Cost Reduction Analysis: Futronics
Futronics – Cost Reduction Analysis
As playing the part of Steve, I would first like to thank you for the opportunity to take on this important task that will help to shape the future here at Futronics. This analysis will bring you the different benefits for outsourcing weighed against those for maintaining our current central stores. It will also, in turn, provide you with the disadvantages for each option.
We can first start with the option of outsourcing. We have collected proposals from five different companies who are willing to take on our requirements for cost reduction by way of outsourcing our tasks to them. Some of the benefits to outsourcing are illustrated below in a general outlined table. Futronics Central Store | Issue | …show more content…
No longer having to maintain and operate our equipment that is used in the receiving process, and also will not have to pay the salaries for the workers required to operate our receiving operations. Not only will we be able to cut costs with facilities maintenance and labor costs, but also in regards to the products themselves. When outsourcing we have found that 90% of the products that we currently have in stock can be found at lower prices. This will drive our costs down and save us an average of 6%. Also with outsourcing we will still maintain our 500 item …show more content…
Will be locked in contract for 3 years and could face price increases with no way to recover |
In the final stages of the decision process and after evaluating many different options, my team and I have come to the conclusion, based on the facts given here that it would be more advantageous to the company to maintain the process that we have now. By doing this we do not run the risk of getting locked into a contract that could surpass the amount of time required to cut costs. Also we will maintain our amount of control that we currently have over our delivery and pricing options. This will also help keep all employees in good morale, because we are not firing anyone from our team here at Futronics. We are simply reducing the work load on some individuals while also cutting costs which will be beneficial to all parties considered. As we continue on the path that we are on now, and reducing the work capacity and saving in costs, we may be able at some point later in the future consider the
As playing the part of Steve, I would first like to thank you for the opportunity to take on this important task that will help to shape the future here at Futronics. This analysis will bring you the different benefits for outsourcing weighed against those for maintaining our current central stores. It will also, in turn, provide you with the disadvantages for each option.
We can first start with the option of outsourcing. We have collected proposals from five different companies who are willing to take on our requirements for cost reduction by way of outsourcing our tasks to them. Some of the benefits to outsourcing are illustrated below in a general outlined table. Futronics Central Store | Issue | …show more content…
No longer having to maintain and operate our equipment that is used in the receiving process, and also will not have to pay the salaries for the workers required to operate our receiving operations. Not only will we be able to cut costs with facilities maintenance and labor costs, but also in regards to the products themselves. When outsourcing we have found that 90% of the products that we currently have in stock can be found at lower prices. This will drive our costs down and save us an average of 6%. Also with outsourcing we will still maintain our 500 item …show more content…
Will be locked in contract for 3 years and could face price increases with no way to recover |
In the final stages of the decision process and after evaluating many different options, my team and I have come to the conclusion, based on the facts given here that it would be more advantageous to the company to maintain the process that we have now. By doing this we do not run the risk of getting locked into a contract that could surpass the amount of time required to cut costs. Also we will maintain our amount of control that we currently have over our delivery and pricing options. This will also help keep all employees in good morale, because we are not firing anyone from our team here at Futronics. We are simply reducing the work load on some individuals while also cutting costs which will be beneficial to all parties considered. As we continue on the path that we are on now, and reducing the work capacity and saving in costs, we may be able at some point later in the future consider the