Cottrill Case Essay

1338 Words6 Pages
Cottrill Inc. Class Notes IMMEDIATE ISSUE Whether to switch Cottrill’s paging services contract from Tallant to Saxton. BASIC ISSUES 1. Service acquisition 2. How to respond to an unsolicited supplier proposal 3. Technology purchases 4. Financial analysis 5. Supplier evaluation 6. Systems testing and evaluation SUGGESTED STUDENT ASSIGNMENT 1. How much money can be saved by switching to Saxton from Tallant? 2. What are the advantages and disadvantages of using Tallant and Saxton? 3. If you were in the position of Judy Stevens, what action would you take and why? POSSIBLE DISCUSSION QUESTIONS 1. What are the costs of the two contracts? How much money can Cottrill save by switching suppliers? 2. What risks are associated with switching to Saxton? Do the cost savings outweigh the risks? 3. What other options would you consider? 4. What would you say to the sales representative at Tallant? Do you think they could match the deal with Saxton? 5. Do you think that Judy Stevens would be considering switching suppliers at this time unless Natalie Hopkins had contacted her? ANALYSIS Size-up Judy and her assistant likely spend the majority of their time handling contracts with local suppliers (e.g., corn from local farmers) and materials management issues related to delivery and inventory management. Other major purchases likely include maintenance, repair and operations (MRO) supplies. In order to achieve her target of $300,000 in working capital reduction, Judy will need to focus on raw materials and investments in MRO parts and supplies. Pagers only cost $100-$150 each and are a “throw away” item. Even if Cottrill purchased all of its pagers, the total investment would only be $2,000 - $3,000. Furthermore, it remains to be seen if leasing is cost-effective. The administrative and financing costs may make
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