Cj Industries and Heavey Pumps †Discussion Questions free essay sample

CJ Industries and Heavey Pumps – 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? CJ Industries (CJI) The first issue presented for CJ Industries was its contract with Great Lakes. 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 Pumps to increase their production of the bilge pumps.The problem is that CJ Industries had signed the contract with Great Lakes prior to any discussions about ramping up production with Heavey Pumps. The next issue for CJ Industries was whether or not Heavey Pumps could guarantee delivery of 50 pumps per month to one of the CJI warehouses. This had been the one item that had â€Å"slipped through the cracks† on the contract with Great Lakes, and it now loomed as something that could conceivably put the contract in jeopardy. We will write a custom essay sample on Cj Industries and Heavey Pumps – Discussion Questions or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page This could have been prevented by developing and keeping quality and performance history records on Heavey Pumps – supplier evaluation. Continuing, there were also at least two other bilge pump manufacturers, thus, CJ Industries may need to consider another supplier. Finally, CJ Industries could make the bilge pumps in-house. CJ Industries had the capability to make this pump, but it would require an initial capital investment of approx. $500,000 according to the CJ Industries production manager, along with the clearing out of some space, and the hiring of three additional employees.With this capability, a cost benefit analysis should have been performed on the bilge pump – the make or buy decision is a strategic decision. Heavey Pumps The first issue for Heavey Pumps is the contract awarded to CJI to supply Great Lakes. Heavey Pumps was producing and delivering 50 bilge pumps at a time typically about every four to six months. However, the contract would increase demand for bilge pumps to 50 pumps per month, and potentially more, depending on Great Lakes’ demand, and the ability of CJ Industries to perform on the contract.With about nine months remaining until the contact start date, Heavey Pumps would need to look at their existing customer orders to see if they had enough capacity to quadruple production of bilge pumps for CJ Industries. Furthermore, Heavey Pumps would need to evaluate the costs associated with this contract (i. e. labor, production, warehousing, purchasing, transportation, etc. ) to determine a new unit price for the bilge pumps associated with CJ Industries contract.Finally, as with CJ Industries’ cost benefit analysis, Heavey Pumps ought to decide if they should continue to service CJ Industries. If so, perhaps consider changing from their current informal, noncontract basis to a more long-term agreement. 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. Option 1 – continue to use Heavey Pumps.This would be probably the easiest decision since Heavey Pumps had been a reliable supplier for CJI for a number of years. This is also contingent on Heavey Pumps and the issues discussed above, i. e. quality and performance, price, delivery timing and volume requirements. The disadvantage would be CJ Industries may need to consider another supplier which might not prove to be as reliable. Option 2 – make the bilge pumps in-house. This appears to be the only item CJI had been purchasing from one of their suppliers.The question is why they decided not to make the pumps in-house. The case states that to make this pump, CJI would need to hire three additional employees suggesting they lack may lack the knowledge specific to its design, thus, the disadvantage will be a heavy learning curve over the nine months remaining. Also, CJ Industries would need to clear out space suggesting there may not be enough, currently. The disadvantage here is that it may take awhile to clear out the necessary space. Overall, the main advantage would be more control of production, timing, pricing, etc.To assure continued contract compliance, CJ Industries must not allow the terms negotiated in the contract to â€Å"slip through the cracks† as before. This applies to both parties. CJ Industries must develop a system for measuring and keeping quality and performance history records on Great Lakes – you cannot improve what you cannot measure. Alternatively, CJ Industries must uphold their relationship with Great Lakes by being a good supplier while maintaining good quality customer service and competitive gain. Ultimately, the partnership is in place. Now, it needs to be made a successful one!