COTTRILL INC MINI CASE ANALYSIS
About Cottrill
Cottrill is one of the largest corn refining companies that operated in the U.S. and Canada. The plant at Columbus, Ohio has been operating for 20 years with more than 100 employees and it produced supply inputs like high fructose corn syrup, starch and glucose, to varying industries like baked goods, beverages, etc. Judy Stevens is the purchasing supervisor at Cottrill and a current initiative in the department is to reduce the working capital, with a target of $300,000 per year.

Tallant Paging System
Tallant is an international wireless company that offers paging service compatible with the ProductionMessaging software system, a system currently used in Cottrill plants. The software detects any unusual conditions such as heat failure and sends out a warning message to a pager, which notifies the appropriate technicians. About one warning per week is usually reported as a message to a maximum of 20 pagers.

Concern with Tallant Paging Service
1. No direct contact at Tallant at the time of emergency. Only a toll free number can be reached with a long wait on hold until a agent attends the call. One hour of downtime at the Columbus plant costs an estimate of $200,000.
2. Dissatisfied customer service by Tallant that takes more than a month to replace a broken pager.
3. The current pager rented from Tallant was no longer available due to discontinued model. A similar pager costs $150 per pager.

Saxton’s Proposal
Natalie Hopkins, sales representative from Saxton submitted a proposal on switching the services to Saxton from Tallant.
1. Saxton offered simpler fee structure with overall costs lower than Tallant.
2. Saxton promised direct access to Natalie by e-mail or by phone.
3. Saxton agreed to test run the pagers with Cottrill’s system.

Cost Comparison/Savings between Tallant & Saxton Tallant Saxton
Annual Fee for airtime $4,068.00 $3,348.00
Annual Fee for phone number $468.00 $0.00
Annual Fee for equipment rental $2,856.00 $0.00
Annual Fee for maintenance $1,200.00 $0.00
Total Annual Cost $8,592.00 $3,348.00
Cottrill can save around $5,244 annually by switching the paging services from Tallant to Saxton. Also the following calculation show on the savings based on downtime that costs $200,000 per hour for Cottrill, assuming a downtime is 60 minutes average.

Cost of Downtime
# Of warnings per month 0 1 2 5
Amount of downtime (hours) 0 1 2 5
Monthly cost of downtime (Thousands $) 0 200 400 1000
Assume preventable downtime (hours) 0 0.5 1 2.5
Total downtime cost - Monthly (Thousands $) 0 100 200 500

By switching to Saxton, Cottrill can possibly be saving on the downtime, as the customer service at Saxton will be instant as promised.

Risks on switching to Saxton
1. No great reputation and unclear on necessary experience to handle the required technology.
2. Overlap of service with Tallant and Saxton – Tallant needs 30 days of notice.
3. Change of pager numbers and training the plant staffs accordingly
4. Feasibility of implementing the new system.

Recommendations
1. Judy can negotiate contract with Tallant on price by leveraging Saxton’s quoted price. Tallant might be willing to match the price.
2. Judy can also consider purchasing the pagers instead of renting them, which could save approximately $2,856 annually.
3. Judy can shop around to find some potential service providers in the paging services market and request for quotes as a last option.