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Supply Chain Management of Jabil Circuit, Inc.

Discuss Supply Chain Management of Jabil Circuit, Inc. within the Elements Of Logistics forums, part of the PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT category; JLG Industries, Inc. is the world's leading producer of mobile aerial work platforms and a leading manufacturer of telescopic material ...

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Supply Chain Management of Jabil Circuit, Inc.
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Netra Shetty
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Supply Chain Management of Jabil Circuit, Inc. - January 12th, 2011

JLG Industries, Inc. is the world's leading producer of mobile aerial work platforms and a leading manufacturer of telescopic material handlers and telescopic hydraulic excavators. The company sells primarily to businesses that rent or sell the products to industrial, commercial, institutional, and construction customers. JLG manufactures boom lifts, scissor lifts, vertical mast lifts, telescopic excavators, and telehandlers. Boom lifts have a horizontal work platform and can extend up to 50 feet. Scissor lifts, for which the company is especially well-known, are machines featuring platforms mounted on scissor-like devices that can extend the platforms vertically up to about 40 feet. Vertical mast lifts, to provide another example, are aerial work platforms that can fit through standard door openings when retracted. More than 63 percent of the company's sales stem from its aerial work platforms. About 15 percent of its sales come from after-sales service and support. While the company sells most of its products domestically, 27 percent of product sales are to international customers. Headquartered in McConnellsburg, Pennsylvania, the company also has production facilities in Bedford, Pennsylvania, and operations in Scotland and Australia. In 2000, JLG's sales peaked at over $1 billion but then declined due to a difficult economy.

Fulton Industries, Inc. in 1969

JLG began as Fulton Industries, Inc., a small metal fabrication shop in McConnellsburg, Pennsylvania. Shortly after its inception in 1969, the company was purchased to develop a prototype for high-reach equipment, which would be welcomed by workers frustrated with cumbersome scaffolding and ladders. The company's name was changed to JLG Industries, Inc.

A crew of 20 workers completed the original JLG boom lift in 1970. The boom could be raised up to 27 feet. When raised, its platform remained stable and horizontal. The boom lift had innovative design concepts, such as an ability to hold tools to reduce clutter at work sites. Some of these design concepts are still used today. JLG boom lifts sold well in the United States. They were sold primarily to equipment rental companies, which then rented them to construction companies. These companies used the lifts to enter hard-to-reach areas not accessible by traditional scaffolding and platforms. JLG established a European presence in 1977 with the opening of a headquarters in Scotland.

Scissor Lifts in 1979

In 1979, the company opened a facility in Bedford, Pennsylvania, to produce and assemble scissor lifts. The first scissor lifts had a platform mounted on a scissor-like mechanism and could extend up to 30 feet. In 1981, the company introduced oscillating axles for boom- and scissor-lift operators.

The company's scissor lifts were enormously successful throughout the United States. Around this time, JLG sought to further expand internationally. In 1983, the company opened a production facility in Port MacQuarie, Australia. JLG's Australian operations serviced customers throughout Asia and the Pacific Rim.

JLG's rapid growth continued into the mid-1980s. During this time, its 10,000th boom lift was rolled off assembly lines in McConnellsburg and it patented an "Extend-A-Reach" feature that offered customers "greater flexibility for platform placement." This feature allowed customers to use JLG products in hard-to-reach areas with many obstacles. Extend-a-Reach pushed JLG a step ahead of its competitors.

A Second Scissor-Lift Facility in the 1990s

The early 1990s were tough years for JLG. The company suffered two years of heavy losses. To cut expenses, it redesigned its production process and switched to continuous-flow manufacturing. With this type of manufacturing, parts moved continuously on the factory floor until the product was assembled. Employees were also cross-trained to operate more than one machine, so they could move to different places along the assembly line.

"JLG, along with companies like Danaher, Black & Decker, and Teleflex have gotten religion about lean production and continuous improvement techniques," said James C. Lucas, an analyst for the Central Penn Business Journal. "They continue to benefit as a major player in what we call 'the revolution occurring on the factory floor in America.'"

JLG predicted that the new manufacturing process would save the company $10 million by 1994. The company's decisions proved to be good ones. By 1997, JLG boasted net revenues of over $500 million. These revenues jumped to $720 million by 1999. In 2000, JLG's revenues surpassed $1 billion with a net income of $60.5 million.

To try and meet the demand for its scissor lifts, the company opened a second facility in Bedford in 1997. The following year, its 50,000th scissor lift came off assembly lines.

Gradall Industries in 1999

JLG acquired Gradall Industries, Inc., based in Orrville, Ohio, in 1999. Gradall had originally manufactured hydraulic excavators, but by 1982 it had expanded its product line to include rough-terrain material handlers. Commercial, industrial, and residential customers used Gradall products for excavation and demolition work. Gradall machines were designed for specialized excavation tasks such as waste removal.

Gradall had changed hands seven times since its inception in 1946, but the company was especially excited about becoming a subsidiary of JLG. "Without any hesitation this is the best owner we've ever had and could ever hope to have. JLG is a very successful company," said James Cahill, vice-president of manufacturing, in the Orrville Bureau Editor. Cahill added that he considered JLG a front-runner in new product development. He believed that JLG purchased Gradall, at least in part, for its attractive facilities. Gradall owned a 430,000-square-foot facility in New Philadelphia, Ohio, and had just purchased a 300,000-square-foot former Volvo GM Heavy Truck facility. The Volvo facility cost Gradall $3.7 million. JLG purchased Gradall for $20 per share--a total purchase of about $200 million.

Forming JLG University

To educate its employees and provide a forum for its customers, JLG entered into a partnership with Penn State University to form JLG University. "Just as JLG is known for quality products and services, Penn State University is known for the quality of education it provides," said L. David Black, JLG president, chairman, and chief executive officer. "As JLG approaches the $1 billion sales mark, we are faced with challenges and opportunities to make it equally important to develop our people along with our markets. Through JLG University, we will facilitate continuous development of a global high performance team, ongoing improvement of our suppliers and the uncompromising commitment to meeting the needs of our customers, all of which is expected to ultimately enhance shareholder value. Our people are our greatest asset, and being able to give them the tools to meet the challenges of a changing and growing marketplace is of key importance. The establishment of JLG University demonstrates the magnitude of our commitment." JLG University was organized into five colleges: professional development, leadership development, skilled trades, customer support, and supply chain. The colleges offered workshops and seminars, credit and non-credit courses, certificate programs and undergraduate and graduate degree programs.

A Drop in Sales

After surpassing $1 billion in sales, the company received a prestigious Telly Award for excellence in business-to-business marketing. JLG was recognized in the "Non-Broadcast Business Promotional Video" category for a company video on its 450 Series of telescopic boom lifts.

It suffered a drop in sales shortly after this, however. In 2001, revenues slipped to $964 million, and in 2002 sales plunged over 20 percent with a net-income drop of about 84 percent. JLG attributed the abrupt downturn to a struggling economy, however, and remained optimistic about its future.

In an effort to boost sales, the company concentrated on international expansion. It focused on increasing sales in Europe as well as in developing markets in Latin America. It also introduced two new scissor lifts, one with a platform height of 33 feet and another with a platform height of 43 feet. Both new scissor lifts featured the largest standard deck in their size class--over 7 feet wide and 16 feet long. The company also unveiled its "Workstation in the Sky" series of tools to complement the aerial platforms.

Bill Lasky, chairman of the board, president, and chief executive officer, said the following in a company press release: "During fiscal year 2002, we enhanced our competitive position and strengthened our balance sheet. There were numerous economic events this year such as terrorist attacks, high-profile bankruptcies, and accounting scandals, all of which contributed to mixed economic signals and a resulting conservative approach by our major customers to fleet expansion or replacement. We continue to focus on what is within our control in the short-term while keeping an eye to the future." Lasky went on to state that, although the company could not precisely predict when a turnaround in business would occur, several positive factors, including fewer competitors and the possibility of bargain acquisitions, boded well for the future of JLG.

Principal Subsidiaries: Gradall Industries, Inc.

Principal Competitors: Caterpillar Inc.; Terex Corporation; W.R. Carpenter North America, Inc.
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