Scribd
Upload
74 views3 pages

Shell Case Fabricators

SCF is a shell case manufacturer that designs and produces plastic casings for electronic devices. They have been contracted by ACL to produce 60,000 underwater acoustic modems. Late in the project, ACL requests a design change from rectangular to dome shaped casings, claiming it will improve performance 2%. SCF estimates the change will cost $391,000 and delay the project, while ACL offers $100,000. SCF must decide how to respond while maintaining its relationship with its biggest customer.

Uploaded by

swati2911
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
74 views3 pages

Shell Case Fabricators

SCF is a shell case manufacturer that designs and produces plastic casings for electronic devices. They have been contracted by ACL to produce 60,000 underwater acoustic modems. Late in the project, ACL requests a design change from rectangular to dome shaped casings, claiming it will improve performance 2%. SCF estimates the change will cost $391,000 and delay the project, while ACL offers $100,000. SCF must decide how to respond while maintaining its relationship with its biggest customer.

Uploaded by

swati2911
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

Shell Case Fabricators

BACKCROUND
Shell Case Fabricators (SCF) designs and builds shell casings that enclose electronic products such
sailculators, cellphones, modems. Typically the cases are plastic or plastic compounds. SCF has
St different production lines that cover different types of product. For example, the largest high
Volume production line for modems can produce three different colors and two models (vertical
and flat). Air Connection Links (ACL) is the biggest customer that buys product from this line.
s high output line now runs at full capacity on an eight-hour shift. The other five lines run
taller quantities and tend to meet the needs of other specialty products
dilerent smaller firms. manufactured by
Ninety-five percent of SCF's product casings line is designed by the original
acturer. Getting a casing to the production stage requires a great deal of hardware
action between the original hardware and case design collaboration and
manufacturer (e.g.. ACL) and SCES
Aesign engineers and production department. The latest new product of ACL is a modem
ghed to be used for monitoring water activity in bays, e.g., ship
trattic, pollution, floating
662 Project Management
functionality and low cost, potential demand for the
high small bays
used for
shipping wants new
of the
product's
everycountry with
debris Becauseof sight. It seems respcctive bays.
enough
product is out their
modems to cover
underwater
MODEM PROJECT
UNDERINATER coordinate and manage the shell
THE is assigned a
At SCFcach new
product
project managerto and
SCFs star project manager 1 is the
Songsee is acoustical modem. The shell project
design,
manufacturing startup.
short-range, underwater casing for
budgets, and for the new materials, custon equipment, and a
seal to
manager ofthe shell required special design, product owner, needs sixty
modem
the underwater to 50 meters Air Connection
Links, the
Control Institute meeting in Hong Kong.thousand
withstand pressure(next January 15)for the Estuary
modemsin 91 days

Client Change Request smoothly, with the exception of beingtwo wek


project was moving along
Songsee has felt the feels she can "lean on" the design department to put the project on t
behind schedule. She Yesterday, ACL'S project manager, Sabin, came in with
priorityand make up the two weeks.shell shape from rectangular to dome shape; it will imDrove
sinple change." Change the outer engineerine
He knows better. He knows the Songses
Songsee couldn't believe Sabin.
performance 2 percent. Sabin tells Songsee, "It shouldn't cost much."
implications, and it is NOT simple! Yet game
five and aborted. At this late stage of the
imagined a sharp retort, but she counted to Songsee said she would get together with her
changes and schedule compression cost big money! She told Sabin he would have to give her a
team and start on a new time and cost estimate by today.
written change request of the new requirements tomorrow. Sabin appeared disappointed. "Why
have been doing business with SCF
don't we just add ¬I00,000 to the price and get on with it? We quickly and have a great
for six years. With expected demand out of sight, SCF will break even I will
profit on the production side." Songsee sighed. "Let's proceed with the change order process.
bring your request to the change order governance committee."
Songsee's meeting with her team about the change went about as expected. Every department
moaned about changing at this late date. The guesstimate cost and time estimates were over tripl
Sabin's idea of ¬100,000. For example, designing a new seal for a dome style modem willrequire
new custom water sealing approach, possibly an untested different sealant, and new molds. ra
ACL frozen the design of the new style modem? Songsee asked the team to come in with a mot
detailed estimate by tomorrow afternoon, before her meeting with the change order governan
Committee.

The Next Day (Friday)


Sabin called from ACL at midmorning the next day. "Our senior management is upset that we have
to be so formal for such asmall change. They just want to get on with the project and meet the
time to market launch date. El00,000 seems like a fair price. They believe you needtotalk toyour
management. They want a
The tearn estimates cameresponse
close tobyyesterday's
Monday."guesstimate (¬391,000). Not good news Songse
knew the answer of the change committee would be to hold for the full amount. She was right. The
change committee believed the costs are launchdate.The
committee was also concerned that there and need to be covered to meet the tochangelor
priorities and resource scheduling would have
Outsourcing: Managing Interorganizational Relations 663

oCEk design and production departments. In three hours she would meet with senior management
decide to accept the clients request at their price or come up with an alternate plan. Songsee
alized she should have several options for senior management to consider, along with a
recommendation.

1, involved?
Should SCF accept or reject ACL's request? Which option would you select? What risks are
) How should SCF negotiate with ACL? How can SCF and ACL develop a positive, long-range
relationship? Give some specifics.

You might also like