Case Study: The Muenster Pump Company
1. There is a difference between making the product in-house, and choosing to outsource it. Terry should look at other information that could include response time for the required products demanded to be able to see if the company would be able to give ample supply and comply with the order. Terry can request a report of the Union Foundry cast housing that can be factors such cast layer thickness or type of material and compare it to the Muenster Company’s cast housing production. She could contact other competitors or suppliers and hear their recommendation about Union Foundry. She can calculate if there are other costs in delays or other long-term costs that can influence the market or internally in departments. Terry should not let cost be her main focus because outsourcing can have drawbacks as well that can lead to less control over the production process, longer lead times ext.
2. Terry should look to get not only Nathanial Dorf to take part but Robert A. Dorf also in the make-or-buy decision. Uncle Ned’s decision is more an emotional and ethical one and is not primarily concerned about maximizing profits. If Terry can bring the outsourcing benefits to Robert A Dorf, the President and CEO, than she could have another answer and outcome if she emphasizes the potential profitability increase.
3. Terry must focus on continuously strive for competitive advantage, procuring the best products at the lowest possible costs to maximize profits. Also the focus should be on the ‘5 rights’, right place, right time, right price, right quality, and right quantity. The supply chain management must integrate all the individual elements together such as supplier relations, inbound and outbound logistics ext.
4. I would recommend not outsourcing based on several potential factors that can have a profound effect on the company. Loss of competitive advantage, loss or retrenchment of employees,...