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Case: Fabtek

EXECUTIVE SUMMARY
Fabtek has the ability to position themselves for profitable
growth, but they need to fix their business, focus on key
business drivers, and re-evaluate the area. Listed below are
the key issues they face and the recommendations for
improvement. Focusing on these issues and developing
selection criteria for quoting would help Fabtek improve their
current profitability and position them for growth. Fabtek
should accept the Pierce Pike order as it closely matches
Fabtek's selection criteria for selecting orders.

Key Issues

 Lack of Skilled Workforce: Fabtek has failed to acquire


highly skilled workers.Fabtek also states anyone can make a
sell. This indicates the company places a low priority on
training sales people.

 Erratic Pricing: Manufacturing Costs are unreliable and the


Bidding Process has a low success rate.

 Lack of Capacity: The company is currently facing shop


backlog and delivery times have increased from 8-10 weeks
to 16-60 weeks. Some employees of the company were of
the opinion that customers continued to place orders with
Fabtek in spite of the delays and backlog, because of the
quality.

 Customer Dissatisfaction: There have been 18 delivery


orders that have not been as per the specifications of the
customers. Fabtek should focus its efforts on maintaining its
quality.

Critical Decision:-

 Which potential order should Fabtek pick and how should it


bid for it.

Constraints

 Limited possibility to add new welders very quickly.

 Fabtek’s limited facility size.

 Added volume from any one of the orders will affect metal
purchases.

Recommendations

 Skilled Worksforce: Fabtek needs to strengthen its core


competency by adding as many skilled workers as possible.
It should not just confine its hunt for welders but they also
need to focus on direct selling and train sales
representatives to accomplish market growth and to sell
customer value.

 Consistent Pricing Strategy: Fabtek needs to train its


manufacturing and marketing group to work together in
estimating accurate costs, lead-times and understanding
customer value in quoting a job.

 Increase Capacity: Fabtek must either be more selective in


order intake or plan for capacity expansion.
 Refocus on Core Competency: Fabtek's core competency
lies in welding Titanium with a high degree of quality. The
company needs to build on this strength.

Conclusion

Because the limit amount of possibilities to add new welders very quickly, in the
company, the decision will be between Refco order and Pierce-Pike and
Worldwide Paper orders. If Fabtek decides to take the three orders together the
welding department will not be able to fulfill this order on the time requested and
the image of the company in the market can be serious damaged. Fabtek should
accept the Pierce Pike order as it is in sync with Fabtek's selection
criteria for selecting orders.