CASE STUDY: MCNULTY’S MUSCULAR MATERIALS (MMM)

Clayton McNulty, owner of McNulty’s Muscular Materials (MMM), is sitting in his dim office located at the top of an old brown brick building, in an industrial area of

South Boston. Clayton had just gotten off the phone with Sarah Holden, his long-time friend and sole supplier of his most popular fabric, when his telephone rings again. This call is from John Masterson, his number-one client.

‘‘Clay Buddy,’’ John says. ‘‘Just got off the phone with the owner of Southside Sluggers. Guess who got the New Jersey contract? That’s right, pal, and I want you to get ’em to me. That’ll be 10,000 jerseys and I need them by the end of the month. How much do you love me, Clay baby? I’ll get you the designs by Monday. Ciao.’’

Clayton hangs up the phone, stares out of his small, double-paned office window and watches the rain slide down the glass. Sure Clayton was excited about the large bid, but how was he to produce the baseball jerseys in time? The season was to start in three months. The one-month deadline was deadlocked, and there was no room for negotiation. The fans will want the new merchandise before the season gets under way.

MMM was a small sports attire manufacturer that primarily focused on making jerseys for local sports teams. Luckily the factory had been set up for expansion, and was capable of handling a production of this magnitude. But where would he get the needed fabric to produce such a large volume? The most he had ever had to produce was one tenth of the size that John had just ordered. A big order like this means big publicity and more orders were sure to start rolling in over the next few months.

A call to Sarah confirms his suspicions. She can’t produce that much fabric in such a short amount of time. He needs another supplier and he needs one fast. It’s a rainy day in South Boston and Clayton McNulty has some tough decisions to make.

Questions:

1. What potential options does Clayton have to procure the needed volume of fabrics in order to meet the deadline?

2. What are the trade-offs for each of these potential options?

3. What should Clayton do?

4. What lessons can be learned from Clayton’s situation?

1 - The problem here is that the existing supplier is not able to supply the required material due to supply constraints. In this condition, there are two options available to the Clayton, as follows

a) End relations with Sarah and look for other suppliers. Search for other supplier who can supply material within the desired duration. This can be done through the process of competitive bidding

b) Continue relationship with the existing supplier and search for other suppliers for serving the immediate demand of the fabric.

2- The trade-off for each decision are as follows:

Option 1

a) More options to chose suppliers

b) Potential of choosing a low cost supplier for long term relationships

However, it is a time consuming process and will affect the existing relationship with the current fabric supplier. New supplier carries more risk in comparison to existing suppliers.

Option 2

a) it will maintain the relationship with existing supplier of fabric, as well as fulfill the current demand

b) Work will run smoothly and will strengthen long term relationship with the existing supplier.

However, managing two suppliers will be difficult and time consuming. Since, the quantity will get divided, there will be lesser quantity discounts.

3 - Clayton first ask to Sarah that some other supplier like her that he can found in a day or two, Supply of fabric is essential to complete the order in over the month. He must have to get outside and find another supplier of fabric until Sarah can find fo him.

4 - This case give us a lesson to have adequate supply and to have some optional reliable source to depend on that they could satisfy the urgent need of the raw material and also in-house production that could indeed reduce reliability over the supplier which can be risky in some situation like this.

Explanation:

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.