Major facts

CJ industries has the chance to supply Great Lakes with vital engine parts for their luxurious boats. They got this contract through their progressive and capable buyer-supplier relation that they have with Great lakes. It is a five year contract that is worth $10 million per year. This contract gives them a chance and opportunity to prolong the contract if they comply with the needs of Great lakes.

The contract is important to Cj industries as it gives them a chance at a successful business future and its main aim should be to meet the terms of the business contract. Although they carry out most of their manufacture internally, they have been out sourcing bilge pumps to supplement their stock on a casual non contractual base from heavy pumps .Heavy pumps is a modest local business entity that has specialized in producing pumps .Heavy pumps was manufacturing the bilge pumps and transporting them to CJI’s warehouse at a cost of $1500 per part. The cost of delivery was $500 for each pump’s consignment. The delivery was made after every four or six months.

Major problems

From the CJI’s perspective the issues that need to be discussed by Mr. Ashby was the contract it made with Great lakes. Although CJI had enough and surplus capacity to improve and speed up on the manufacture and production of the different components that were supposed to be delivered to Great lakes according to the agreement signed; they were not confident that they would deliver their part of the contract in spite of already signing it. The challenge was that Cj industries had already signed the contract with Great lakes without informing them that they were not able to meet all of their requirement within the duration that had been stipulated in the contract.

  The other issue on the side of C J industries is that they had been in partnership with Heavy pumps. Heavy pumps has always supplemented Cj industries with bilge pumps. In terms of the contract, CJ industries was not sure if heavy pumps could increase their rate of manufacture and production to meet the threshold required by Great lakes contract. The new demand that was stipulated in the contract required fifty bilge pumps every month and the number had the potential to increase depending on great lake’s needs. Therefore the bottom-line issue with heavy pumps is that no one confirmed the ability of heavy pumps to meet the demand of pumps required (Part two supplies issues).

Nick Gram is the purchasing administrator of Cj industries. He was also the man who made the contract between great lakes and CJ industries happen. He was confident of the potential of cj industries to manufacture and deliver the pumps but it needed an additional finances. The finances would cater for labor and space required to manufacture the pumps. The issue was that he made the contract without taking necessary steps. For the above reasons Mr. Ashby should look into all the cj industries and heavy pump before he can be able to manage the project appropriately (Part two supplies issues).

One of the alternatives that nik gram considered was to  either seek other supplies who reside within the geographical region or put up infrastructure that would facilitate the production of bilge pumps and its parts (Part two supplies issues)

Possible solutions

A combination of this alternatives is a better option for CJI.

CJI should continue its partnership with heavy pumps. One of the advantage of continuing doing business with a long time partner is that the partner is more reliable and predictable .CJI already know the work ethic of heavy pumps and they can deliver their specifications to them when they are called upon to do so. Heavy pumps are also in close proximity to CJI and it will be more cost effective to work with them. Quality work is assured from heavy pumps due to their past relationship with CJI (Part two supplies issues).

            The disadvantage of using heavy pumps is that Cj industries is not sure whether they are  able to supply more than 50 bilge pumps per month as per the contract terms. The terms of the contract are supposed to be adhered to consistently on a monthly basis (Part two supplies issues).

The advantage that comes with   manufacturing and producing bilge pumps in -house is that it will comfortably meet the requirements and it will be more cost effective as transportation will to be considered as part of the expenses. The disadvantage of using in- house is that and an initial capital expenditure of US $500,000 as quoted by CJI’s production manager is needed. This is an expensive investment and  Cj industries has no experience in handling the demand required by Great Lakes Company therefore they will be indulging in an area they have never handled before in their business (Part two supplies issues).

The advantage that comes with using other suppliers is that it will easen the burden off CJI and heavy pumps and spread it to other firms. Also using the expertise of other suppliers will give heavy pumps and cj industries a chance to prepare themselves so that they can maximize on production of the pumps to add on whatever number the suppliers have produced.

Disadvantage that comes with using other suppliers is selecting and narrowing down to the right supplier will be challenging and will be time consuming. An unknown supplier may fail to meet the requirement specified or their quality may be lower than what is required. This may make CJI to incur more cost. So, other suppliers would be expose CJI to more risk due to the uncertainty. (Part two supplies issues).

Choice and rationale and implementation of the choice

The best way to solve this issue is to bring in Heavy pumps to help in carrying out in house activities in order for CJI to become more familiar with what it entails to manufacture bilge pumps and to gain more exposure on what needs to be rectified on their part. (Part two supplies issues).

 CJI can assure a consistent and continued contract agreement and other additional potential contracts in the future from great lake by cementing a good functional work relationship with CJI staff and other associates. A good relationship will entail openness on the terms and conditions of the contracts and how the conditions can be met comfortably without stressing one side. Also informing great lakes on the progress made in the production of bilge pumps and at the same time focusing on how the agreed target can be met will increase the trust of great lakes and trust will award them more contracts. The first step that can be taken to implement the choice above is by drafting a service delivery plan. This exercise will ensure that the whole contract is properly managed by enabling actual terms are adhered to. By bringing in heavy pumps will enable CJ industries to produce more bilge components. This will be a collaborative effort that will require less labor and utilizing the skills of both companies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Part two supplies issues: CJ Industries and Heavy pumps.