Custom Fabricators Inc.

2. Recommendation

Together with Orleans’ shift in priorities and in response to a threat of possible competition from Mexican companies, there is a need for Custom Fabricators to also change its business model in order to be more effective and efficient in providing products and services to its customer and ensure future success of the business.  Rather than being just a supplier, CFI has to move up in the value chain by becoming a total solution provider banking on its core competencies of modern technology, pool of loyal and talented employees, good long term relationships with both supplier (Bedford) and customer (Orleans), and Lean manufacturing system.

To achieve the goal of becoming a total solution provider, the group reviewed Custom Fabricator’s critical success factors and core competencies in operations (Exhibit B – Custom Fabricator, Inc.’s Critical Success Factors and Core Competencies in Operations) and utilized a SWOT (Strengths, Weaknesses, Opportunities, and Threats) Matrix (Exhibit C – SWOT Matrix) in recommending the following strategies to Ben Lawson both in the short-term and long-term:

Short-term:

• Buy out or merge with the manufacturing plant in Bedford.  Banking on their good long term relationship, this would lead to streamlined operations and provide products with lower costs and high quality which would be difficult for Orleans to refuse.  It will make them much more marketable to OE and much more competitive with other suppliers.  Retaining their close proximity to OE would also contribute to lowering product costs at the same time maintain the speed in delivery time.
• Begin expanding and diversifying.  Currently, CFI is a single product shop specializing in certain parts for one company.  They should be able to diversify their specialties to incorporate other fabrications for other products in varying industries.  By acquiring or partnering with Bedford and capitalizing on their modern technology and talented employees, they will be able to diversify their final product making them more marketable to other customers.

Long-Term:

• Become a public company.  This will raise needed funds in order for the company to expand and with new customers; they can open other shops in strategic areas of the country perhaps near other large manufacturers who could benefit from their products.  Going public will also help market their company when people can begin to familiarize what the company can provide.
• Become an international business and apply a global strategy.  Take advantage of low cost raw materials and labor that other countries offer.