September 15, 2011
CASE HIGHLIGHTS: (Key points, events in case relevant to study topic) Sensormatic manufactures, markets, and services theft detection devices and pioneered the merchandise security business. Its current manufacturing operations occur at Deerfield Beach plan between two separate departments of systems production and tag production. Sensormatic currently purchases polypropylene and ABS parts from Canon Plastics and Piedmont Plastics for its alligator, half alligator, and other tags. Now it is evaluating whether to make or buy plastic parts while at the same time considering the adoption of a radically new process technology to make 'throw away' tags that would simplify assembly and is expected to achieve mass production rates within 1 year.
SALIENT ISSUE: (Business issue, crisis, impact? Operations decision or challenge?) The issue for this portion of the Sensormatic Electronics Corporation case study is whether Sensormatic should proceed with purchasing plastics from Canon Plastics, purchase Canon Plastics, or produce its own plastic parts in house in light of its possible alternative competitive advantage to produce “throw away tags” in the next year. The issue is being analyzed as the suppliers are causing Sensormatic to ship its products late and these options might be a good vertical integration decision in the short-term. The opportunity to put “throw away tags” on the market makes the operations decision more of a challenge to allocate cash flow up front to a capital budget project with a payback of 6 years or more. The strategy of Sensormatic is to remain as the industry leader and the operating decision to expand and make a new product, “throw away” tags, a process technology decision, could enhance its position in the near future..
COMPLICATIONS/COMPLEXITIES: (Include one or more of the following) * Market changes -Suppliers are not reliable for the old technology of the gator tags and other...