Custom Fabricators Case Solution

I. hassle How keister Custom Fabricators, Inc. (CFI) prevent a possible logical argument sateover of the Mexican suppliers and at the same clipping, ensure semipermanent makeability? II. Assumptions 1. The case is set on the current year. 2. The Mexican suppliers entrust pull in the bid and yieldion ride out exit to Mexico. 3. In case CFI would switch to pack together manufacturing, the contracted volume of unit of measurements that they will obtain is within the range of their return chthonic pitch manufacturing. 4. siege of siege of siege of Orleans would shoulder the exist of shipping intersections from Mexico to CFI only. III.Alternatives establish on the opportunities of CFI, the aggroup has identified three preferences for the phoner to weapon a. Work closely with Mexican suppliers This involves presidential term of effective communication lines (e. g. through Internet, image conferencing), assigning a representative to admonisher tonus of products to be shipped, displace prize tone down machines to Mexico or asking Orleans to require the Mexican suppliers to conduct select check before shipment. b. Differentiate product and/or expand commercialise This involves growth more advanced products (e. . touch-screen elevator control panels) or expanding its target trade (e. g. preferably of dear supplying control panels for elevators it can in any case create ones for ATMs, safety vaults etc. ) c. Switch to contract manufacturing This nitty-gritty or else of producing outputs only when Orleans unavoid adequatenesss it, CFI would immediately have a fit(p) intersection per month that they would need to deliver. IV. Analysis First, let us identify the major ejects in the case. Currently, CFI has several strengths that dish out them establish a competitive advantage.First is the gilds proximity to the construction site and to the Bedford bring which serves as its supplier as it was commensurate to keep the transporta tion cost minimal. some new(prenominal) one is its customer intimacy. Beca phthisis CFI knows exactly what Orleans needs and when to provide it, it is up to(p) to bring home the bacon to their customers brings in time with skinny attri alonee products. Having been in the line of merchandise for over 15 years, CFI was alike suitable to set up efficient trading operations which helped them on becoming a lean manufacturer. It too has loyal and skilled employees that argon satisfied in their job.Lastly, its business has also been profitable with a last profit margin of almost 30%. However, the company also has several weaknesses that we must take into consideration. First, CFI is a private company which means it has limited financing options and relies heavily on its revenues as generated by its operations. Also, because it wants to maintain its good relationship with its employees it could not reduce excavate cost. Because of Orleans change magnitude efforts to reduce be , the company faces the threat of having the production of raw materials locomote to Mexico because of the cheaper proletariat costs there.If that would happen (and this make-up assumes that it will), CFI king have problems with shipping backbone items that are not of par quality in addition to possible problems in communication. Moreover, there is also the threat of competitor as Orleans might life for new(prenominal) suppliers in Mexico to continue to commence costs and since CFI couldnt humble its costs anymore, Orleans might just character totally from Mexico. Now, let us crumple each of the ersatzs. The first one is to melt closely with its Mexican suppliers.Through this, CFI will be able to ensure the quality and secure shipment of units to their company. It would also lessen chances of error in production and economy and decrease waiting costs for the unit replacements. However, there is the uncertainty of soliciting cooperation from the Mexican suppliers and sending a representative or a quality control machine in Mexico is dear(p). Moreover, the Mexican suppliers might gain intimacy of CFIs efficient production march which ontogenys the risk of business putsch.If CFI will break its product, it would be able to lessen its habituation on Orleans as it would be able to get more customers and thereof generate more income. Also, there is a lesser risk of business takeover as their product will increase competitive advantage as it was able to provide more value for a small additional cost. This can also be related to the alternative of foodstuff expansion as its differentiated product could open new market opportunities for them. However, it should also be considered that this alternative requires more enthronization in R&D and different equipment.Also there are risks of market failure and having problems in meeting learn due to its limited capacity. Lastly, we have the alternative of switching from lean manufacturing to contract manufacturing. This would help CFI develop economies of scale and receive fixed income or stable inflow of revenues. Because of this, it will be able to better apportion its resources and might even reduce labor costs as it would generally need less lapers. CFI can also use its excess capacity to cater to other customers or work on other products.However, this can also be a factor against them because Orleans might be reluctant to have it as a contract manufacturer thus increasing the risk of CFI being replaced by a Mexican supplier. In addition to that, this alternative also comes with termination costs and decrease in competitive advantage. V. Plan of meet After analyzing the position and the possible alternatives of CFI, we created an put to death plan that takes into consideration the long-run costs and benefits of each option and its technical, operational and scotch feasibility given the current capacity, resources, and opportunities of the company.Based on the analysis, CFI could undertake several alternatives but each should be implemented at the right time. Here is the proposed action and chance plans for the company Short-term (1-2 years) Assuming that the production of raw materials will move to Mexico, the scoop up immediate action that CFI could undertake is to work closely with the Mexican suppliers. The company might not be able to lower its costs anymore but they could lock up ensure that the products that they create are nonoperational of good quality and are able to meet the demand.Moreover, we make up ones mind that it is unlikely for Orleans to eliminate CFI in the supply concatenation as it would be more costly for them to look for new Mexican suppliers considering that they already established a good business relationship and developed the efficiency caused by over 15 years of functional together. Long-term (More than 2 years) To address the issue of ensuring long-run profitability knowing that CFI couldnt compete with Mexican suppliers in name of cost, it can try to differentiate its products to nurture its competitive advantage.Since the company has a high profit margin and loyal workers that adopt when there is only a demand for it, it could use these as additional investing in R&D and be used to cater to other consumer demands. Because of this, it would be impractical for Orleans to eliminate CFI in the supply chain as they would get more value from it that they couldnt just get anywhere easily. Moreover, CFI could also see get an opportunity to expand its market for its unique selling proposition thusly increasing its profitability.