Part 1: Executive Summary
Based on the initial information from the normalized bids from all nine potential suppliers
for flap shrouds and equipment bay doors, my decision is to recommend Marton to De
Havilland’s Source Selection Board (SSB) as prospective vendor provided that the tooling
costs are included in the quote. Their bid shows their unit price to be 18% lower than their
nearest competitor, and when comparing pricing of specific components to the pricing by
current providers they are between 54% and 75% less expensive. However, there is no
Non-Recurring cost in their cost (Exhibit 3) and when we are checking the breakdown unit
cost (Exhibit 5), we still cannot find this part of the cost. It is a big concern to me as the
tooling cost is usually quite significant for injection molding product, especially when the
order volume is small. From the second lowest bidder Das Composites, we can tell that
their unit cost is even lower than Marton, but they have tooling cost which takes 12.5% of
their total cost.
However, beyond parts cost reduction we are also interested in establishing long-term
co-operative contracts with the vendor. So, apart from determining whether the best price
offer, we need to determine whether Marton is sufficiently stable to be relied upon in the
long run. So my strategic intention here is to negotiate an agreement with Marton Inc. that
will be of the greatest value possible to de Havilland keeping in mind our goal of
longer-term agreements and reducing the amount of vendors we deal with. A good decision
from SSB will allow De Havilland to achieve this objective.
Part 2: Issues Identification
Immediate Issue
Figure out if the tooling cost included in Marton’s quote
Nature: Tactic Timing: short term
Although a complete product specification is attached with the RFQ, it is still the buyer’s
responsibility to review the quotes and check if the quotes are consistent with the RFQ.
The choice of material had important implications for tool cost and the RFQ clearly stated
that it was up to the vendor to deal with the cost of producing the tools. In Marton’s quote,
there is no separate tooling cost and you can’t find any information for this in their bill of
material. It is necessary to advise the vendor about this and confirm if the tooling cost is
included in their quote.
Systemic Issue
Evaluate if Marton a suitable long-term supplier
Nature: Strategic Timing: short term & long term
Recent policy requires the firm to establish long-term, co-operative contracts with
