Cumberland Industries Case Analysis

Case Write-up: Cumberland Industries

Summary

Cumberland Metal Industries (CMI), one of the largest manufacturers of curled metal products in the country, has just come across a new product application for their curled metal. This new application, in the form of cushion pads used in pile driving, could potentially be a big product for CMI. Consequently, the vice president of CMI’s Engineered Products Division, Robert Minicucci, thinks pricing could have a significant impact on the marketability of the product.

Analysis (EVC Analysis)

Given that pricing is crucial, it is important to identify what benefit can be derived from CMI’s cushion pads that alternatives (namely, asbestos pads) can’t offer. Given the information provided in the case we can easily identify a few benefits, including: performance efficiency, increased endurance, and health benefits.

In two separate tests, CMI cushion pads displayed greater endurance than asbestos pads by driving, on average, 290 more piles per set of pads. Additionally, fewer pads were used per set and fewer sets/set changes were required. These tests also demonstrated increased performance efficiency by driving more feet per hour and requiring less time during set changes. All of these factors resulted in CMI pads driving piles “33% faster than the asbestos and lasted for the entire job.” Additionally, using CMI pads eliminated the health dangers presented by the use of asbestos pads.

Since we’ve already established the benefits CMI pads offer, the next step in our analysis of the economic value to the customer (EVC) is to identify the closest competitive offering and calculate its price. Luckily, the case provides us with this information: the closest competitive offering is asbestos pads at $3 per pad.

The next step in our EVC analysis is to identify potential sources of differentiation value. These sources of differentiation can be derived from the benefits listed above, as follows: faster...