CASE 14 Dennison Manufacturing International "Growth opportunities are always accompanied by challenges," exclaimed the CEO of Dennison. She then went on to explain why you, a consultant, were hired. Dennison started business in the city of Waterloo in 1951 as a manufac turer of televisions and electrical products. Television manufacturing was discontinued in the 1970s. Dennison remained in the electrical products business, which over time required it to enter many new markets. New products had to be constantly developed to maintain growth. The life of many of those products was short, and thus many products were exited after a few years. In addition, competition and the need to be cost effect tive obliged Dennison to locate new plants in China and India, and to enter into outsourcing arrangements. Along the way, Dennison also acquired about 30 small manufacturing plants. The result has been that Dennison now has 36 plants worldwide. Systems integration attempts were a constant challenge because of acquisi- tions, outsourcing arrangements, and new product implementations. If there had been a uniform enterprise resource planning (ERP) system, the CEO said, there would have been fewer problems for you to resolve. Sung, one of the older, larger divisions, has been subject to a series of problems, which the division's general manager and his controller have not been able to resolve. The CEO introduced you to the general manager and the controller. They explained that the sales have been lagging behind expectations, with the recently completed year being typical of the last three. A bigger prob- lem has been that for the first year in decades, actual profits have become neg- ative. You are shown the operating statement in Exhibit 1. After a quick review of the operating statements, you asked if there have been any changes to the manufacturing process. You were told that the only change has been the use of a new supplier for the major components. The new supplier, EL Manufacturing, was an acquisition by Dennison that occurred late previous year. The acquisition was premised largely on EL being able to most of Sung's existing suppliers. The components from EL have defects, whereas the previous suppliers provided defect free components. Con