Essay on Case Study : Inc. Case Study
• The steel contracts account for about 60% of the total cost.
• In the production phase, suppliers are expected to provide defect-free products with JIT delivery.
• MasTech won a bid to produce a cross-member part for the new frame of a new Ford truck model, & will be using Uxbridge as their steel supplier.
• MasTech requires 130,000 tons of steel annually (260,000,000lbs) to complete the cross-member deal.
• Steel is paid for in hundredweight (100lbs = 1 unit).
• Uxbridge indicated that it would add another line for its business with MasTech.
• Both MasTech & Uxbridge negotiated a price of $30 per hundredweight, FOB MasTech.
• As standard practice in the industry, Uxbridge used Vaughan Steel Processing to do all its secondary processing (pickling, slitting, & edge trimming).
• MasTech ‘s steel suppliers were required to make deliveries on a fixed schedule, sometimes ever 4 to 8 hours.
• MasTech could machine downtime & risk of delaying shipments to customers. Idling costs are $1,500 per line per hour and $300,000/hour of a car assembly plant.
• Vaughan is only able to supply 75% of MasTech’s requirements, which resulted in Robert Fisk to choose alternate sourcing, incurring a 10% price premium.
• Demand for steel has been strong the past two years, but indications were that the market was beginning to weaken.
• Colgon Steel has not been profitable in its recent years.
• Robert Fisk received a quote of $24.75 per hundredweight of…