CJ Industries Case Study
CJ Industries has just been awarded a 5-year contract with Great Lakes Pleasure Boats, a luxury and is now trying to decide how to meet the demand of their new client. CJ Industries manufactures all part in-house, except bilge pumps. For years, CJ Industries has been using Heavey Pumps to meet their demand for bilge pumps. In the past, CJ Industries ordered 50 pumps every 4-6 months. With the new contract, in order to meet the demand of Great Lakes Pleasure Boats, CJ Industries would need at least 50 bilge pumps every month from Heavey Pumps. The issue now is what alternatives CJ Industries will use to meet the demand of Great Lakes Pleasure Boats and what the possible risks of each of these alternatives are.
The first option CJ Industries has is to keep Heavey Pumps as the bilge pump supplier. The advantage of this option is that CJ Industries and Heavey Pumps have an already established relationship. Heavey has been supplying CJ Industries with bilge pumps for a number of years already and although there are no performance records, the quality of the pumps has not been something to worry about. The issue with this option, however, is whether or not Heavey Pumps could guarantee delivery of 50 pumps per month to one of the CJI warehouses. This option would expose Heavey Pumps to additional liabilities and risks. “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.” In order to determine whether or not keeping Heavey Pumps as a supplier would be a good options CJ Industries would have to determine whether or not Heavey Pumps would be capable and interested in this expansion. By securing this contract, it is imperative that CJ Industries be able to meet the demand of their client.
The second option CJ Industry has is to make the bilge pumps in-house. The advantage of this would be quality...
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