Muenster Pump Company
7 March 2014
Jimmie Leonard & Page#1
The Muenster Pump Company has manufactured high-quality agricultural pumps for over 40 years. The company is Muenster’s largest employer. This company is ran by the Dorf family which lives in or near Muenster. Since this company was founded by Emil Dorf, the firm has always been self-sufficient. Emil Dorf also established a foundry to cast pump housings and related items. Terri is the purchasing manager for Muenster Pump and graduated of State University. Since she assumed responsibility for purchasing, material cost have come down from 60 percent of the cost of sales to 50 percent in the two years since she assumed the position. The L-1012 represents 60 percent of Muenster’s demand for casting housings and is sold to distributors for $500. Major problems
The Muenster Pump company is a family ran organization with two generations experienced in manufacturing, however with the market changing and new ideas it is difficult for them to adapt to new change. Muenster Pump is manufacturing a case pump housing at a cost twice that of their competition. Bob Dorf has to decide whether or not to continue to manufacture in-house, or to outsource and buy the product from another company. However, there are dangers to outsource such as loss of control which entrust an entire process to an external provider may cause loss of control and skills, resulting in over dependency. (David Burt, 2010) Loss of client focus, which results in goals and objectives being differed between external providers and firms. (David Burt, 2010) Lack of clarity, managers failing to articulate the responsibilities of the selected external provider is a concern. (David Burt, 2010) Considerations such as quality, delivery, customer relations, cost, and volume of orders must be taken into account.
Jimmie Leonard, Page 2
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