Case Study - CJ Industries and Heavy Pumps: SCM Plan

Instructions:
This is Group Assignment. You are required to provide a written report. You are required to familiarize yourself with the selected case scenario and address all of the questions posed.

Scenario:
Bob Ashby has hired your team as consultants.  You have been asked together with your team to support Bob in putting together the plan within the 1-2 week timeframe. You are confident that your overall SCM experience will allow you to understand the challenge(s) Bob is experiencing.  

You decide to deliver a written report to Bob detailing your findings and recommendations and to support your recommendations with some external (i.e. Textbook, SAIT Library) research.  

Written Report:
Your report should be presented in an appropriate management format that reflects your professionalism.  Be careful to properly reference your source material, using APA referencing.  

To properly demonstrate that you have understood the output Bob wants, your report will need to be around 800-1200 words in length, excluding any abstract and appendices.You are to submit a soft copy in MS Word format by the due date in the assignments folder in D2L.  Standard marking rubric for written work applies.

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 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 long term 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.

Scenario

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 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?
   
   Grading Rubric:
   
   

   Area/Mark	0-1.0	2.0-3.0	4.0	5.0	Earned
   Identification of Main Issue/ Problem	· Unable to identify the main issue(s)/problem (s). · Identifies some irrelevant ideas. · Unable to identify any main question or presents irrelevant questions.	· Identifies the main/problem, but the statements are not clear. · Introduces a few ideas to be discussed. · Ends with a few questions raised, but they are not all relevant. Many main questions not identified.	· Clearly identifies the main issue/problem. · Introduces most of the key ideas to be discussed. · Ends with some of the main questions raised by the case study.	· Clearly identifies the main issue/problem. · Introduces all of the key ideas to be discussed. · Ends with a clear identification of the main questions raised in the case study.	/5.0
   Quality of Analysis and Interpretation	· Analysis and interpretation is basic or limited. · Provides a limited summary or restatement of the case facts. · Provides limited, often irrelevant argumentation. · Discussion is inadequate and limited. · Conclusions and implications of the issue are missing.	· Provides partial analysis and interpretation. Issue needs further exploration. · Provides an incomplete summary of the case facts. · Provides weak, illogical argumentation that does not tie in well with the case. · Draws a few conclusions and identifies some implications.	· Provides very good analysis, synthesis and interpretation of the issue. · Provides a relatively clear summary of the case facts. · Provides logical and convincing argumentation that mainly ties to the facts of the case. · Draws most conclusions and identifies most implications.	· Provides a comprehensive, insightful analysis, synthesis and interpretation of the issue. · Provides a clear summary of the case facts. · Provides logical and highly convincing argumentation tied to the facts. · Draws clear conclusions and identifies implications.	/5.0
   Quality of Solution / Strategies	· Unable to provide solution/ strategies. Lacks problem solving skills. · No information provided to support ideas. · No support for statements made.	· Provides some solution/strategies, showing limited problem solving skills. · Provides limited use of information to support solution/strategies. · Most statements are unsupported with evidence and examples.	· Identifies original and well developed solution/strategies, demonstrating effective problem solving skills. · Provides sufficient information to support solution/strategies. · Clearly supports most statements with evidence and examples.	· Identifies innovative and comprehensive solution/strategies, demonstrating outstanding problem solving skills. · Provides extensive information to support solution/strategies. · Clearly supports statements made with evidence and examples.	/5.0
   Writing Skills	· Writes paragraphs that are poorly written, with no transition between sections, creating confusion and lack of continuity in the response.	· Writes paragraphs that are often poorly developed with few transitions between sections. · Lacks continuity and organization. · Quotes and evidence poorly integrated into sentences and overall paper.	· Writes well developed paragraphs with transitions between sections. · Shows good organization. · Quotes and evidence integrated well into sentences and overall paper.	· Writes carefully crafted paragraphs, and transitions between sections. · Shows excellent organization. · Shows smooth integration of quoted material into sentences and overall paper.	/2.5
   Mechanics, Grammar, Professional Format	· Numerous errors in usage, grammar, and mechanics, affecting the readability and meaning of the paper. · Many errors in APA citation, demonstrating lack of citation knowledge. · Does not meet requirements for an academic response. · Does not adequately meet any case study written requirements.	· Frequent errors in usage, grammar, and mechanics, beginning to interfere with the readability and meaning of the paper. · Uses APA citation inconsistently and with errors. · Meets a few requirements for an academic response. · Meets a few case study written requirements.	· A few minor errors in usage, grammar, or mechanics. · Generally uses APA citation correctly. · Meets most requirements for a well written academic response. · Meets most case study written requirements.	· Mainly error free. · Uses APA citation correctly. · Meets all requirements for an excellent academic response. · Meets all case study written requirements.	/2.5
   Total					/20