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Case Analysis Dashman

Dashman Company supplies equipment to the US Armed Forces through 20 autonomous plants. To address a shortage of raw materials, the president appoints Mr. Post to centralize purchasing. Post requires purchases over $10,000 be approved by headquarters and plants notify them of contracts 1 week in advance. However, no plants comply with the new rules. Problems include strong resistance to disrupted autonomy, insufficient people management skills from Post, and lack of follow up. Questions are raised about whether centralization or decentralization is best, and how to streamline purchasing while gaining plant cooperation.

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10K views3 pages

Case Analysis Dashman

Dashman Company supplies equipment to the US Armed Forces through 20 autonomous plants. To address a shortage of raw materials, the president appoints Mr. Post to centralize purchasing. Post requires purchases over $10,000 be approved by headquarters and plants notify them of contracts 1 week in advance. However, no plants comply with the new rules. Problems include strong resistance to disrupted autonomy, insufficient people management skills from Post, and lack of follow up. Questions are raised about whether centralization or decentralization is best, and how to streamline purchasing while gaining plant cooperation.

Uploaded by

moodra
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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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) Scarcity of raw materials


2) No notice sent to the head office; no approvals asked
3) Plants running normally

Problems:

1) The clause that all the purchases made over $10000 should be cleared with the head
office
2) Long standing organizational structure disrupted with centralization; hence strong
resistance
3) The centralization announced just 3 weeks before the peak buying season
4) Mr.Post found wanting in People’s management; doesn’t visit plant heads, only sends
terse letters
5) No follow up until 6 weeks elapse

Observations:

1) Post is impulsive, too eager to make his presence left


2) Post could use Larson’s experience and relationship with the plant heads to his
advantage.
3) 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 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) Communicate to the plant heads through Larson to make a report on the the estimates of
raw materials their plants would require
2) 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
3) Get a report done on what raw materials each supplier supplies, approximation of the
quantities of these raw materials available with each supplier
4) 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...
5) 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.
6) Explain this model to the plant heads during the board meeting
7) 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 will streamline the purchasing activity and the dealings will become more
transparent. Also, the purchasing procedures will become more co-ordinated.

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