1. Situation Audit
Fell-Fab Products is a manufacturer of interior coverings, which takes 75% of their total production and the rest was based on diverse products for Canadian military, shipping containers, elevators and many other specific products.
Glen Fell, the president of Fell-Fab Products received an offer from North American Airlines (NAA) to overtake the whole interior coverings management process for their company. NAA would have several benefits such as reduction of their costs, less “aircrafts on ground” (AOC) and perhaps better product quality. On the other hand, for Fell-Fab Products it would be a good opportunity to increase their revenues and profits. Everything looks perfect in statistics, but the other side of this proposal is that Fell-Fab Products does not know a lot about running a service operation. Company is concerned because of bad experience with previous partners; they did not hold cooperation with those companies for very long. In this offer the most important reason to Mr. Fell’s doubt is because of their inexperience in this field, and any mistake and failure could cost them money and also bad reputation. Furthermore, Fell-Fab Products’s interiors sales would decrease and their just-in-time production process would be on a stake. 2. Problem/decision statement
Fell-Fab Products is a niche manufacturer that bases its production on flexibility with their customers and just-in-time/zero inventories. Its strength is in having stable customers that require products for long terms, which they served with high professionalism. On the other side, Fell-Fab Products does not have any experience in service operations. 3. Alternative identification
After long discussion we discovered that Fell-Fab Products has two other alternatives besides accepting or rejecting the NAA’s offer. First one is to negotiate with NAA to become their full interior supplier. At the moment they are just accounted for 35% of...