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Futronics, Inc.
Central Stores versus Outsourcing Analysis
Devry University Online
PROJ410/Contracts and Procurement

Central Stores versus Outsourcing

Steve Hastell
Futronics, Inc.
1213 Lincoln Parkway
Lexington, Massachusetts, 02421

To offset the changing trends of fierce competition, flattened sales, and decreased profits the following analysis will provide the Corporate Cost Reduction Team members with the needed resources and recommendations to make an informed decision in the corporate overhead reduction program. Outsourcing is a hot topic in corporate America. Companies have begun to look at outsourcing of non-core materials and services to achieve substantial cost reductions while turning these low performing assets into a competitive advantage. Within this analysis a comparison of cost savings, lead and delivery times, product selection, facility space and labor cost will be examine as to assessing the “make or buy decision while supporting the Senior Management’s, May 2002 mandate. The objective is to reduce the short and long-term cost of office supplies for Futronics, Inc. The question or decision to be made is whether to do so via in-sourcing, outsourcing, or a hybrid combination. FUTRONICS, INC. COST REDUCTION PROGRAM

Two years ago Futronics found itself facing fierce competition, flattened sales and decreasing profits, so a corporate wide cost and overhead reductions effort was put into place with the emphasis being placed on purchasing departments to seek cost savings areas within the corporation. In the effort of reducing cost and overhead, the Central Stores operations came under review. The initial purpose of this operation was to reduce individual office inventories and decrease purchase order costs. CURRENT CENTRAL STORES OPERATION

Today, Central Stores services forty-two sites from the main warehouse in Lexington. The annual internal sales are $900,000, with an...
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