Leadership

Question 1

It is very clear from the case that the contract with Great Lakes is really important for CJI. If this contract signifies 30% of its annual sales, CJI needs to work out a sturdy plan to ensure the desired supply of bilge pumps to Great Lakes and honor the contract.

The two other pump manufacturers cannot be considered. Their location 500 miles away from the firm’s warehouses will entail high transportation costs. This will not only increase delivery costs for CJI, but will also contribute to more threat to the environment in terms of carbon monoxide emissions, noise pollution and traffic congestion. Furthermore, either of these 2 manufacturers have never been used in the past, making it difficult for CJI to entrust a $10million worth of orders to either of them. Therefore, Nik Grams needs to think of better ways to meet Great Lakes’ demand of bilge pumps for the next 5 years and hopefully secure additional contract business in the future.

My first suggestion would be that CJI and Heavey Pumps collaborate and divide the required number of pumps. The latter currently produces an average of 25 pumps per month. Since CJI has the capacity and the required financial resources to manufacture the rest of the pumps, it can produce the difference in-house. The advantage of this option is that CJI and Heavey Pumps will not need to overuse its labor and other resources and share the workload. If CJI has the capacity and financial resources to make 50 pumps per month, it can surely manufacture the extra 25 pumps. Moreover, CJI can build a better working relationship with Heavey Pumps: CJI could have eliminated Heavey Pumps from the supply chain and look for another supplier who can provide the 50 pumps per month. Instead CJI preferred keeping Heavey Pumps in the equation and honor the past years’ collaboration. On the other hand, making the pumps in-house does not seem to be a viable option since CJI has no experience in pump manufacturing. Keeping in mind the...