Will outsourcing the company’s inefficient sheet metal operation be a proper strategic move to save the company money and satisfy current and potential customers with respects to quality and delivery lead time?
Size up: Item | So What? | Machine break-downs | Since break-downs occur at the initial step, the rest of the process gets delayed causing longer customer lead time and extra shifts are required which increases labour expense. | Age of the machines | Considering the turret press was old and broke down often, this causes a delay in customer lead time and unnecessary costs because parts are expensive and hard to find. | Under performing sheet metal operation | Because …show more content…
Donna can save the company money by outsourcing the sheet metal operation. By taking the following facts into consideration she can reduce company overhead, reduce customer lead-time, and improve Productivity: 1. Reduce labour force by 12 unionized workers. i.e. wages and benefits. 2. Eliminate the second shift 3. Improve labour productivity by eliminating the 40% inefficiency rate on the sheet metal line 4. Achieve product cost below $50 5. Reduce lead time to the customers 6 week requirement 6. Eliminate Maintenance cost 7. Eliminate part sourcing time cost for the turret press
Alternatives | Alternative | Pros | Cons | Recourses / Issues | Feasibility | Thoughts | Select Noma Sheet Metal | 1. Well established company capable of producing specialty items. 2. Located 2 hours from Chatham 3. Reputable companyin terms of Quality. 4. Large and modern facility capable of handling required volume. 5. In house paint operation 6. ISO 9001 registered 7. Can meet delivery lead time requirements 6-8wks. 8. Agree to company payment terms 9. Satisfactory financial condition. 10. Fair price $48/part | 1. Large shop=greater overhead cost 2. Rework parts scattered all over, safety concern 3. Few large clients 4. No employee empowerment 5. Risk of downtime due to unhappy employees 6.