Crouse Hinds Inc. Case Analysis
Crouse Hinds, Inc. Case Analysis
1. PROBLEM STATEMENT
Crouse Hinds Inc. is trying to reduce logistic expenses and overall costs because of a recent resignation of an experienced, yet possibly outdated Purchasing Manager during a period of national economic turmoil. Savings will be met by creating a thorough logistics strategy, which is aimed at reducing major costs such as a 24% annual holding cost, and multiple transportation costs.
2. ANALYSIS
Crouse Hinds, Inc. is a well-established manufacturer of heavy duty and explosion-proof electrical products. They are a division of conglomerate Cooper Industries, which has industry leading sales revenue of nearly $2 billion. Paul Thorpe was a Purchasing Manager whose practices were challenged to be outdated with his failure to meet the need to cut costs and please suppliers. After doing it his way for 30 years the tides have changed and made way for a new Purchasing Manager.
Digby, Baldwin, and Chester are the three significant suppliers for Crouse Hinds, Inc. and are a large focus for the success of Crouse Hinds’ operations. After these suppliers manufacture their goods into finished products, they are shipped to the distribution center in Roanoke, Virginia. This distribution center is Crouse Hinds’ primary customer. The major suppliers do not communicate with each other and they all make LTL shipments to Roanoke on a daily basis. It typically takes 6 days for the LTL shipments to go from Roanoke to California and vice versa.
Crouse Hinds also ships 3,200 LTL shipments annually to California distributors from Roanoke. The LTL shipments come with a considerable amount of variability, and often take longer than 6 days to ship from Virginia to California. From this variability comes uncertainty, which caused Thorpe to have a high holding cost of 24% in the Roanoke, Virginia distribution center with 5 weeks of inventory on hand. Thorpe wanted LTL shipments from the major distributors, Digby, Baldwin, and
1. PROBLEM STATEMENT
Crouse Hinds Inc. is trying to reduce logistic expenses and overall costs because of a recent resignation of an experienced, yet possibly outdated Purchasing Manager during a period of national economic turmoil. Savings will be met by creating a thorough logistics strategy, which is aimed at reducing major costs such as a 24% annual holding cost, and multiple transportation costs.
2. ANALYSIS
Crouse Hinds, Inc. is a well-established manufacturer of heavy duty and explosion-proof electrical products. They are a division of conglomerate Cooper Industries, which has industry leading sales revenue of nearly $2 billion. Paul Thorpe was a Purchasing Manager whose practices were challenged to be outdated with his failure to meet the need to cut costs and please suppliers. After doing it his way for 30 years the tides have changed and made way for a new Purchasing Manager.
Digby, Baldwin, and Chester are the three significant suppliers for Crouse Hinds, Inc. and are a large focus for the success of Crouse Hinds’ operations. After these suppliers manufacture their goods into finished products, they are shipped to the distribution center in Roanoke, Virginia. This distribution center is Crouse Hinds’ primary customer. The major suppliers do not communicate with each other and they all make LTL shipments to Roanoke on a daily basis. It typically takes 6 days for the LTL shipments to go from Roanoke to California and vice versa.
Crouse Hinds also ships 3,200 LTL shipments annually to California distributors from Roanoke. The LTL shipments come with a considerable amount of variability, and often take longer than 6 days to ship from Virginia to California. From this variability comes uncertainty, which caused Thorpe to have a high holding cost of 24% in the Roanoke, Virginia distribution center with 5 weeks of inventory on hand. Thorpe wanted LTL shipments from the major distributors, Digby, Baldwin, and