Case 8-2: Throsel-Teskey Drilling
Situation: Alison Burkett - purchasing manager at Throsel-Teskey Drilling Inc. (TTD) o Reports to John Dietrich, the president, maintained a substantial equity interest in the company. o Responsible for sourcing and materials management. o Reporting to Alison was Ken Jenner, materials manager, and Emerson Parrish, warehouse manager Throsel-Teskey Drilling Inc.: Merged with Teskey-Dean Drilling Inc. (Teskey-Dean) o A mining services company performed diamond drilling o Had more than 600 employees o Drilling rigs: Approximately 145 rigs operated at sites in US, Canada, Mexico, and South America; about 75% (109 rigs) of the company’s rigs in the south-western US. o Customers of the company: top-tier multinational and junior mining companies involved in the exploration and production of copper, zinc, and gold. o Had the same size total sales as Teskey-Dean Drilling Inc. (Teskey-Dean). o Operating at full capacity under the market condition “Increased commodity prices resulted in substantial increases in demand for drilling services”. Purchasing and Materials management: o Purchased $25 to $27 million in goods and services from 400 suppliers, about 50% of the company’s total spend o Carried about 800 different stock keeping units (SKUs). Current situation since the merger: o Inventory systems had not been updated; besides, inventory levels are reviewed manually every week. o Ken provided Alison a written purchase requisition to replenish stock o Employees were provided open access to obtain materials and supplies in the warehouse o Sales had increased approximately 40% o Inventory levels were expected to decline but instead had more than doubled in budget BASIC ISSUES: 1. 2. 3. 4. 5. 6. 7. 8. Lack of synergies from purchasing Difficult to standardize completely with one supplier because of specific needs Suppliers experienced delivery problems and extended lead-time resulting from demand increase Bottlenecks occurred on...
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