Sensormatic Case Study

September 15, 2011
CASE HIGHLIGHTS: (Key points, events in case relevant to study topic)
Sensormatic manufactures, markets, and services theft detection devices and pioneered the merchandise security business. Its current manufacturing operations occur at Deerfield Beach plan between two separate departments of systems production and tag production. Sensormatic currently purchases polypropylene and ABS parts from Canon Plastics and Piedmont Plastics for its alligator, half alligator, and other tags. Now it is evaluating whether to make or buy plastic parts while at the same time considering the adoption of a radically new process technology to make 'throw away' tags that would simplify assembly and is …show more content…

Sensormatic has the R&D to produce this new technology and it should lower its production costs per unit based on preliminary date presented in the case. “Throw away” tags would be a more marketable product because of its convenience and lower cost giving us a competitive advantage and market leadership. The customers wouldn’t have to spend so much in labor costs and process times associated with inventorying the alligator and other technology tags if they moved to throw away. Bringing the production of the old technology of plastic parts in house by purchasing Canon Plastics or buying machines to produce in house would create a short-lived competitive advantage with shorter wait times for its customers. It however holds the risk of tying up cash into capital assets that might not work with the new throw away technologies. Suppliers are already in the market that supply a reasonable amount of products to Sensormatic for the old technology and the shortage of the supplies may pertain to a shortage of raw materials. * 2. Understand Technology trends- By introducing this product to the market Sensormatic would be the trend leader and innovator. There would likely be a patent on the product creating a barrier to entry for other competitors. A need for these disposable tags exists and should have a positive impact on the industry and market. By not producing these new tags, there is the risk of