Iowa Case
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School
University of Texas, Dallas *
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Course
4340
Subject
Industrial Engineering
Date
Feb 20, 2024
Type
docx
Pages
1
Uploaded by MasterOstrich4002
Iowa Case
1.
Iowa Elevators is one of the largest grain-handling companies in the United States, headquartered in Des Moines, Iowa. It operates in two main business units: Grain handling and marketing division, operates 300 grain elevators in the Midwest, contributing to 75% of the company's total revenues. The division faced a 20% decline in revenues due to drought conditions impacting farm crop production. The other department is farm supplies division Sells crop-protection products, equipment, supplies, fertilizer, and seed through country elevators and marketing centers. This division experienced a doubling of revenues over the previous five years. The company had produced loss the previous year which led to a change in the executive team, a new CEO and CFO were appointed.
2.
The current purchasing practice is, led by Scott McBride, manages acquisitions for head office and some regional offices. Major purchases include IT, printing, office supplies, and automobile leases. The purchasing organization is part of the corporate services and reports to
the CFO. Some ways they could improve are the data collection process for expenditures with outside suppliers is complex due to different management systems at various levels and locations. The analysis revealed that 20 suppliers account for approximately 45% of total spend, with the top five representing 35%. This concentration poses a risk to the company. Annual inventories in the farm supplies division were nearly $120 million, indicating a need for efficient inventory management practices. Some ways they could cut costs are reduce supplier base to reduce concentration risk, efficient inventory management practices, negotiate better terms and prices with suppliers, buy in bulk to get cost saving. 3.
The new cost cutting strategy may face some resistance from divisions, field elevator managers, and potentially employees who are part of the cost cutting. To bring the management onboard communicate the necessary changes required to regain financial stability. Involve key stakeholders in decision making process, this ensures everyone are in the decision-making loop. Ensure the key long term benefits of cost cutting are to ensure profit stability.
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