Butler Systems
Butler Systems is a manufacturer of environmental control systems and power conditioning equipment. Butler is the world’s leading supplier of computer support systems and the largest supplier of precision air-conditioning and power protection systems. Butler sales exceed $1 billion. The HD-5 battery is the primary component for the EPS (emergency power supply) system. The vice president of operations is concerned about the low HD-5 battery inventory. There is currently a 20-day supply of batteries. A 90-day supply is the normal inventory level. Butler has not received a battery shipment in two months. Last week when the buyer discussed the problem with SDX, the battery supplier, it was revealed that the contract price would be doubled and that the current contract with Butler is now null and void.
Questions:
1. As the VP of operations, what is your assessment of the battery shortage problem, and what actions would you take and why?
2. What is the buying organizations role in selecting and qualifying potential suppliers?

Case 12: Hoosier Pride Construction

In addition to the cyclic down turn in the construction industry HPC was facing a serious problem. The employee benefit costs have increased at approximately three times the rate of increases for wages alone (19 percent versus 6 percent yearly) from 2000 to 2001. In particular, the employee health insurance costs increased from $2,584 per employee per year in 2000 to $4,316 in 2001. The insurance premiums to cover these costs increased 21.4 percent in 2003 and 22.6 percent in 2004. From 2000 to 2004, premium increases averaged 12.2 percent per year and the average health cost per employee was $7,212 in 2004. The owner expressed frustration at these increases and asked what could be done. HPC’s health care costs have grown faster than overall inflation and faster than any other segment of