CJ Industries and Heavy Pumps Case Study Assignment

CJ Industries and Heavey Pumps
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Background of the Case
In this case, study, the CJI Company intends to approve its capability by supplying pumps to Great Lakes Boat Company. Through this contract, the company income will increase by $10 million in a year and hope for a long-term engagement with the company. The problem with the CJI is how to provide the required quantity of bilge pumps; the purchasing manager needs to explore several options. Mr. Ashby needs to research to get information that will enable them to estimate the amount needed to sustain the contract. He needs to understand some of the potential challenges and decide whether to continue supplying or not. In this case, Mr. Ashby needs to conduct a cost benefit analysis if CJI intends to increase production, including bilge pumps as part of their production or simply work with a pump supplier.
Problems Statement
The main challenges are how CJI Company can supply 50 pumps every month as requested by Great Lakes Company. There will be potential additional costs of equipment, labor, and other production related cost that Heavey will incur due to extra demand for bilge pumps, including delivery costs. Heavey is a reliable supplier for CJI for several years, but the company has not purchased any other equipment from the company. The demand for these pumps is low and the company delivers them occasionally. There is little performance records to prove its past performance, the unknown quality history for Heavey Bilge pump supplies is a challenge.
Alternative Solutions
The company can decide to increase production and improving on their inventory. The company should focus on creating a pump production section by training specific employees to meet its new demand; this could be part of its future investment (Yawar & Seuring, 2017). The second option is to negotiate with Heavey Pumps to give them a better offer that will generate better revenues since the reason why Heavey did not want to supply is that the payment was not worth the effort. In addition, relying on a company that CJI did not know much about could be risky and could make the company look unreliable for Great Lakes (Yawar & Seuring, 2017).
Negotiating for a better offer is a better solution that would enable CJI industries not to jeopardize the contract. The disadvantage would be that the company would require the additional cost of approximately $ 500000 to enable them to meet the demand. The other challenge would be how to find expertise required for pump manufacturing (Yawar & Seuring, 2017). Heavey Pumps Company needs to inform CJI of the increased demand and confir...