obtain further help in the use of computer applications and Internet research. Student needs to develop better formatting skills. The student may need to take additional training or obtain help from the Educator Help Desk while preparing an assignment. Research and resources presented in the assignment are limited. Student needs to expand research scope. The number of formatting errors is not acceptable