United Screen Printers (USP) produces a wide range of but USP has been unable thus far to locate a source for decals for displaying promotional messages on fleet these parts. Given the problem of finding replacement vehicles (including delivery vans, eighteen-wheelers, and parts and the fact that the press is somewhat outdated, aircraft). Its decals range from flat-color designs to full- this project calls for purchasing a new large press for color photographic reproductions. $160,000. Based on estimates that a new large press Although it is one of the oldest forms of printing, could process jobs 50 percent to 100 percent faster screen printing is superior to most of the more modern than press 6, it is calculated that the payback period for approaches because it permits making heavier deposits a new large press would be one year. of ink onto a surface, resulting in more vibrant and longer-lasting finishes. Screen printing works by block- 2. Build new headquarters ing out areas on a silk screen so that ink passes through USP's CEO fervently believes that the company needs only the unblocked areas to make an impression on the to have a strong corporate identity. He therefore pur- vinyl decal. chased land and had plans drawn up for the construct Many in the industry believe that the economics of tion of a new corporate headquarters. Analysis of the fleet graphics makes them an extremely attractive form new headquarters indicated that although it would of advertising and should lead to their continued pene- improve operating efficiencies, the savings generated tration of a largely untapped market. One industry would not pay for the new building (estimated to cost source estimated that the cost of fleet graphics works $4 million). Many of the board members viewed the pro- out to be $2.84 per 1 million visual impressions. Given ject as too risky since it increases the company's debt the highly cost-effective nature of using fleet graphics as a percent of capital from almost zero to 50 percent. as a form of advertising, it is speculated that organiza- tions will increasingly exploit this form of advertising. In 3. Pursue ISO 9000 certification addition, as organizations become better aware of This proposal also comes from USP's CEO. ISO 9000 is this advertising medium, it is likely they will want to a set of standards that provides customers with some change their message more frequently. According to assurance that a supplier follows accepted business managers at USP, this could be one of the major factors practices. In some industries obtaining ISO 9000 certi- apparently driving the competition to focus more on fication is essential, such as in industries that export to short lead times and prices, and less on decal durability. Europe and the domestic automobile industry. It was less USP is about to begin its annual evaluation of pro- clear what competitive advantage pursuing ISO 9000 posed projects. Six top projects have been defined as would provide USP at this time. On the other hand, the follows. process alone would help it document and perhaps improve its processes. The cost of this initiative was 1. Purchase a new large press estimated to be $250,000 to $300,000 and would take There is currently a three-and-a-half to four-week one year to complete. backlog in the screen printing department. The result of this is that USP's total lead time is 4 to 6 weeks in com- 4. Develop formal procedure for mixing inks parison to an industry average lead time of 3.5 to 4 This proposal comes from USP's plant manager. At weeks. In a typical month, USP ships 13 percent of its present, mixing inks is a highly specialized skill that orders early, 38 percent on-time, and 49 percent late. It consumes 2 to 3 hours of the team leader's time each has been estimated that 75 percent of the backlog is day. This project would focus on developing ink formulas waiting for press 6, the largest press in the shop. Fur- to make the task of mixing inks more routine, and less thermore, press 6 is in dire need of replacement parts, specialized and subjective. The team leader is paid 57$25,000 annually. The cost of pursuing this project is press. The major disadvantage of the ink-jet printers estimated to be $10,000. is that, compared to the screen printing process, the outdoor durability is more limited. In general, ink-jet 5. Purchase and install equipment to printers are more economical for small orders, while produce four-color positives in-house screen printing presses are more economical for large The lead time to have positives made by an outside orders. supplier is typically one week and costs $1500 to USP currently has annual sales of approximately $6000. According to this proposal, the cost of pur- $7 million. It typically allocates up to 10 percent of chasing the equipment to produce four-color posi- sales to the preceding types of projects. tives in-house would be approximately $150,000, plus $25,000 for installation and training. The variable costs Questions of producing positives in-house are estimated to be 1. What criteria would you recommend USP use in $375 per job. If produced in-house, the lead time for selecting its projects this year? the four-color positives would be approximately an 2. What projects would you recommend USP fund hour-and-a-half. this year? Are there any types of projects you would recommend USP pursue that were not 6. Purchase ink-jet printers proposed? An alternative to purchasing a new screen printing 3. What are the boundaries and limitations associ- press is to add capacity based on newer technology. ated with each project? Given the ink-jet's production rate, six ink-jet printers 4. What additional information would you still need at a cost of $140,000 would be needed to provide the to write Statements of Work for each project? equivalent capacity of a new large screen printing Where might you seek out this information