Christal LeeBrandt Nevin

Maziar Mahboubian

Situation Analysis Roberts Auto Sales and Services (RASAS) operates four divisions of their company, which originally started as a Ford dealership that owner, Vicky Roberts (Roberts), inherited from her father and expanded into a successful mini-empire:

• 3 Car Dealerships that specialize in the sales and service of American and Japanese cars

• 2 Auto parts stores• 1 Body shop that paints and does bodywork• 1 Auto Salvage Yard

Roberts has purchased a 1965 Shelby Mustang that she is tasking her Director of Service Operations to assemble a restoration schedule and budget that would bring the total cost of acquisition and restoration to no more than $70,000 without spending more than $3600 per week and to be completed within 45 days.Roberts also request a brief report exploring the feasibility of expanding RASAS business to include restoring vintage automobiles to mint condition through sourcing New Old Stock (NOS) parts as well as selling NOS to Do-It-Yourself vintage car enthusiasts.

Activity Chart

Based upon the scheduled activities, we have identified the following Earliest Start, Earliest Finish, Latest Start and Latest Finish times for each activity as well as identified their preceding activities.Initial cost calculations reveal that the restoration process will cost approximately $18,100 including transportation of the mustang to the Detroit auto show, well within her budget of $70,000 including cost of acquisition.

Network Diagram

Based upon the network diagram, restoration would be completed within 39 (Earliest Finish) or 41 (Latest Finish) days.The Critical Path of A-B-T-V has been identified as the longest path with no slack.

Project Budget

Complete Budget

• Original projections of the network diagram revealed that implementing the activities according to the Earliest Start timeline would result in exceeding the weekly budget of $3,600 in weeks 1 and 7.

• As a result, start times of activities G, H, M, O, P, R, S, and U were delayed in order to spread the costs across the 8-week project and operate within budgeting constraints.

• Thus, restoration of the Shelby Mustang within the specified date, budget and weekly costs constraint is indeed possible.

Principle ProblemsRoberts has identified two potential markets to provide services for:

1. DIY Car enthusiasts looking for NOS to purchase for their own restoration projects2. Customers who want to own a vintage car without having to restore it themselves – interesting market – continue to need maintenance

Is this expansion of her business feasible with these two markets?How would RASAS address the competitive priorities of cost, quality, customer service and flexibility?Does this new business complement, compete or detract from her current businesses?

SWOT ANALYSIS

StrengthsRASAS has many of the current facilities necessary to undertake the task of restoring vintage cars (body and paint shop, auto parts store, service department of dealership).

Weaknesses RASAS does not have a “stock” of NOS parts (would have to divert resources to research and locate). Furthermore, the skill set of current employees may not be able to meet the requirements of rebuilding and restoring vintage automobiles

OpportunitiesThere is growing market of vintage car enthusiasts. A fully restored mint condition vintage automobile could be sold at a premium price. The restoration of the Shelby will expand RASAS market, grow their reputation, and generate PR for their existing business at the Detroit auto show.

Threats There are competitors already in the market who do this type of service exclusively. Roberts her expansion into an operations process that may be very different than her existing business model that she runs successfully

Cost – The only way to make real money is to do the mint condition restoration, partial restoration that would not utilize all NOS parts would reduce the value of the automobile and thus the price RASAS could command for itQuality – How effectively can RASAS find the NOS parts? Does RASAS have the resources to machine these parts effectively if they cannot locate them?Customer Service – Given the difficulty in sourcing NOS parts, there is no certainty in the supply chain, – which affects RASAS’s ability to deliver to the customer.Flexibility – The start up time, devotion of resources to vintage restoration processes (such as different installation and repair of old parts), and creating a whole new department devoted to sourcing NOS or machining parts would entail a detailed specific process that would not provide the flexibility that Roberts’ current operations has.

Competitive Priorities

Based upon the two markets Roberts desires to pursue and the constraints of the business she wants to expand into we have developed the following three alternatives: 1. Launch the restoration of mint condition vintage automobiles and sourcing of NOS parts for restoration and sale to DIY vintage automobile enthusiasts. However, this alternative relies upon a stable supply chain of NOS parts for both customer markets

2. Launch the restoration of vintage automobiles without the requirement of sourcing and using NOS parts. Do not attempt to source NOS parts. This alternative is more feasible in delivering upon RASAS competitive priorities of customer service and flexibility; however cosmetically restored vintage automobiles do not command the price that mint condition vintage automobiles do.

3. Launch the NOS sourcing department and develop a more predictable, stable supply chain of NOS parts for DIY enthusiasts and, once RASAS can determine the reliability of sourcing parts, explore the expansion of the business into restoration.

Alternatives

Recommendation/Analysis In terms of the restoration and delivery of the Shelby Mustang to the Detroit Auto show, RASAS Director of Service Operations and his team can assuredly meet the deadline within the projected budget and cost constraints. However, in terms of the feasibility of launching a vintage auto restoration line of business, there would be a significant shift in operations in terms of developing new timetables for her employees for restoring vintage parts and cars. Based upon the network diagram, the majority of the activities were dependent upon the sourcing and delivery of parts. Sourcing NOS parts, therefore, is a key component in the ability of RASAS to restore vintage cars in a timely manner as well as selling these parts to DIY vintage car enthusiasts. Mint restoration is risky and not as feasible given the uncertainty in the supply chain of NOS parts. While RASAS may be a first mover in the market for vintage restoration, they cannot guarantee the timely delivery of NOS parts. Therefore, RASAS jeopardizes their competitive priorities of quality and customer service. If RASAS only provides exterior and cosmetic restoration through their body and paint shop, which is feasible given the existing facilities and employee skill set, they can avoid an unstable supply chain. However, the price of the finished product will drop dramatically, which brings into the question of the cost benefit to expanding into the vintage restoration market. Therefore, we recommend that Roberts focus on building the network of NOS suppliers, utilize her auto salvage yard to source used vintage car parts and, once this department determines what parts are the most difficult to source, expand into machining those parts.