Rondot Case Study Essay

787 Words Oct 24th, 2014 4 Pages
Arra Patricia Bocar
SCM880TT/ Fall 2014
September 2014
Rondot Automotive Case Study

Background
Glenn Northcott is a purchasing planner in Rondot Automotive. Their Jackson, Mississippi plant manufactures an average of 7million small motors which they distribute to their OEM customers. Their purchasing organization which has a hybrid structure is comprised of two groups—strategic purchasing (dotted-line reporting to purchasing manager) and plant purchasing department (straight-line reporting to purchasing manager). Currently, they are being pressured to cut down their plant costs and reduce their prices. Aside from these, they are also facing employment and global competition issues. Three months ago, an opportunity to outsource their
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2. CHRONIC- Rondot Automotive is also confronted with long-term issues like total sales and employment drop. They are also facing great amount of pressure caused by global competition and demand for lower prices.

Analysis
1. Rondot will cut down cost by at least $294k annually if they outsource their painting operations. Comparison and computations are summarized below:
|Wet-Based System |Greven E-Coating |
|- $0.25/unit |$0.18/ unit |
|- system to be pulled out or upgraded soon due to cost and |($0.15 Greven + 0.03 for transpo & packaging) |
|environmental factors = more cost |More cost-efficient |
|No additional inventory = costs stay the same |Additional inventory needed = higher carrying cost |
|No change in production capacity |Higher production capacity |
|More control over the product |Less control over the product |
|Savings |
|(WET PAINT)

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