...Case Study | De Havilland | | Executive Summary Financial analyst, Kim Tomar is a Financial Analyst at De Havilland Inc, a Canadian aircraft manufacturing company. Her responsibility within procurement is to evaluate bids and make recommendations to De Havilland Source Selection Board (SSB). She must make a recommendation on a supplier for flap shrouds and equipment bay doors. Since Dollard Plastics has failed to remain competitive by addressing the high pricing by unwilling to lower their price, she has solicited a number of competitive bids from 9 suppliers. We currently have sufficient supply of flaps and doors till the end of 1993, giving us approximately 17 months of inventory. Recent changes at de Havilland meant that we wanted to establish long term, cooperative contracts with suppliers. Normally 6-8 weeks were permitted for the vendors to return their completed bids. The value of the contract under consideration required the more senior management participated. The Bidder Selection Board (BSB) was comprised of representatives from finance and materiel areas. The BSB had four major objectives; review historical data in purchasing and cost patterns, financial data, quality and product support, secondly they produced an estimate on future purchasing trends for the part as well as new costs and finally they assembled a list of potential bidders. Once all bids were normalized they analyzed them, picked the likeliest candidate and a physical inspection was conducted...
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...Executive Summary De Havilland is an Aircraft company founded in 1928. In March of 1992 De Havilland was purchased by Bombardier Inc (51%) and the government of Ontario (49%). Due to high manufacturing cost, De Havilland is trying to implement a new cost reduction strategy by partnering with a smaller base of suppliers and utilizing long-term contracts. De Havilland sent out RFQs to nine suppliers and the Financial Analyst, Kim Tomar was responsible to evaluate and recommend the candidates. When comparing price, one of the suppliers, Marton Enterprises had pricing that was less expensive by $2, 061,180 compared to the current provider, Dollard Plastics. De Havilland had approached Dollard and asked for a 25% discount; however, they disagreed and didn’t provide any counter offer. De Havilland was hesitant to switch to Marton as the company did not provide financial information, and was in question as to whether they would be able to support all of De Havilland’s inventory needs. Furthermore, the wide range of low pricing from suppliers was in question as there could have been misinterpretation of the terms and agreement for the bid. De Havilland will need to clarify that Marton is able to perform the duties on a long-term basis and is able to provide and perform up to the service levels to meet standards. To mitigate risk, it would be recommended that De Havilland acquire Dollard Plastics for one year while awarding Marton the majority of the production of the flap shrouds...
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...Executive Summary De Havilland (Havilland) is Canadian aircraft manufacturer that was recently acquired by Boeing. The parent company has requested Havilland take on several initiatives including seeking 25% price reductions from suppliers, reducing the total number of suppliers and seeking more long-term fixed pricing agreements. Havilland recently received submissions for an RFQ for the supply of supply flap shrouds and equipment bay doors. The pricing received raises some concerns however, as there are large variations in pricing between the lowest price from Marton Enterprises Inc. (Marton) and the highest price from the incumbent, Dollard Plastics (Dollard). There are several viable alternatives for Havilland. They may accept the bid from Marton on the condition that it is assured Marton fully understands the scope, their facilities are sufficiently equipped, and they provide their financials. It will be in Havilland’s best interests not to pursue their policy under the Bidder Selection Board (BSB) to attempt to renegotiate the price lower since Marton already provided substantial savings. The next option for Havilland is to pursue the first option but only given Marton 80% of the work for the first year and keep the incumbent under contract for the remaining 20% of work. The third option is to cancel the RFQ, clarify with the bidders what was unclear in the specifications that resulted in such a wide variation in pricing and go out for bids again. The final option...
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...Case Report- DeHavilland Inc. CASE ANALYSIS CONTENT | | MARKS AVAILBLE | EXECUTIVE SUMMARY | De Havilland had high inventory and high manufacturing cost which has been caused by the high cost of sourcing the flap shrouds and bay doors from Dollard Plastics of Montreal and the company was looking forward to an alternative supplier with a long time relationship. I found they were less of strategy and more tactical. The total parts cost of Dash 8 airplane at De Havilland represented 60-65% of their total manufacturing cost. It’s is evident that the company has recognized that and they have taken steps to solve this issue. A further indication that the company is operating at high cost is their previous failed attempt when they requested a 25% discount on all parts across the board. Dollard Plastics of Montreal is currently supplying the company with the parts needed but at about 3 times higher than Morton’s quote. The uncertainty that De Havilland was going through at this point in terms of choosing the right supplier who was going to be reliable enough to commit to a 5 year fixed contract with the company. The company wanted to move to a smaller base of vendors but should not be sore source without a backup plan. The company focused on cost reduction but cost should not be the only criteria of vendor evaluation and selection. The whole structure and process did not respect the strategic role of procurement, as well as tactical approaches that support the strategy. Such as Kim...
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...Executive Summary De Havilland (Havilland) is Canadian aircraft manufacturer that was recently acquired by Boeing. The parent company has requested Havilland take on several initiatives including seeking 25% price reductions from suppliers, reducing the total number of suppliers and seeking more long-term fixed pricing agreements. Havilland recently received submissions for an RFQ for the supply of supply flap shrouds and equipment bay doors. The pricing received raises some concerns however, as there are large variations in pricing between the lowest price from Marton Enterprises Inc. (Marton) and the highest price from the incumbent, Dollard Plastics (Dollard). There are several viable alternatives for Havilland. They may accept the bid from Marton on the condition that it is assured Marton fully understands the scope, their facilities are sufficiently equipped, and they provide their financials. It will be in Havilland’s best interests not to pursue their policy under the Bidder Selection Board (BSB) to attempt to renegotiate the price lower since Marton already provided substantial savings. The next option for Havilland is to pursue the first option but only given Marton 80% of the work for the first year and keep the incumbent under contract for the remaining 20% of work. The third option is to cancel the RFQ, clarify with the bidders what was unclear in the specifications that resulted in such a wide variation in pricing and go out for bids again. The final option...
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...DE HAVILLAND Case Report January 20, 2015 Table of Contents Executive Summary 3 Issues Identified 3 Environmental and Root Cause 3 Alternatives and Options 4 Implementation 5 Recommendations 5 Monitor and Control 6 Conclusion 7 Executive Summary This case report addresses many factors when decisions are made in identifying and working strategically with custom designed components and assemblies. De Havilland Company especially Kim Tomar has a decision to make. A RFQ proposal by Marton Enterprises could bring cost reductions down by 60% for this particular assembly and help with streamlining BOM cost to achieve a reduction of 25%. There’s risk to using a new vendor, including delivery and trust and even if the correct SSB members are evaluating the proposals. There are discrepancies that need to be reviewed and questioned by the Operations, Logistics and Sourcing staff and hidden costs not noted on the price breakdowns ie: soft and hard tooling costs. Marton must prove to the SSB group and OLS that their proposal is solid and can manufacture and meet spec’s as identified by De Havilland Engineers. There also needs to be plan to increase capacity should there be an upswing. My recommendations include two options including a primary and secondary vendor model (mitigating risk of custom components and shortages and working with the existing vendor Dollard Plastics to looks for ways of continuous...
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...1. Executive Summary After having full exposure to the cost structure of De Havilland’s Dash 8 airplane I immediately becameaware of their high manufacturing cost which has been caused by the high cost of sourcing the flapshrouds and bay doors from Dollard Plastics of Montreal. The latter showed no flexibility on reducingtheir prices on the above parts when the former was in search of ways to improve their productionefficiencies by reducing the cost attributed to Dash 8 airplane. Kim Tomar, the Financial Analyst at DeHavilland had realized that issue and therefore started the process of finding a new business partner whois capable of meeting a set of standards that De Havilland had developed earlier for their procurementdepartment, had started the process about year and half earlier than the expiry date with the incumbentsupplier.After receiving 9 bids to supply the needed parts, I have recommended Morton to De Havilland’sSource Selection Board (SSB) as prospective vendor for selection provided that Mortonmust pass the set of standards which I mentioned above. Based on the initial information fromthe normalized bids from all nine bidders, the lowest bid was Morton Enterprises. Their bid was18% lower than their nearest competitor, and when I compared prices of the needed components tothe prices supplied by current providers they were between 54% and 75% less expensive.However, beyond parts cost reduction we are also interested in establishing long-termco-operative contracts with...
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... 5 Alternatives or Options 7 Recommendation 9 Implementation 10 Monitor and Control 11 Executive Summary At De Havilland Inc. we have been in business since 1928 and have come a long way since then. After many acquisitions and mergers and now bought by Bombardier Inc we have been a major part of Canadian aircraft manufacturing industry. With the influence of Bombardier we are making strategic decisions to focus on cost reductions, long term vendor relationships and reduce number of vendors we use at De Havilland. Focusing on cost reductions we have requested a 25% cost reduction on the flap shrouds pricing and Dollard Plastics who is the current supplier has turned us down. Now after looking at nine bids Marton Enterprises Inc. has been chosen as the preferred vendor which will meet the terms that BSB was looking for. This new relationship will reduce overall cost of the parts and make us a stronger competitor in the market. Product quality and financial health of Marton must be checked but this relationship will be...
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...IDENTIFIED Long Term The major concern for De Havilland is their high manufacturing cost for bill of material, which range from 60% to 65%. This presents a challenge for being price competitive in the market, therefore it is important for De Havilland to take some initiatives to discount cost for all the parts. Also, De Havilland has concern over their large portfolio of vendors that would stop them from capturing economies of scale and pass cost reduction along. The company has recognized the need to minimize the size of vendors, initiate long term contract, moreover, to simplify their purchasing cycle. Short Term The uncertainty that De Havilland is going through at this point in terms of choosing the right supplier who is going to be reliable enough to commit to a 5 year fixed contract with the company for supplying flap shrouds and equipment bay doors. ENVIRONMENTAL AND ROOT CAUSE ANALYSIS Potential Barriers Both companies has a parent company that could have major impact on their agreement. The parent companies can potentially over-turn any decision made by either de Havilland or Marton at their discretion.The reasons they could over-turn could be based on previously established relationships or political reasons. Besides the influence from parent companies being the potential barriers, there are some other roadblocks. As Marton states that their bid price is very competitive, not up for negotiation, if De Havilland continue to force their model of three price...
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...On reviewing the supply function in the Blozis Company it is clear that it is not organized at all. It works under a tactical strategy with many holes in its informal policies and procedures. Some of the key issues/Problems that have been identified are as follows: * There is no proper approval policy. * Lack of technical training or knowledge in the Supply Department. * Verbal not written descriptions were provided by engineering. * Supply Manager has no technical training. * General supply buyer handles technical items. * Expeditor attached to production spends over 50% of his time picking up items every day, also makes changes to specifications without approval and has too much authorization for his position. * Stock room is managed by a clerk with almost no supervision from the Expeditor to whom that position reports. * Stock room clerk could dispose of slow moving or deteriorated goods without approval. * No proper tracking of delivery receipts. * Long overdue payments are frequent and sizable discounts had been missed due to lack of receiving reports received by the Supply department. * In rush situation purchase orders are created by expeditor not the supply department. * Suppliers were delivering goods in rush situations without a signature from the supply manager. * Anyone in the company could initiate requisitions. * No formal signature policy. * No discipline actions for wrongdoing. The causes of the issues...
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...Executive Summary: Ford Motor Company was incorporated in 1903 in Michigan,USA by Henry Ford and 11 partners with a starting capital of 28000 US $ in cash. The company witnessed tremendous growth and became one of the top three car manufacturers in North America. Sales reached 150 billion $ in 1996 with a total of 370,000 work force worldwide. The company stayed innovative and progressive in its strategy and business model. In the 1970's, the car market became more competitive with the Japanese manufacturers like Toyota and Honda gaining grounds in the auto market worldwide by producing high quality vehicles with extended life time. In 1999 Ford acquired the Swedish company Volvo to establish a foot hold in Europe and launched a campaign called "Ford 2000"to reengineer the company infrastructure and IT strategy that aimed at reducing their vehicle centers to 5 worldwide and requiring information technology to be the driving force and the link between the various company divisions. In doing so, Ford was trying to build a model similar to the one adopted by Dell computers to improve supply chain and delivery times. Dell launched the "direct business model" or "virtual integration" where Dell contracted with reliable suppliers to produce and assemble hardware and software for its computers and note books and tried to sell its products directly to organizations and individuals through the internet by cancelling the role of the retailers or intermediaries. I recommend the implementation...
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...De Havilland is a very successful and well known name in the aviation industry. The company has been procuring Flap Shrouds and Equipment Bay doors from two of its major vendors. However Dollard Plastics, the Flap shroud vendor refused any renegotiations with de Havilland. Kim Tomar, the Financial Analyst at De Havilland had realized that issue and therefore started the process of finding a new business partner who is capable of meeting a set of standards that De Havilland had developed earlier for their procurement department, had started the process about year and half earlier than the expiry date with the incumbent supplier. After careful analysis of the nine bids received by de Havilland, I recommended Morton to De Havilland’s Source Selection Board (SSB) as prospective vendor. Based on the initial information from the normalized bids from all nine bidders, the lowest bid was Morton Enterprises. Their bid was 18% lower than their nearest competitor, and when I compared prices of the needed components to the prices supplied by current providers they were between 54% and 74% less expensive. However, beyond parts cost reduction we are also interested in establishing long-term co-operative contracts with the vendor. So, apart from determining who had the best price offer, I need to determine whether Morton is sufficiently stable to be relied upon in the long run. So my strategic intention here is to negotiate an agreement with Morton that will be of the greatest value possible...
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...Introduction Faced with a downturn in the commercial aircraft business and reduced military spending, The Boeing Company was forced to downsize approximately 55,000 people over a five-year period. The company's management, organized labor, the local community, multiple levels of government, and community colleges collectively worked together to develop Reemployment Centers to assist in the transition of their specialized workforce into alternative forms of employment. The following is a description of how The Boeing Company successfully completed this effort at downsizing. Downsizing is thought to be an effective human resources strategy to increase global competitiveness. Labor costs, generally one of the largest costs for most organizations can be reduced through downsizing. In many cases the downsizing process includes outsourcing or subcontracting jobs previously performed within the organization. Although organizations often consider downsizing necessary in order to remain competitive, this strategy does not always result in increased organizational profitability and performance. One recent survey conducted by the Society for Human Resource Management reported that only 26% of firms reported productivity improvements while 58% said that productivity was flat or had declined after downsizing (The Washington Post, 1996). In addition, the study found that approximately 54% of companies surveyed cut jobs in 1994 but only 25% expected any further downsizing. Whatever the...
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...[pic] Module TWO - Supply Chain Management DE HAVILLAND INC: Supply Chain Strategy Case Study Prepared By: Pankaj Kapoor Executive summary De Havilland’s Dash 8 aircraft division has only a “year plus” inventory of Flap Shrouds and Equipment bay doors and now they have to decide if they want to continue sourcing these parts from same supplier “Dollard Plastics” a Montreal based supplier or should they start thinking of sourcing these parts from other potential suppliers. Kim Tomar, financial analyst materials of DH has responsibility to gather all related facts, Analysis and come up with report & recommendations. Since De Havilland is now under new management of Bombardier Inc. Kim Tomar has to keep Bombardier’s following new policies in mind while making any recommendations. (Exhibit 2: DH Organizational Chart), • 25% discount on purchases across the board • Establishing 5 year fixed cost contract with suppliers • Consolidation of sources / reduction of suppliers Kim Tomar had received good response from nine potential suppliers on RFQ sent by BSB (Exhibit 3 reflects the bidding structure from each supplier). After normalization, it was evident that Marton Enterprises Inc, offered huge savings and also ready to commit to all policies including fixing the cost for next 5 years...
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...The makers of “Blood Diamond,” an exceptionally thriller starring a most excellent Leonardo DiCaprio, want you to know there may be blood on your hands, specifically your wedding finger. The story involves so-called conflict diamonds, illicitly mined stones that have been used to finance some of the most vicious wars in Africa. If films were judged solely by their good intentions, this one would be best in show. Instead, gilded in money and dripping with sanctimony, confused and mindlessly contradictory, the film is a textbook example of how easily commercialism can trump do-goodism, particularly in Hollywood. The 2006 movie (Blood Diamond) was recently seen by me, this is an American political war thriller film produced and directed by Edward Zwick, starring Leonardo DiCaprio, Jennifer Connelly and Djimon Hounsou. The title refers to blood diamonds, which are diamonds mined in African war zones and sold to finance conflicts, and thereby profit warlords and diamond companies across the world. During Sierra Leone Civil War in 1996–2001, the film shows a country torn apart by the struggle between government soldiers and rebels. It also portrays many of the atrocities of that war, including the rebels' amputation of people's hands to discourage them from voting in upcoming elections. The film's ending, in which a conference is held concerning blood diamonds, is in reference to an actual meeting that took place in Kimberley, South Africa in 2000 and led to the Kimberley Process...
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