DRW TECHNOLOGY

SITUATIONAL ANALYSIS:
DRW technology, a defense and aerospace company, was running profitably with its 21
manufacturing plants across USA. But the company was facing some anticipated downfall in
its sales due to defense budget reduction by government and a drop commercial aviation
market. Also, defense industry was inclining more towards fixed price contracts.
All the 21 plants are autonomous in their operational aspect. They prepared their own annual
budget and set a profit target. But some of the plants had failed meet their targets because of
fixed price contracts. Plant managers are trying to deal with the situation by contacting the
vendors.
Hilgard, company’s CEO feels that company can cut down the production cost by negotiating
in procurement. Thus, she hires Claiborne as the Corporate Vice President of Procurement.
His appointment news was made public via various means.
Claiborne is assisted by Debby Lopez who has been working diligently at DRW for the past
14 years. She provides him the cost data of past 10 years. Claiborne comes up with a plan and
assures to have nearly 50% cost savings in the next six years. Now he has to communicate the
new plan to all the plant managers so that they can implement it as soon as possible. Lopez
suggests him to meet managers of larger plants at least. But he doesn’t consider her advice
and sends a mail instead. In the mail he asks the managers to inform him at least 2 weeks
prior to signing the contract if it involves more than a certain amount. He also gets response
from almost all the managers within a week but the plan doesn’t seem to work.

PROBLEM STATEMENT:
1)How to make managers act according to the schedule in spite of their busy working
schedules in the upcoming months?
2)Whether to procure from national vendors or the local vendors?

OBJECTIVE:
To cut down the cost of manufacturing so that sales figure and profit do not decline with the
prevailing changes in market conditions.

CRITERIA:
1)Cut down production cost.
2)Timely procurement at lower rates.
3)Disseminate the information to plant managers in an effective manner.
ALTERNATIVES AVAILABLE:
1)Claiborne should call a general meeting of the procurement managers from all 21 plants
and discuss the problem at length.
2)He can make it mandatory for all the plants to procure from the national vendors.
3)He should pay a visit to at least the major plants and meet the Plant managers as well as the
procurement managers to tell them about the proposed plan and ask for their reviews.
4)He can go for a mixed procurement from the national as well as the local vendors according
the type of material and how early it is needed.

EVALUATION OF ALTERNATIVES:
1)This move can be proved beneficial for the company as communication will be effective
and not just one sided. But as the plants are extremely busy for the next 5-6 months due to
backlog of orders so it would not be possible for all the procurement managers to come for
the meeting.
2)He is still not sure whether the national vendors will be able to fulfil the needs timely. So
instead of implementing them suddenly he should compare the national vendors with local
vendors.
3) By paying a visit to the plants, Claiborne will be able to understand the procurement process
in a better manner. Also, as the plants have been working in autonomy for years, it would be
very fair to impose an entire new plan all of a sudden. By discussing it with the plant and
procurement managers before implementation with give a sense of responsibility and
importance to them and they will pay more attention to its implementation. They can come up
with new solutions also as they have been in contact with different local vendors. The managers
are already in contact with each other regarding the common vendors. It increases Claiborne
reachability to them.
4) The supplies which are needed imminently can be ordered from the local vendors from
whom the procurement managers are already dealing and for rest of the common material
needed by all the plants can be ordered from national vendors so that the cost of manufacturing
reduces.
CHOSEN ALTERNATIVE:
Claiborne should go with a combination of alternative 3 and 4.
PLAN OF ACTION:
Claiborne should plan a visit to some of the larger plants, meet the plant and procurement
managers and tell them the proposed plans. He should ask for their reviews over the proposed
plan and also ask if they have some alternative solution to deal with present situation.