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Write a brief (one paragraph) summary of the case


Write a brief (one paragraph) summary of the case. Each case has several questions associated with it. Read the questions carefully. Answer the questions with a critical eye. Each case analysis should be one full page in length.

Chapter Fifteen Supply Chain Management


1. Explain the key benefit of the revised approach, and the reason for the benefit.


Plants with tags are shipped to retailers.

End customers buy plants with tags.

2. MasterTag has not yet decided to implement this plan. List the pros and cons you think should be considered.

case {

|Brian Wilson, materials manager at B&L Inc. in Lancaster, Pennsytvania, was considering a proposal from his purchasing agent to outsource manufacturing for an outrigger bracket. It was the end of April and

Mr. Wilson had to evaluate the proposal and make a decision regarding whether to proceed.

B&L Inc. Background

B&L Inc. manufactured trailers for highway transport trucks. The com-pany comprised three divisions: the Trailer, Sandblast & Paint, and Metal

Fabricating Divisions. Each division operated as a separate profit center, but manufacturing operations between each were highly integrated.


The Metal Fabricating Division produced most of the component parts of the trailers, the Trailer Division performed the assembly operations, and the Sandblast & Paint

Division was responsible for completing the sandblasting and final painting operation. B&L manufactured approximately 40 trailers per year, with about two-thirds produced during the period from November


to April.

The Outrigger Bracket


The outrigger bracket, part number T-178, was an accessory that could

be used to secure oversized containers. The bracket consisted of four



Chapter Fifteen Supply Chain Management component parts welded together, and each trailer sold by B&L had 20 brackets—10 per side.


The Metal Fabricating Division was currently manufacturing the out-rigger bracket. The subassembly parts—T-67, T-75, T-69, and T-77—were processed on a bum table, which cut the raw material to size.

Although the burn table could work with eight stations, this machine had only been operating with one station. The final assembly operation,

T-70, was performed at a manual welding station.


Manufacturing lead time for the outrigger bracket was two weeks.

However, the Metal Fabricating Division had been able to coordinate supply and production with assembly operations. Consequently, finished inventory levels of the outrigger bracket were kept to a minimum. B&L’s inventory holding costs were 20 percent per annum.


The Outsourcing Decision


In an effort to reduce costs, the purchasing agent, Alison Beals, who reported to Brian Wilson, solicited quotes from three local companies to supply the outrigger bracket. Mayes Steel Fabricators (Mayes), a current supplier to B&L for other components, offered the lowest bid, with a cost of $108.20, FOB B&L.


Brian met with the controller, Mike Carr, who provided a breakdown of the manufacturing costs for the outrigger bracket. Looking at the spreadsheet, Mike commented: “These are based on estimates of our costs from this year’s budget. Looking at the material, labor, and over- head costs, | would estimate that the fixed costs for this part are in the area of about 20 percent. Keep in mind that it costs us about $75 to place an order with our vendors.” Exhibit 1 provides B&L’s internal cost breakdown and details from the quote from Mayes.




EXHIBIT 1 = Manufacturing Costs and Mayes Quote: Outrigger

Bracket T-178


Mayes Steel B&L Manufacturing

Parts Fabricators Costs

T-67 $14.60 $17.92

T-75 21.10 17.92

T-69 18.50 45.20

1-77 13.00 10.37

T-70 41.00 58.69


Total $108.20 $150.10


Brian expected that B&L would have to arrange for extra storage space if he decided to outsource the outrigger bracket to Mayes, who had quoted delivery lead time of four weeks. Because Mayes was local and had a good track record, Brian didn’t expect the need to carry much

Safety stock, but the order quantity issue still needed to be resolved.


B&L was operating in a competitive environment and Brian had been asked by the division general manager to look for opportunities to reduce costs. As he sat down to review the information, Brian knew that he should make a decision quickly if it was possible to cut costs by outsourcing the outrigger bracket.


Analyze the information and make a recommendation.


Source: Johnson, P. Fraser, Michiel R. Leenders, and Anna E. Flynn. Purchasing and Supply Management, 14th ed. New York: McGrawHill/irwin, 2011,

pp. 131-7.


Benton, W. C. Purchasing and Supply Chain Manage-ment. 2nd ed. New York: McGraw-Hill, 2010.


Blanchard, David. Supply Chain Management: Best

Practices. 2nd ed. New York: Wiley, 2011.


Bowersox, Donald J., David J. Closs, and M. Bixby

Cooper. Supply Chain Logistics Management. 3rd

ed. New York: Irwin/McGraw-Hill, 2010.


Chopra, Sunil, and Peter Meidl. Supply Chain

Management: Strategy, Planning, and Operation.

5th ed. New York: Pearson, 2012.


Guide, V. Daniel R., Jr., and Luk N. Van Wassenhove.

“The Reverse Supply Chain.” Harvard Business

Review 80, (2), pp. 25-26, 2002.


Handfield, Robert B., and Emest L. Nichols Jr.

Introduction to Supply Chain Management. Upper

Saddle River, NJ: Prentice Hall, 1999.


Johnson, P. Fraser, Michiel R. Leenders, and Anna

E. Flynn. Purchasing and Supply Management.

14th ed. New York: McGrawHill/Irwin, 2011.


Lee, Hau L. “The Triple-A Supply Chain.” Harvard

Business Review, October 2004.


Monczka, Robert M., Robert H. Handfield, Larry

Guinipero, and James Patterson. Purchasing and

Supply Chain Management. 5th ed. Stamford, CT:

South-Western - Cengage Learning, 2011.




Simchi-Levi, David, Philip Kaminsky, and Edith

Simchi-Levi. Designing and Managing the Supply

Chain: Concepts, Strategies, and Case Studies. New

York: Irwin/McGraw- Hill, 2000.


Webster, Scott. Principles and Tools for Supply Chain

Management. New York: McGraw-Hill, 2008.






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