Butler Systems
Butler Systems is a manufacturer of environmental control systems and power conditioning equipment. Butler is the world’s leading supplier of computer support systems and the largest supplier of precision air-conditioning and power protection systems. Butler sales exceed $1 billion. The HD-5 battery is the primary component for the EPS (emergency power supply) system. The vice president of operations is concerned about the low HD-5 battery inventory. There is currently a 20-day supply of batteries. A 90-day supply is the normal inventory level. Butler has not received a battery shipment in two months. Last week when the buyer discussed the problem with SDX, the battery supplier, it was revealed that the contract price would be doubled and that the current contract with Butler is now null and void.
1. As the VP of operations, what is your assessment of the battery shortage problem, and what actions would you take and why?
2. What is the buying organizations role in selecting and qualifying potential suppliers?