Case Study: Futronics Inc. Corporate Overhead Reduction Program

Introduction
Frutronics Inc. is a $2 billion dollar firm with sales in consumer products and government systems and services. Due to a sharp increase in competition, flattened sales and external economic conditions, Futuronics is implementing a corporate overhead reduction program. This case study analyzes the replacement of the company’s central office stores by outside vendors and presents recommendations.

Requirements
The decision to implement outsourcing the central office and supplies must fall in line with the company’s overall goals to reduce overhead and maintain or improve quality. The outsourcing vendors must supply the appropriate mechanism to make ordering easy, efficiently, quickly and at a cost savings. Vendors must supply catalogues to all employees responsible for ordering for their department and keep the catalogues up-to-date. The vendors chosen must supply the same variety as the current 500 products or more we store in our warehouse. The corporate letter head requests must have an improved turnaround time to reduce complaints. If outsourcing is not the chosen action suggest strategies can be taken to reduce costs in-house?

Comparisons
Futronics Central Store Comparison Issue Outsourcing
500 Items Number of Items Stocked 600
Every 6 Months Catalogue Update Dist Handled by Outsource Co
Building Dock or Reception Areas Delivery Secrataries' Desk
3-4 Weeks Letter Head Delivery 10 Days
5 months New Item Implementation Immediately
Common Split Deliveries Much Less Common
42 Area Sites Site Service All Sites
$900,000 Annual Throughput *$846,000
$200,000 Space Personnel Costs 0
$140,000 Inventory Management 0
4 Employees 0
*Note: This is based on same level of throughput with 6% savings

Stake Holders Impact
The stake holders that are