Case 5-2: Marshall Insurance Company Case Study Solution

Marshall Insurance Company Case Study

The case studies are designed to provide the opportunity for you to interpret situations involving supply chain logistics, distribution, and warehousing, and apply the material you have read and discussed. In a Word document, answer the following questions. Remember all of your assignments should be in APA format. Your case study analysis is due at the end of the week.

Questions:

• As Kara Murphy, how would you respond to the proposal from David Callum? Are you prepared to provide him the information he needs?
• What criteria would you use to evaluate the proposal?
• Where do you see opportunities to outsource, insource, or subcontract? Is this the right move for Marshall?
• What conditions would you place on Gilmore if you were to pursue this relationship?

Solution

Marshall Insurance Company

There are significant issues to consider in this case scenario, both positive and negative. Kara acknowledges the need to outsource and its importance in decreasing overhead costs (Franco, Rodrigues, & Silva, 2021). The overarching concern is that Gilmore could be looking to overtake all the printing business for Marshall Automobile Club (MAC), considering Gilmore is presently responsible for about 30% of MAC’s printing purchases.

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Moreover, the proposal would see Gilmore take over existing contracts with Marshall’s suppliers and oversee the decision for printing works when existing contracts expire. Besides, Kara is worried about the possibility of Gilmore maintaining the service levels and confidentiality and security issues related to managing client information.

In every business partnership, risks are involved. Franco et al. (2021) argue that risks are broad, vary according to the extent of relationships, and are influenced by a conflict of interest and related factors. However, when the benefits outweigh the risks, risk management measures can be established to mitigate significant impacts.

In this case, the proposal seeks to relieve Marshall Issuance Company from overhead costs associated with ordering materials and maintaining inventory that costs two personnel working full-time to fulfill, earning $900 a week plus add-ons. Other benefits the company will get from the partnership are a storeroom space that can be converted for other uses, relief from headaches associated with maintaining inventory, and sourcing materials. Therefore, taking the proposal will be the right move for Marshall.

The most crucial recommendation is for Kara to approve the proposal and give Gilmore the total responsibility for kit assembly, printing, production, and distribution of forms and brochures. Considering the primary benefits of outsourcing (Franco et al., 2021), Marshall will benefit from reduced staff wages, inventory costs, organizational obligations, and timely and quality service levels.

In this case, Kara has identified the three aspects of lessening risks associated with outsourcing, including strategic, operational, and organizational (Franco et al., 2021). These include the importance of the services to be outsourced to the company, expected levels of performance by Gilmore, and the relationships between the outsourcing strategy and the proposed business strategy.

Furthermore, Kara should establish possible gaps associated with confidentiality and security risks. In this case, a critical review and analysis of the proposal ensure that the potential risks are manageable and pose no significant threat to Marshall’s security.

A cost-benefit analysis would be vital as it allows a business to weigh the benefits and cons of a given decision using empirical evidence to make systematic decisions (Koopmans & Mouter, 2020). In this case, it would be crucial to evaluate the proposal in detail, considering the financial benefits and risks before finalizing it.

However, as Kara prepares to accept the proposal, she should consider these three conditional aspects of the contract given to Gilmore. Gilmore must uphold existing services quality, including processing materials within 24 hours and timely processing client membership kits and cards.

Secondly, Gilmore must enforce the confidentiality and security of Marshall’s clientele, not use the client data for unrelated purposes, and not be limited to advertising or promoting products and services for other customers.

Thirdly, the contract ceases if Gilmore costs Marshall its reputation or different kit prices other than the proposed imposed during the partnerships. Lastly, Gilmore must not use Marshall’s image for any gain from the proposed business partnership.

In summary, the case typically presents scenarios associated with outsourcing services by companies. While outsourcing services has benefits, there are also significant risks to financial stability and reputation. Therefore, managers should weigh the risks against the benefits before outsourcing. In this case, a cost-benefit analysis is crucial in determining whether an outsourcing scheme is beneficial.

References

Franco, M., Rodrigues, M., & Silva, R. (2021). The Viability of Outsourcing in Organizational Performance: Benefits and Risks. In Outsourcing and Offshoring. IntechOpen.

Koopmans, C., & Mouter, N. (2020). Cost-benefit analysis. In Advances in Transport Policy and Planning (Vol. 6, pp. 1-42). Academic Press. http://dx.doi.org/10.1016/bs.atpp.2020.07.005