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Case Study # 2.1 – Spartan Heat Exchangers Inc.Business Strategy for the Materials GroupImmediate Issue: Prepare a strategy for the materials group to support the new business strategy of the company.In order for Rick Coyne and his materials group to devise a successful business strategy, theymust look at the entire operation as a whole. Identify the “corporate, business unit and functions”of the business and plan their processes to interline with these principles.With this in mind, the strategy Rick Coyne and his materials team should use to meet the newdirection of the company is:1)Do a full inventory audit of the existing materials in the store to understand what youcurrently have and update your database accordingly.2)Implement a security structure within the store to prevent staff from taking materialswithout it being documented and processed through the database.3)Review the material lists for the new standardized product lines.4)Determine 2 or 3 of your best tier 1 and tier 2 vendors who can supply the materialsneeded.5)Determine the quantity needed for manufacturing, considering the 20 times turn over ratedesired, including safety stock.6)Ensure overlap of delivery times to ensure there is no chance of stock-outs.7)Negotiate rates and lead times with the best vendors as identified previously. Ensure theycan meet the demand needed.By reducing the number of vendors and dealing with specifically your best few, you canincrease your PO (Purchase Order) quantities. Increasing your purchase volume is apurchasing power which allows company leverage to negotiate better rates based on theconcept of economies of scale. This means that Rick Coyne should have no problem reducingSpartan’s purchasing costs by 10%.1 | P a g e
Basic Needs: As you can see from the above strategy plan, all of the below basic issues have been covered.1Congruency between corporateand functional strategiesOur plan is congruent with the corporate and functionalstrategies as it meets all of the targets set out in the newcorporate strategy.