Casturn Systems Essay

1825 Words Apr 19th, 2016 8 Pages
Casturn Systems (A) (B) Group Case #3

1. What went wrong with Casturn’s first two auction attempts?

Casturn hired a consulting company that possibly didn’t have the best interest of Casturn as its core motivation. The consulting company was paid on POTENTIAL cost savings and identification instead of a results oriented contract. Due to this structure, it became about quantity of parts that can be included in the bid instead of identifying the top say twenty percent of parts that, if managed well, could have yielded both companies a lucrative cost savings in the resourcing effort. In addition, the consulting company exited the process after the initial stages giving no one accountability to carry the resourcing effort to fruition.
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Therefore, proper vetting of the suppliers beforehand would be crucial and at that level of intensity, a traditional bidding process may remain more attractive.

3. What are the benefits and disadvantages of the re-sourcing process in Figure 1?

The benefits of the re-sourcing process in Figure 1 are that it ideally sets the tone for the company to obtain low prices, reduce sourcing cycle time, allowing the market to have credible prices, and allow the re-sourcing process to be repeatable. The sourcing process allowed the Casturn to identify $40 million dollars in potential saving opportunities through electronic request for quotations, as well as competitive bids.
The disadvantage to this process was that many of the suppliers did not meet the requirements to pass the technical evaluation for Casturn’s engineering. Those suppliers that did pass the technical evaluations typically asked for price increases. Other suppliers would proposed quotes for the company and later back out of the initial deal at hand. Another disadvantage to the re-sourcing process is that suppliers also were requesting changes to items that that would make for Casturn, which was not approved by any of Casturn’s customers. With all the issues with the re-sourcing process, the company was not even close in earning their predicted savings which was less than $3.5 million dollars.

4. Are there any improvements that should be made to the current practices within

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