How does Ben Lawson s Custom Fabricators, Inc., create value for Orleans? Custom Fabricators Inc.

has a very companionable relationship to Orleans. Orlean s Elevator is a subsidiary of United Technologies and provides Custom Fabricators Inc. with a monthly schedule of their products and these are produced by order and delivered either to the nearby Orleans plant site or directly to the construction location. Custom Fabri cators Inc. creates value for Orleans by delivering quality and great service with the speed , reliability and flexibility of the manufactured items they produce. Most of the manufacturin g business is done with Orleans. Because of Orleans purchasing the raw materials, costs for Custom Fabricators is limited to land lease, the plant, equipment and employee costs. T his leads to a stable revenue margin of approximately 30 percent. This economic wealth of Custo m Fabricators is being shared with their Is this essay helpful? Join OPPapers to read more and access more than 600,000 j ust like it! get better grades loyal employees who increased productivity as business increased. Because of their high employee satisfaction the company s reputa tion to produce quality products and deliver on time has enhanced. 2. In the past, what has been Ben Lawson s competitive advantage in keeping the Orleans business? By having a close relationship with Orleans, Custom Fabricators Inc. has been ab le to maintain their competitive advantage. Custom Fabricators understands the busines s and is able to provide the exact products whenever they are needed and Orleans can depe nd on the quality and the service provided to successfully achieve their goals in comp leting elevator contracts. Also their location has gained them a big competitive advant age and helped them in being the primary supplier for Orleans Elevator. Newly Orleans has included Ben Lawson in their search to find new suppliers for raw..

Custom Fabricators, Incorporated Case Study Since its release in 1994, the North American Free Trade Agreement (NAFTA) has i mpacted the manufacturing sector in the United States. Manufacturing organizatio ns such as Custom Fabricators, Inc (CFI) have been forced to find ways to cut co sts to remain competitive. In the United States, NAFTA has contributed to the re duction of employment in high- wage traded-goods industries, growing wage inequa lity, and a steady decline in demand for workers without a college education. Th e majority of the net jobs displaced were in the manufacturing sector. Growing t rade deficits with Canada displaced 270,248 manufacturing jobs while growing def icits with Mexico displaced 388,682 manufacturing jobs, for a total of 658,930 m anufacturing jobs displaced (64.9% of the total) (Scott, Salas, & Campbell, 2006

, p. 1). Figure 2 displays job losses per state. Figure 2 NAFTA Impacts on Jobs per State Note: Retrieved from Scott, Salas, & Campbell, 2006, p. 1. This paper will summarize the Custom Fabricators, Inc. case study by Chase, Jaco bs, & Aquilano, p. 44, answer the discussion questions shown in Figure 2, and de fine the role of Operations Management at Custom Fabricators, Inc. Figure 2 Case Study Discussion Questions Note: Retrieved from Chase, Jacobs, & Aquilano, 2004, p. 45. Custom Fabricators, Inc. CFI is a non-union shop with loyal employees, and low employee turnover. CFI sta rted by providing sheet-metal elevator panels for Orleans Elevator in the 1980s. Since that time CFI's role with Orleans has grown due to Orleans policy with re gard to outsourcing. Not only does CFI produce panels, but CFI also provides the entire panel assembly, which includes the electronics, the elevator motor assem bly, and several custom brackets and other machined parts for Orleans. CFI and O rleans have developed a close partnership. Orleans provides CFI with elevator fo recast data, which CFI uses to assemble components to support the forecast. CFI ships the components directly to the work site. Orleans parent company, United Technologies Corporation (UTC) has recently decid ed to implement the FreeMarkets Internet Purchasing system. This system works as an online-auction. Orleans enters data with regard to purchased parts and assem blies, and other companies bid on the jobs. Orleans invited Ben Lawson, CEO of C FI to a recent auction. "For Ben Lawson what was most interesting was to observe the auction for some parts that he used at his plant" (Chase, Jacobs, & Aquilan o, 2004, p. 45). A Mexican facility had bid on some of these components and Laws on was concerned with how he would deal with a Mexican supplier. Distance and la nguage barriers were of special concern to him (Chase et al, 2004). Operations Management at CFI "Operations management (OM) has been a key element in the improvement in product ivity in businesses around the world. Creating a competitive advantage through o perations requires an understanding of how the operations function contributes t o productivity growth" (Chase et al, 2004, p. vi). The OM role at CFI is there t o provide "a systematic way of looking at organizational processes" (Chase et al , 2004, p. 6). OM provides a business plan which includes methods to improve qua lity, lower costs, and improve the effectiveness and efficiency of operations. T he OM strategy is constantly updated to change with current business and economi c trends, the changing marketplace, and technological advancements. How does Ben Lawson's Custom Fabricators, Inc. provide value for Orleans? CFI provides value to Orleans because of the close partnership of both companies . CFI is able to provide several components and whole-assemblies to Orleans by u se of a schedule forecast. CFI also ships the components and assemblies directly to the worksite. This working relationship allows Orleans to spend more time en gineering elevators and less time monitoring one of its key suppliers (Chase et al, 2004). In the past, what has been Ben Lawson's competitive advantage in keeping the Orl eans business? Prior to Orleans transition to a just-in-time and lean manufacturing system, CFI was able to maintain its competitive advantage because of its location near the Orleans facility. CFI also invested in new machines to improve the processes us ed to manufacture components for Orleans. Another advantage, now and in the past , is employee loyalty. CFI pays its employees well, which has reduced turnover. This allowed CFI to consistently deliver quality products to Orleans (Chase et a l, 2004). Have Orleans' priorities changed? Orleans priorities have shifted to outsourcing more work. Orleans is interested in receiving whole sub-assemblies rather than components. Orleans currently manu

factures some of the large sheet metal parts and light fixtures for the elevator s. Orleans is leaning more towards an engineering firm and away from manufacturi ng (Chase et al, 2004). Should Ben change his business model? CFI should change its business model to maintain its competitive advantage with Orleans. Because of Orleans interest in outsourcing and NAFTA, CFI's relationshi p with Orleans could change. CFI should consider outsourcing to other suppliers and countries to reduce costs and investigate potential technologies to help imp rove the efficiency of its manufacturing processes. CFI should also look for oth er companies to partner with. How should Ben position his company in the value chain? CFI should remain a Tier One supplier with Orleans. This puts CFI in the positio n to continue its close partnership with Orleans. CFI already acts as a warehous e and distributor for Orleans which further strengthens its position in the valu e chain. Figure 3 provides a visual image of a typical manufacturing value chain . Figure 3 Schematic of Typical Original Equipment Manufacturer Value Chain Note: Retrieved from Chase, Jacobs, & Aquilano, 2004, p. 7. What should Ben do to ensure his company's future success? CFI should continue to change Operations Management strategies to improve the ef ficiency and effectiveness of current processes. The current business model shou ld be examined and changed to improve CFI's position within a global market. CFI should also continue to work with Orleans and look for other companies to partn er with. Executives at CFI should also investigate the need for more capital inv estments. New technologies may reduce fabrication time, reduce costs, improve qu ality, and provide more quality to Orleans and other customers. Lastly CFI shoul d consider outsourcing assemblies to other suppliers, including foreign supplier s. Although, this may have a negative effect on the current employee base, it ma y improve overall costs and competitiveness. Summary The affects of NAFTA and global outsourcing to manufacturing companies within th e United States have caused companies such as CFI to make changes to business st rategies to remain competitive. These changes may require difficult decisions wi th regard to employee cuts and relocation of facilities but are necessary to rem ain in business. OM at CFI and other companies, must constantly examine potentia l threats and opportunities, and make improvements as required. These changes wi ll ensure the company's position in the global marketplace.