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Prism Canada Inc Case Solution

Solution Id Length Case Author Case Publisher
1533 1240 Words (6 Pages) Niels Billou Ivey Publishing : 9A98D011
This solution includes: A Word File A Word File

The key issue faced by Donna Smith, a buyer for Prism Canada is the sheet metal operation of the company. Customers have been demanding low costs and Donna is struggling to locate outsourcing options that would enable her to address these customer demands effectively. The sheet metal operation had registered an efficiency of 40 per cent that impacted costs and lead time for customers. Due to this underperformance the department was being outsourced. Alternatives needed to be sought out to deal with this core issue. Although suppliers are available, the criterion for choosing them needs to be pondered upon. Looking at the outsourcing from a strategic point of view Donna needs to analyze if outsourcing is an option and will eventually enable the company to reduce costs and lead times.

Following questions are answered in this case study solution

  1. Key Issue

  2. Secondary Issues

  3. Alternatives

  4. Analysis of Alternatives

  5. Recommendations

Case Analysis for Prism Canada Inc

2. Secondary Issues

Turret Machine

The underperforming sheet metal operation was creating other problems for the company in terms of finance and customer satisfaction. The machine break-downs were causing delays in the production process and idle time was high. Moreover the turret press machine was prone to breakdowns and parts were difficult to obtain and costly, thereby delaying the repair. 

Financial Issues

Moreover, the company would be facing financial issues as costs are rising due to the inefficient machine and operation. Customers were also demanding lower costs and losing business would lead to further loss of revenue. The battle to lower costs and maintain the turret machine and the operation by injecting cash into it continuously was something that the company had to address. 

Additional Shifts & Aging Workforce

The additional shifts on the machine are also a problem that needs to be catered to as it reflects the inefficiencies of the employees operating and maintaining the machine. Moreover, the addition of a second shift also reflects that the employees are underperforming. This can also be attributed to the aging workforce as noticed in the case where most employees had been working with the company for many years. Firing employees would lead to fears amongst all employees and tarnish the company’s reputation amongst them. 

3. Alternatives

Prism Canada has two primary alternatives at their disposal. Either they could invest in a new turret machine and train employees regarding its use and maintenance or they could outsource to one of the three mentioned suppliers after a careful analysis. 

Alternative 1 – Purchase a new machine

Prism Canada can purchase a new turret machine after careful consideration. Replacing the machine would address inefficiencies to a certain extent if managed properly. The company can look into suppliers of the machine that provide training regarding operating the machine and maintenance of it. Purchase options such as installments or leasing can be looked into to keep cash flows intact.

Alternative 2 – Outsourcing

The other alternative is to outsource the operation to a supplier and choose amongst Noma Sheet Metal, Henderson and Sons and Metalworks. The criteria for selection though should be based on the prices being quoted and the credit terms of the agreement so that the company can minimize cost impacts on customers. Three options available include:

1. Noma Sheet Metal

Advantages of this supplier include high quality, large capacity, ISO 9001 registered, financially sound, favorable delivery and credit terms. Disadvantages for this supplier included a paint facility that was not operational, disorganized shop floor and de-motivated staff. 

Quoted Price - $48/part

Delivery Time – Six to eight weeks

2. Henderson and Sons

Advantages included preferred suppliers for a large client, high quality standards, new turret machine, organized shop floor, motivated staff and additional services offered free of cost such as improving process design and product design. Disadvantages included a lack of painting facility, no ISO registration and no financial information available.  

Quoted Price - $47/part

Delivery Time – Six to Eight Weeks

3. Metalworks

Advantages included modern facilities and equipment, satisfied employees and planned to move into a larger facility and add a paint line. Disadvantages included quality issues, cluttered shop and a lack of financial information. 

Quoted Price - $55/part

Delivery Time – Six to Eight Weeks

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