In August 1995, Donna Glitter, buyer for Metal Breeze Inc. (Metal Breeze), sat in her office in Giggles, Ontario and pondered how to outsource the company's inefficient sheet metal operation. To satisfy current and potential customers' requests to lower costs for upcoming contract bids, Donna had to decide quickly whom to outsource and on what criteria to use for choosing a supplier. COMPANY BACKGROUND Metal Breeze Canada, Inc., located in Giggles, Ontario, was the sole Canadian subsidiary of Metal Breeze International (MBI) , a large manufacturer of electronics hardware. MBI had seven plants in North America and produced a broad range of products for the electronic industry, including radio equipment, high frequency receivers and input/output panels. MBI was considered the market leader in North America with the largest range of competitively-priced, premium-quality products. The parent company had revenues of $744 million and employed 14,000 people. MBI opened its Canadian subsidiary in Giggles in 1961 to meet the needs of a growing Canadian market. Metal Breeze Canada employed 140 people and had revenues of $30 million. The Canadian subsidiary made roughly 100 standard products and also performed custom work, which represented approximately 35 per cent of revenues. THE SHEET METAL OPERATION Metal Breeze's in-house sheet metal shop produced metal casings for a variety of the company's radio equipment products. The operation produced everything from standard "high runners", with long production runs of 150 pieces per week to customized one-offs. Raw sheet metal was cut, punched with holes, slotted and bent into the required shape by a crew of 12 unionized workers. The shop ran one day shift from 7:00 a.m. to 3:30 p.m. with a partial second shift, (three to four people) operating from 3:30 to 11:00 p.m., added when volumes warranted or when the shop had fallen behind in a particular order. The crew was quite senior, with eight of the 12 having been with the company for an average of 15 to 20 years while the other four had been there for an average of four to five years. The sheet metal operation had been operating in the plant for the last 15 years and had been under performing for the last four years. Its efficiency was measured at 40 per cent. For example, an operation that according to a time study should take one hour would end up taking 2.67 hours. This not only affected costs, but also drove up lead times for customers. The average fully allocated cost per part was $50 (unpainted), and the average lead time was approximately three months, significantly higher than the six weeks demanded by customers. Frequently, a second shift had to be added to ensure that the order did not exceed three months. The majority of problems in the operation centred around the turret press, a machine used at the beginning of the process, which cut the sheet metal into the appropriate size and punched in the proper holes and slots, before any further work could be done to the product. The machine was old and prone to frequent breakdowns. Parts for the press were expensive and hard to find; downtime could last up to a week, leaving the whole operation idle. OUTSOURCING In July of 2020, Donna Glitter was approached by the general manager of the plant and was secretly told of the decision to eliminate the sheet metal department due its inefficiencies. She was asked to source out a supplier discreetly that would be able to provide the same services with shorter lead times and in a more cost-effective manner. Donna set about the task of finding suppliers by looking through trade magazines, reviewing literature that had been dropped off in previous solicitations and talking to a few colleagues that were aware of the

decision. Through this research, she narrowed her focus to three companies and decided to send each a request for a quote. She also decided that it would be a good idea to visit each supplier in order to get a better feel for their operations. NOMA SHEET METAL Noma Sheet Metal was a large, well-established sheet metal shop located about two hours from Giggles. It was recommended to Donna by a colleague who lived nearby. The company had a few large clients and numerous small specialty clients and was known for its excellent quality. Donna commented after her visit: The facilities are quite large and modern, and they can certainly handle our required volume. On the other hand, the shop floor was a little disorganized; there seemed to be re- work parts lying all over the place. As well, the workers seemed to be a surly bunch; the feeling I got was that they weren't overly happy to be there. The company had recently put in a paint operation, which was not yet fully operational. Although Metal Breeze did have its own paint facilities, Donna wondered if it would be beneficial for suppliers to deliver a painted product. Noma Sheet Metal was also ISO 9001 registered, as was Metal Breeze. Although not a mandatory requirement, many of Metal Breeze's customers looked favorably upon ISO registration. Noma Sheet Metal offered delivery times of six to eight weeks and agreed to Metal Breeze's 45-day credit policy. Donna had the accounting department check the financial condition of the firm through Dun and Bradstreet reports and was told that it was satisfactory. Noma Sheet Metal quoted an average price of $48/part (unpainted) f.o.b. collect. HENDERSON AND SONS Henderson and Sons was a small, privately-owned, second generation operation located a half-hour from Giggles. Henderson and Sons was the preferred supplier of a large company (which represented the majority of its business) in Giggles with which Donna was quite familiar. This company was known for its demanding quality standards. Donna commented on her visit: This operation was quite small, but they were expecting to grow. They had recently purchased a brand new turret press, which gave them the increased capacity to take on our required volume. The shop floor was amazingly clean and organized for a sheet metal operation. The small crew seemed to work well together; there seemed to be a sense of pride among the employees. On the flip side, the shop was not ISO registered and had no intention of doing so. The company did not have a painting facility and was not intending to add one. The company's owner, a draftsman by trade, also offered services for improving process and product design to Metal Breeze at no extra charge. There was no financial information available as the company was privately held. The company promised delivery within six to eight weeks, quoted a price of $47/part f.o.b. collect and agreed to Metal Breeze's credit terms of 45 days. METALWORKS Metalworks was a privately-owned, mid-sized operation located one hour away from Metal Breeze. This

company had been supplying Metal Breeze with products that it could not make in-house for the past 15 years. There had been occasional problems with quality, mostly having to do with paint finishes that were outsourced, although for the most part the quality had been very good. Originally a family-owned operation, it had been sold to an individual about six months ago. Donna reflected on her visit: The facilities and equipment are quite modern. The shop did seem a little cluttered and disorganized. However, they will be moving to a larger facility in the near future. The employees were the same ones that had been there under the previous owners; most of them had been there for quite a long time and seemed to be enjoying working together. The company was not ISO registered, although they had plans to do so in the near future. The company was also considering putting in a paint line in its new location. There was no financial information on the company as it was privately held. Metalworks promised delivery within six to eight weeks, quoted a price of $55/product f.o.b. collect, and agreed to Metal Breeze's credit terms. THE DECISION It was August 2020, three weeks after Donna was first approached by the general manager. Donna wondered which supplier to choose and what criteria to apply for selection. For example, should price be the most important criteria, or should it be something else? She knew that she had an important decision to make and she needed to make it quickly in order to satisfy customers' demands.