...CJ Industries and Heavey Pumps – Discussion Questions 1. What are all the issues here, from both CJI’s and Heavey’s perspectives, that need to be researched by Mr. Ashby? CJ Industries (CJI) The first issue presented for CJ Industries was its contract with Great Lakes. Though CJI had sufficient excess capacity to ramp up production on the parts to be supplied in the Great Lakes’ contract, they were not sure about the ability or willingness of Heavey Pumps to increase their production of the bilge pumps. The problem is that CJ Industries had signed the contract with Great Lakes prior to any discussions about ramping up production with Heavey Pumps. The next issue for CJ Industries was whether or not Heavey Pumps could guarantee delivery of 50 pumps per month to one of the CJI warehouses. This had been the one item that had “slipped through the cracks” on the contract with Great Lakes, and it now loomed as something that could conceivably put the contract in jeopardy. This could have been prevented by developing and keeping quality and performance history records on Heavey Pumps – supplier evaluation. Continuing, there were also at least two other bilge pump manufacturers, thus, CJ Industries may need to consider another supplier. Finally, CJ Industries could make the bilge pumps in-house. CJ Industries had the capability to make this pump, but it would require an initial capital investment of approx. $500,000 according to the CJ Industries production manager, along with...
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...1 Individual Assignment 10 marks Supply Chain Management MGT60404 BUS2454 August Semester 2015 Read the following case study and answer the two questions given. CJ Industries and Heavey Pumps In October 2007, CJ Industries (CJI) had just been awarded a 5-year contract with Great Lakes Pleasure Boats amounting to U.S. $10 million per year, commencing in July 2008. CJI would be providing a number of key engine components for Great Lakes’ luxury line of pleasure boats. The award marked an important milestone for CJI, in that it was the culmination of several years of hard work and dedicated service, supplying Great Lakes parts for their boats on an as-needed basis. The contract had significant long¬term follow-on potential as well, if they could continue to show Great Lakes they had the capabilities to be one of their valued, alliance partners. In addition, this contract with Great Lakes would represent approximately 30 percent of CJI’s annual sales, so performing adequately on this contract had a significant long-term financial impact on CJI. One of the parts, a bilge pump, was an item that CJI had been purchasing from one of their suppliers, Heavey Pumps, a small local specialty pump manufacturer, on an informal, noncontract basis. The remaining items were all built in-house by CJI and supplied to Great Lakes from one of their two finished goods warehouses located near the Great Lakes production facilities. Heavey Pumps was producing and delivering 50 bilge...
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... Detailed Recommendations VI. Answer to Case Questions VII. Learnings 1. Summary of Findings II. Background Information CJ Industries got the opportunity to provide Great Lakes Pleasure Boats with key engine components for their line of pleasure boats. They earned this through the culmination of several years of hard work and dedicated service, the development of a strong buyer-supplier relationship with Great Lakes and this 5-year, $10 million per year contract offers them the chance to have an extended relationship if they can satisfy Great Lakes’ needs. The opportunity given to CJI is very critical for the success of their company, and the principal goal of the company should be to fully satisfy the requirements of the contract with Great Lakes, and secure their future business with Great Lakes. CJI has been doing most manufacturing in-house, however, they have been sourcing their bilge pumps out to Heavey Pumps on an informal basis. Heavey has been a reliable supplier, however, their company is small and the expanded business will stress their production capabilities, so CJI has been planning whether to build the pumps in-house, or continue to subcontract them. III. Problem Statement Normally, CJI orders a batch of 50 bilge pumps eight to ten weeks ahead of time which occurred every four to six months. However, there is a new demand now of 50 pumps per month or more depending on Great Lakes’ demand and CJI’s...
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