Harvard Business School 9-175-246 Industrial Grinders N.V. Ia late May 194, Lar Bridgeman. the general manager u the Ger plant of Lndustrial Grinders N.. sleduled a afterwon neeti with lus sales manae, accountat, ad development engineer to disass the introdiction bythe French firm rlenn roulenc (a ompetitor) of a plastic rig sustitute for tle steel rins presendy used i certain nachines sold by Idustrial Grinders (LG ), The plastic ray, tuen luew tu the nlarket. Iut unly had 1nuch luswer life than the lG. 01 nng but also apparently had a m1rh lower cost. Bridgeman's problem stemmed from LC.'s large quaatity of steel rings o and and te substantial iaventory uf special steel fortleir manufacture. After tlwrough survey. he had fu und that the special steel could not be sold even fur scrap the total book valie of theseinventories exceoded $3,000. For nearly years G. had manufactue idustrial malue ur sale i numerous countries. The partiar machine vd in Bridgeman's dilemma was made oly a the company's German plant, which employod seal thousand people, in Cologne. The different models weTe priced between S4,50 ad.820 ad were d by a separate sales organizati Parts, which accounted for a substanal part of the compny's siness, were sold separately. As with the stoel rings these parts cold often also he used on similar machines manfacted hy competitors. The company's head offie was in Hola. I general the plants were allowed csderable leeway in administering their own affairs the Dutch office, howevc, was sily accessihle y corespondenr or hy tephone or during exccutive visits to the individual plants. In the rly 1970s, competition had become irly strong. Japanese manufachurers, with low priced spare parts, ad suesstully entered the ield. Other companis had appeared with lower- quality ad lower-pried maus Tere was little doubt that future copetitio would become more ntens. The steel rug inanufacture l by LG. had a noul il life of bout tw u nu outlus, depesuling upon the extent to which the machiewas usod. A worn-oit ring could be replaced in a few seconds, and although differet nwdels of the maclunes required frou tw to six rings the rings were usually replaced individually as tluy wore out. The sales anager, Harry Greiner, had leared uf he ew plastic ring shurtly after its appearaue ad lad inumecdiately asked wle LG. would be able to supply then particularly fur sale to customes in Fran we Ti Pouenc was the strongest competition faced by I.C. Anders Fricsson, the development ngineer, estimatod that the plastic rings could be procucod hy mid September e necessary touls and equipuent could be ubtained for about S1,0.Eri had initially raisod the issie o the stol ring inventorics that wmld not be used y emher. Greiner Connghi 1474 b lhe Piesideil and Hellows of Harvard College. Io ceder copies or Equest penni ision lo reproduce materils, all 1-900-515-7885, write Harvard Business School Publshing. Bastn, MA l3, r to htty:www .hbsp harvard.adu. Na part cif this publication may be reproducd, stored in a retl system, used in speeadsheel, oransilled in any by any mens elecironi, mecanica, pholoxopyine rexrding. or otherwise withaut the permissionaEIavard Businss Sci Modo-manage your online data. Learn More> Harvard Business School 9-175-246 Industrial Grinders N.V. Ia late May 194, Lar Bridgeman. the general manager u the Ger plant of Lndustrial Grinders N.. sleduled a afterwon neeti with lus sales manae, accountat, ad development engineer to disass the introdiction bythe French firm rlenn roulenc (a ompetitor) of a plastic rig sustitute for tle steel rins presendy used i certain nachines sold by Idustrial Grinders (LG ), The plastic ray, tuen luew tu the nlarket. Iut unly had 1nuch luswer life than the lG. 01 nng but also apparently had a m1rh lower cost. Bridgeman's problem stemmed from LC.'s large quaatity of steel rings o and and te substantial iaventory uf special steel fortleir manufacture. After tlwrough survey. he had fu und that the special steel could not be sold even fur scrap the total book valie of theseinventories exceoded $3,000. For nearly years G. had manufactue idustrial malue ur sale i numerous countries. The partiar machine vd in Bridgeman's dilemma was made oly a the company's German plant, which employod seal thousand people, in Cologne. The different models weTe priced between S4,50 ad.820 ad were d by a separate sales organizati Parts, which accounted for a substanal part of the compny's siness, were sold separately. As with the stoel rings these parts cold often also he used on similar machines manfacted hy competitors. The company's head offie was in Hola. I general the plants were allowed csderable leeway in administering their own affairs the Dutch office, howevc, was sily accessihle y corespondenr or hy tephone or during exccutive visits to the individual plants. In the rly 1970s, competition had become irly strong. Japanese manufachurers, with low priced spare parts, ad suesstully entered the ield. Other companis had appeared with lower- quality ad lower-pried maus Tere was little doubt that future copetitio would become more ntens. The steel rug inanufacture l by LG. had a noul il life of bout tw u nu outlus, depesuling upon the extent to which the machiewas usod. A worn-oit ring could be replaced in a few seconds, and although differet nwdels of the maclunes required frou tw to six rings the rings were usually replaced individually as tluy wore out. The sales anager, Harry Greiner, had leared uf he ew plastic ring shurtly after its appearaue ad lad inumecdiately asked wle LG. would be able to supply then particularly fur sale to customes in Fran we Ti Pouenc was the strongest competition faced by I.C. Anders Fricsson, the development ngineer, estimatod that the plastic rings could be procucod hy mid September e necessary touls and equipuent could be ubtained for about S1,0.Eri had initially raisod the issie o the stol ring inventorics that wmld not be used y emher. Greiner Connghi 1474 b lhe Piesideil and Hellows of Harvard College. Io ceder copies or Equest penni ision lo reproduce materils, all 1-900-515-7885, write Harvard Business School Publshing. Bastn, MA l3, r to htty:www .hbsp harvard.adu. Na part cif this publication may be reproducd, stored in a retl system, used in speeadsheel, oransilled in any by any mens elecironi, mecanica, pholoxopyine rexrding. or otherwise withaut the permissionaEIavard Businss Sci Modo-manage your online data. Learn More>