Dashman Case-Study Situation: Dashman Company is one of the major suppliers of equipments to the U.S Armed Forces. There are about 20 of their plants which almost work as autonomous bodies. In an effort to avoid the foreboding shortfall in the essential raw materials required by the plants, Mr. Post is appointed to coordinate the purchasing activity by Mr. Manson, the president of the company. Experienced Mr. Larson is appointed as Mr. Post¶s secretary. Post decides to centralize a part of the system by announcing through letters to the purchase executives that all the purchases made over $10000 should be cleared with the head office and that he is notified about contracts that are being negotiated at least 1 week in advance. The plant managers express support and co-ordination but the head office doesn¶t receive any notice from any plant in this period. Symptoms: 1) 2) 3)
Scarcity of raw materials No notice sent to the head office; no approvals asked Plants running normally
Problems: 1) 2) 3) 4) 5)
The clause that all the purchases made over $10000 should be cleared with the head office Long standing organizational structure disrupted with centralization; hence strong resistance The centralization centralization announced just 3 weeks before the peak buying season Mr.Post found wanting in People¶s management; doesn¶t visit plant heads, only sends terse letters No follow up until 6 weeks elapse
Observations: 1) 2) 3)
Post is impulsive, too eager to make his presence left Post could use Larson¶s experience and relationship with the plant heads to his advantage. Post could analyze the processes, procedures and logistics better and come up with a more optimal solution
Questions: (asked if I were Mr.Post) Centralization or Decentralization? It is evident that the existing set up (decentralized set up) is failing. I would have anticipated the extreme consequences of sudden centralization (the strong resistance), and involved the 20 odd plant heads more in streamlining streamlini ng the existing system.
Assumption: From the facts presented in the case, it is safe to assume that there is no scarcity of raw materials in the market. There is some internal reason for scarcity of essential raw materials within the company. It could be a not-so-robust purchase model, it could be one/some plants monopolizing a supplier(s), it could be hoarding done by one/some plants.
Plan of action: Steps: 1) 2) 3) 4)
5)
6) 7)
Communicate to the plant heads through Larson to make a report on the the estimates of raw materials their plants would require Call the plant heads for an urgent, high priority board meeting at the head office to discuss these estimates and the new clauses and norms Get a report done on what raw materials each supplier supplies, approximation of the quantities of these raw materials available w ith each supplier Analyze the logistics and come up with a purchasing model, where each plant is mapped to certain suppliers, based on distance between the plant and supplier, raw materials required by the plant, raw materials supplied by the supplier etc. Ex; Plant 1 mapped to suppliers A, B, C, D... Clause: Each of these plants can deal independently with the suppliers they are mapped to, without any interference from the head office. In case of an exigency, where the plant requires more raw material than the estimation they present to the head office and/or there is scarcity of raw material with its mapped suppliers, than the plant has to get clearance for a purchase order from the deal office to deal with any other supplier. Explain this model to the plant heads during the board meeting Regularly follow up on the purchasing activity of the plants
Conclusion: This method of communicating with the plant heads, because of its moderateness, will not elicit strong opposition like the centralization method that Mr.Post had adopted. The issue of the plant heads feeling alienated from the system would thus be resolved. This would also facilitate a quicker and more optimal solution. This clause of mapping certain suppliers will ensure that no plant is able to monopolize any supplier(s). This purchasing model w ill streamline the purchasing activity and the dealings will become more transparent. Also, the purchasing procedures will become more co-ordinated.