In the John Deere case Scott Nolan has faced a challenge when he accepted the job. His supervisor has requested him to identify and justify which suppliers to integrate in the product development phase, and specify how to construct the interactions with the chosen suppliers. The target of Scott Nolan is to have the new plant up and running smoothly by the target date of July 1998. The market was growing about 15-20% per year and was projected to reach $1.2 billion, or 60,000 units by year 2000-2001.
In 1995-1996, John Deere had been outsourcing their manufacturing to Holland, although New Holland produced their own competing skid loaders. New Holland had agreed to sell only the excess capacity to manufacture the same product. Since the market demand was increasing John Deere needed to make more Skid Loaders, although New Holland refused to do so, in return, John Deere had decided to design and manufacture their own skid loaders directly, and become the leading manufacture of Skid Loaders.
A solution for John Deere to manufacture directly is to build a new building in Knoxville, TN. In April of 1996 JD in invested in a $35 million site to directly design and manufacture the Skid Loader. By taking back the manufacturing and design of the skid loader, John Deere can really take control of their costs and profits. Since New Holland was a main competitor, John Deere can now differentiate their product from others in the market. John will be able to make their design specific to their consumers’ needs including, fuel efficiency, reduced maintenance requirements, ease of use and reduce operational costs. Another solution to “creating their own” skid loader would be to offer different models of the loader that offered multiple usage requirements (hand or foot controls). As another sales incentive, John Deere would like to offer demonstration along with drop offs to