Case Study 1: Crouse Hinds, Inc.

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Christopher R Meier SCM 401 Prof. LaPoint February 16, 2014 Case Study 1: Crouse Hinds, Inc. Problem Statement The main problem for Crouse Hinds, Inc. and more importantly Carol Quinn, VP of Operations, is that the current PPV or purchase price variance for Crouse Hinds three main suppliers is to high and trending in the wrong direction. Also, Crouse Hinds currently isn’t using their manufacturing locations especially the Montebello, CA facility properly in order to cut down on LTL (less than truckload) shipments to the distribution center in Roanoke, VA. Analysis The current situation for Crouse Hinds, Inc. is that most of their US sales come from products that are shipped to California. This number totaled 3,700 LTL shipments last year with an annual freight cost of $2,500,000 and a total weight of 1,800,000 lbs. Meaning that each shipment to CA cost the company roughly $675.68 and weighed 486.49 lbs. Since these shipments to California were normally LTL it would take around 6 business days and sometimes even more. California is also where the firms’ main suppliers reside Baldwin Castings and Digby Gaskets. Crouse Hinds purchased 8 million and 5 million dollars in parts from the suppliers respectively last year. Both firms make daily LTL shipments, containing finished components, to Crouse Hinds distribution center in Roanoke, VA. Another, major supplier for the firm is Chester Connectors, which is in Oklahoma City, OK. With these suppliers Crouse Hinds purchases items FOB shipping point prepaid from the 3 suppliers already mentioned meaning that while Crouse Hinds pay for the actual products the suppliers pay in advance for the cost of freight. The purchase price is made up of 95% actual material cost with 5% being freight cost. Supplier Purchase Expenditures Cost of Freight LTL Daily Shipments in LBS. Digby Gaskets $5,000,000

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