Case Report: de Havilland Inc. Essay Example
Module 3, Session 3
Case Report: De Havilland Inc.
January 22, 2010
Executive Summary
My decision is to allow Marton Enterprises to the next stage of the purchasing cycle and pass them onwards to the Source Selection Board (SSB). Marton has surpassed the 25% cost reduction required from our parent Boeing. In fact the costs have been reduced by more than half. Furthermore Marton is able to manufacture and supply us with both the flap shrouds and the single equipment bay door therefore also meeting our mandate of moving to a smaller base of vendors, realizing long-term firm fixed pricing, and of course a contract. It is noteworthy that we will need to tread carefully during the SSB stage and negotiate the audit of their financial records for this division of Devon Holdings, assess their BATNAs; interest and priorities, to determine if they are buying the contract; if so why, and determine how this could impact a negotiated contract. It is difficult to pass on this deal and that is why we should move to the next stage of negotiations. At the same time we should also continue discussions with our original supplier, Dollard Plastics to determine if there has been some misinformation that has left them priced so high in comparison with all other bids.
Key Assumptions * The labour rate produced by Marton is historically stable and sound in fact a labour contract is in place to cover the term of the five year contract proposal. * The tool cost to remain the same throughout the contract period as we assume the most durable material is being used. * Dollard Plastic has created value for themselves and de Havilland. The product is of quality and smooth on time delivery has been in place without interruption.
Statement of Issues
The first issue is that Marton may not be realistic in their bid as they appear to be “buying” the contract with such a low bid. Clearly this could lead to a variety of implications for our firm including; Marton being
Case Report: De Havilland Inc.
January 22, 2010
Executive Summary
My decision is to allow Marton Enterprises to the next stage of the purchasing cycle and pass them onwards to the Source Selection Board (SSB). Marton has surpassed the 25% cost reduction required from our parent Boeing. In fact the costs have been reduced by more than half. Furthermore Marton is able to manufacture and supply us with both the flap shrouds and the single equipment bay door therefore also meeting our mandate of moving to a smaller base of vendors, realizing long-term firm fixed pricing, and of course a contract. It is noteworthy that we will need to tread carefully during the SSB stage and negotiate the audit of their financial records for this division of Devon Holdings, assess their BATNAs; interest and priorities, to determine if they are buying the contract; if so why, and determine how this could impact a negotiated contract. It is difficult to pass on this deal and that is why we should move to the next stage of negotiations. At the same time we should also continue discussions with our original supplier, Dollard Plastics to determine if there has been some misinformation that has left them priced so high in comparison with all other bids.
Key Assumptions * The labour rate produced by Marton is historically stable and sound in fact a labour contract is in place to cover the term of the five year contract proposal. * The tool cost to remain the same throughout the contract period as we assume the most durable material is being used. * Dollard Plastic has created value for themselves and de Havilland. The product is of quality and smooth on time delivery has been in place without interruption.
Statement of Issues
The first issue is that Marton may not be realistic in their bid as they appear to be “buying” the contract with such a low bid. Clearly this could lead to a variety of implications for our firm including; Marton being