Issue Identification

Steel Works, Inc. is a manufacturer of custom and specialty use steels founded in 1993. The issues the company is currently facing are high levels of inventory, drops in sales, increments in expenses, bad customer service performance, and loss of market share.

Founded in 1993, Steel Works, Inc. is a manufacturer of custom and specialty steel. The company operates through two divisions that are very separate and distinct in their operation. Steel Works Inc. has seen a significant decrease in sales due to poor customer service and loss of market segment. An increase in inventory levels and uncoordinated supply chain systems has also caused a spike in expenses leading to a greater net loss.

Analysis

Qualitative

Steel works has two divisions, Custom Products and Specialty products, and both of them are operated completely separate and distinct.

Custom Products develops its products under contract for a single customer, so each customer gets exclusivity. Once those products are no longer leading-edge, they negotiate with the customer the possibility of selling that exclusive product to any other customer at a 30% higher premium; if the customer accepts, the portion of the product sold to other customers is now the responsibility of Specialty Products.

Custom Products’ manufacturing system is based on having 3 manufacturing sites, each located near one of their 3 R&D centers, one to serve different regions of the U.S.. Each customer and their products are assigned to a specific location, and several warehouses are located near the plant. When it comes to inventories, they always keep the levels high so they can satisfy customers within the time they expect.

Meanwhile, Specialty products have been struggling with hitting their sales in the last months. They operate 3 plants that manufacture 6 different product lines and their general strategy is to exploit economies of scale in production to rely on the logistics network to distribute their products nationwide. Product families are manufactured in the same plant

Quantitative

SWOT

Strengths	Weaknesses
	Different departments within the company are using multiple computer systems
Opportunities	Threats

Alternatives

Alternative 1:Discontinue products that are not getting sold enough and focus high volume products to maximize revenue.

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• Cons:
• Risks:

Alternative 2: Use a statistical forecasting to predict demand and lower the amount of inventory needed, as well as implementing a continuous review policy.

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Alternative 3: Reduce the number of warehouses to reduce inventory.

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Decision/Recommendation

Implementation Plan

RACI - WILL CHANGE ONCE RECOMMENDATION IS CHOSEN

	Legal Department	KTZ Express Management	Port Managers	Shipping Managers	Investors
Contact for meeting about Alternative 2	R	A	C	C	I
Contact Chinese & russian companies over opportunity	R/A	R/A	C	C	I/A
Partner with new companies and start shipping	R/A	R/A	I	I	I/A
Regroup after 6 months to discuss progress	R	A	C	C	I