Cj Industry

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CJ Industries has an opportunity to provide Great Lakes Pleasure Boats with key engine components for their luxury line of pleasure boats. They earned this through the development of a strong buyer-supplier relationship with Great Lakes and this 5-year, $10 million annual contract offers them the chance to have an extended relationship if they can satisfy Great Lakes’ needs. The opportunity is critical for the successful future of CJI and the main goal of the company should be to completely satisfy the requirements of the contract with Great Lakes, and secure their future business with Great Lakes. While they do most manufacturing in-house, they have been sourcing their bilge pumps out to Heavey Pumps on an informal basis. While Heavey…show more content…
Discuss the advantages, disadvantages, and risks of each of these alternatives. Should they continue using Heavey?: The major reasons to stay with Heavey would be that they have developed a relationship by working together with CJI for a long time. CJI always counted on Heavey to deliver their high quality pumps on time and the relationship was so convenient that in fact CJI didn’t even consider the pumps being an issue when they signed their contract with Great Lakes. Unfortunately, since Heavey is a small local company, CJI originally ignored that Heavey would have to expand their production capabilities. It seems like a lot to ask and expect from Heavey, and since there is no formal contract between them, it seems the most likely scenario is that CJI will either discontinue doing business with Heavey, or form some kind of partnership with them. They cannot however, solely rely on Heavey for pumps as they currently are, because it would almost guarantee them to fail their obligations to Great Lakes. Also, CJI likely does not receive much of a benefit (regarding cost savings) from Heavey utilizing economies of scale because they are very small company that produces products in batches. Additionally, while CJI has been able to rely on Heavey’s expertise and product quality with regards to producing pumps, contracting their pump manufacturing has been a short-term strategy so far and with their increased production it will begin to cost

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