Butler Systems Case

In: Business and Management

Submitted By jmcook120
Words 580
Pages 3
Problem Statement
- The HD-5 battery level inventory is experiencing a shortage due to increased need in China for new electric-powered cars. As a result, shipments have not been received in two months and SDX revealed that the price would double and the current contract is null and void. These batteries are very important to keeping the EPS running so it is critical that Butler has these in optimal supply numbers.

Symptoms
- Symptoms include that inventory is currently at 20-day supply and not 90-day supply as normal and no shipments have been received in two months. This 20-day supply hurts Butler because shortages in the HD-5 can hurt the demand of EPS systems. This relationship also seems mismanaged because of Butler not receiving notice of SDX nulling the contract.

Assumptions
- Butler expected that SDX carry out its end of the contract by achieving a 100% service rate, on-time delivery, and a notice of non-renewal 60 days prior to the expiration of the initial term.

Alternatives
- SDX presented new information to Butler informing them of the changes in the battery industry due to increased demand in China. In this case, it is important to assess your options of how to get inventory back to its normal supply of 90 days. Creating a competitive bidding event to attract new suppliers can be a way to start bringing in new vendors that may have the same capabilities or even better than SDX. If sticking with SDX is the preferred route, working with them to establish a new contract with shorter terms to allow for fluctuations in demand from China can also be an option. Also, giving some of the business to SDX and the rest to another supplier can prevent delays like this as well to diversify where materials are coming from.

Implications
- In the short term, the diminishing battery supply hurts Butler because of its importance to their EPS system.…...

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