De Havilland Inc. Case Report Essay

1465 Words Dec 1st, 2010 6 Pages
De Havilland Inc. Case Report

Date of submission: February 2, 2010

Executive Summary:

Marton’s suitability as a Vendor for De Havilland must first prove that its proposal is realistic in price and does not lack any important elements to efficiently supply the flap shrouds and equipment bay doors to De Havilland. Once that is clarified, De Havilland must ensure that Marton’s is a viable entity that can perform its duties on a long term basis, provide the necessary warranties and guarantees as well as perform to the service levels De Havilland is receiving from their current supplier. In order to not jeopardize any production levels at De Havilland it is recommended that De Havilland use both, their current supplier Dollard
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The Marton proposal definitely provides the cost reduction and a fixed price for parts on a long term deal but does provide 4%-6% annual increases for employee hourly labor rates for work orders and the same increases for material costs for the flap shroud program each year. It’s clear that there are eight (8) other suppliers that De Havilland could go to if the Marton bid does not work. De Havilland also holds inventory for one and half years and does have some leverage to not rush into any decisions. De Havilland still has the current Supplier providing inventory to the organization but according to the responses De Havilland is paying a higher premium than the supplier it would be negotiating with.

Marton’s BATNA is simply that they can walk away and provide competitive pricing to De Havilland competitors.

For De Havilland, it is of great interest to consolidate purchases with one Vendor who can provide flap shrouds and equipment bay doors with cost reductions and the will of offering a long term deal. For Marton enterprises their interest may be for reasons that are not necessarily only in conducting business with De Havilland. Marton is an enterprise owned by a conglomerate called Devon that holds 50 other firms under its belt. Devon’s financials do show a substantial reduction in profitability in the last 3 years with both automotive

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