Applichem Case

Group Case Analysis Reports:

Applichem Case

Laura Brady

Andrew Jaworski

Ryan Casano

Objective and Scope

The central objective of the case is to determine how Joe Spadaro should rearrange his manufacturing business, Applichem, in order to cut unnecessary costs and produce more efficiently.

Recommendations

1. Shift all production from Gary to the Frankfurt and Mexico manufacturing plant.

2. Upgrade the Gary plant’s technology and operation management, while eliminating the Sunchim plant.

Analysis

1. Shift all production from Gary to Frankfurt and Mexico:

Risks

There is the potential for this action to adversely affect Applichem’s reputation due to the fact that the company would be laying off employees. It could lower employee morale and loyalty for they would be more inclined to think that the company does not care for their employees’ well being. This could therefore be harmful to Applichem’s reputation, and could lose some of their customer base. Moving all of Gary’s production to the Frankfurt and Mexico plants would put a lot of pressure on these plants to produce more than they are used to. Dividing Gary’s production volume in half, so seven million pounds would go to each plant, it would still be within Frankfurt and Mexico’s design capacity. But it is still more than they have ever produced before and there is the possibility that the plants would not be able to handle the extra volume. Gary, even though not as productive as Frankfurt and Mexico, is still producing half of North American sales, which is the greatest amount of all the plants. Gary is also still in charge of 20% of the Release-ease sales, so Applichem has the risk of losing some of this business. Transportation costs would also have to increase to ship the products from Frankfurt and/or Mexico to Gary, and the company suffers the risk of transit time being longer, which could lead to unhappy customers and loss of their business.

Benefits

Applichem...