Quality Metal Service Center Strategic Objectives

Management Control Systems Professor Bob Madden March 3rd, 2011 Case 7-3: Quality Metal Service Center Matt Stone (200706221)

Bradley Morrison (200606309)

Quality Metal Service Center is a metal distributor, which sells to smaller users of metal products than the big manufacturer/suppliers such as Bethlehem, Crucible, etc. To be competitive they must have shorter lead time and all around better customer service to cover the extra cost of small lot sales and make their product worthwhile to customers.

Quality has three main strategic objectives. Their first objective is to focus sales efforts on targeted markets of specialty users. Quality metals focuses on sales of specialty metals and competes on differentiation of product rather than cost. This will help them avoid commoditized good markets where they cannot compete based on price. They aim to produce higher tech, higher return products and sell these to customers. These markets of high tech metals have less competition and better profit margins. Their second objective is to identify geographic markets where metals are being consumed. They use database technologies to have accurate, up to date, sales forecasts on hand and they service these needs by preparing for orders before they occur, which will shorten lead-time and improve the benefit of their services. They also use these to allocate products on hand by location and service each location in a manner that works best for the region‘s customers. Their third objective is to develop techniques and marketing programs that will increase market share. Their fast lead time allows customers to adopt JIT inventory avoiding high carrying costs and obsolescence. As quality has saved costs on their own JIT system through short lead time they can help customers achieve this cost savings as well. This helps customers to have the most up to date metal products available on the market as needed. In addition they offered a wide range of processing services. These modifications to products reduce need for customers to have and use specialty tools, as well as cut down on time they need to complete jobs.

The management Control systems should support the implementation of these three main strategies through influencing management behavior to act in accordance with these corporate goals in maintaining a superior quality of service to the consumer.

Each of the four regions have a manager who is evaluated based on return on assets and aims to exceed a set goal of 90% of projected profit. Ken Richards, a district Manager is responsible to the vice president of the Midwest division and has a set of functional managers who report to him. While many of these functional managers operate independently of head office, the purchasing decisions