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Case Study. Custom Fabricators Inc. From Lean Manufacturing to Contract Manufacturer

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Operations Management Case Analysis: Custom Fabricators Inc. ? From Lean Manufacturing to Contract Manufacturer Introduction This paper analyzes and examines the case article entitled ?Custom Fabricators, Inc. ? From Lean Manufacturing to Contract Manufacturer. It aims to identify the business challenges faced by Custom Fabricators, being led by Ben Lawson, and the solutions or strategies that can be implemented to maintain and enhance its position in Orleans Elevator?s business supply chain. Custom Fabricators Inc. Challenge: Orleans Elevators Materials Outsourcing The main business challenge that Ben Lawson is facing as Chief Executive Officer of Custom Fabricators Inc. is how to re-think or re-position its business in order to cope with Orleans Elevator?s action of outsourcing low-cost raw materials from Mexican suppliers through the use of an internet purchasing system. Custom Fabricators Inc. Strategies Utilizing the Comparative Advantages With its long working history with Orleans, Custom Fabricators Inc. ...read more.


By focusing on products to which it has expertise and that return the highest profit i.e., discontinuing production of products with lower profit margin, Custom Fabricators Inc. not only maximizes its comparative advantage but also improves its profitability. To achieve and deliver its value proposition of providing the lowest cost control panels and motor housings, Custom Fabricator Inc. will implement the following strategies: (1) outsource low-cost raw materials, (2) explore technological developments in manufacturing elevator control panels and motor housing to improve efficiency and cost-effectiveness, and (3) expand its market clientele. Custom Fabricators Inc. must be able to find and expand the number of its suppliers on its supply chain that offer low-cost raw materials. With globalization, this may entail the inclusion of foreign suppliers on its supply chain. Also, Custom Fabricators Inc. must explore recent technological developments in producing elevator control panels and motor housings. ...read more.


Transporting the parts from Mexico to Bloomington would take at least a week. In order to avoid unnecessary delivery turnarounds and to be able to put a ceiling on the delivery time, Custom Fabricators Inc. should work with Orleans in also negotiating with the outsourced firms that the suppliers shall be responsible for the insurance of the materials prior to the turnover to Custom Fabricators Inc. The purchaser and supplier should also agree on acceptable delivery service level agreements to safeguard Orleans and Custom Fabricators Inc. from late delivery costs. Custom Fabricators Inc. solely depends on Orleans in acquiring materials that the firm needs to manufacture the elevator components. With the availability of outsourced firms providing cheaper raw materials, Custom Fabricators Inc. should look at this as an opportunity to consider outsourcing the raw materials that they need, which could possibly support the company in exploiting new and widening their current market segment. ...read more.

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