Marshall Insurance Company

There is nothing wrong with the Gilmore printing of all the forms and promotional materials of Mac. Earlier it just took care of Mac's printing business. But now by outsourcing the entire printing to Gilmore, it may create potential threats like, threat of information and insecurity. With multiple suppliers for Mac, even if one supplier delays delivering the product, Mac's business would not suffer. But now, with outsourcing the entire printing, if Gilmore will not be able to supply printing and promotional material on time, then that would create a problem to Mac and it may potentially lose sales because this material is very important to raise awareness in the market. Kara is not sure about Gilmore's service levels. Service levels with single supplier could pose unnecessary threats to the company and once the agreement or a contract for a fixed period is made, Mac would not be able to change it till the period ends. But within that period, Kara is not sure on how well Gilmore's quality and service levels would be. The major cost savings from outsourcing would is Inventory holding costs will reduce, no fixed and variable costs, reduced labor costs and since the entire material is printed by one supplier printing costs will reduce.  When analyzing the proposal and make a cost-benefit analysis to know what will be the financial implication of this proposal. If on an average 2500 kits processed in a week, then total cost will be salary of two person having $900 per week. It will be $3600 and other cost also associated with this. Wage component is $1.44 alone. When Gilmore will provide this at $3 per kit then the pricing element is okay. Information will have to be provided to them and for this will have to be signed by agreement with Gilmore and that they will not use the database for their own benefit apart from the task which is agreed.