De Havilland Inc.

Case Study
September 22, 2014

DE HAVILLAND INC.

mICHELLA pRITCHARD

I.        executive Summary        

II.        immediate issues        4

III.        Goals/Objectives        5

IV.        Recommendation / Implementation        7

1. Executive Summary

Looking at many of the immediate issues that De Havilland has, it is determined that a number of steps needs to be implemented into the Policies and Procedures. As a large firm which has been publically and privately acquired on a number of occasions it is necessary to develop a new corporate strategy that will assist Supply Management within the organization to better support the airline.

It has been determined that duplications of business units should be eliminated or amalgamated together to produce a shift in the organizational chart.

With this being said, addition efforts to produce set standardization of materials, skews and products for Supply Management to Procure will be a focus in order  to eliminate cost and build strategic partnerships will fewer Suppliers which will guide De Havilland with new technologies and / or options to reduce the cost and processes in production and delivery of needed products. Specifically at this time the shrouds, but long term and holistically, for all materials.

A partnership with one or two possible Suppliers may suggest the sharing of De Havilland’s current facility and warehouse space. But further analysis of this consideration will not occur until after a Request for Proposal takes place with a maximum number of four (4) qualified Proponents this year.

1. Immediate Issues

DE HAVILLAND is an airline company that has been around since the early 1900’s. It has been a company that has seen a century of change and everything that encompasses change from product lines to ownership. DE HAVILLAND has been a company that has rolled with the punches so to speak, and with that has encountered the immediate and systematic issues going forward in this case study.

1. Numerous Acquisitions

• De Havilland has been publically and privately acquired on a number of occasions from 1928 through to 1992, with the most recent change with-in the decade. The corporate strategy systematically has not caught up to these changes that would give the Supply Management direction on how to support De Havilland’s Corporate Philosophy.

Numerous acquisitions has led to;

1. Duplication of Processes

• De Havilland has a BSB (Bidder Selection Board) and a SSB (Source Selection Board), in which the two boards (management groups) are typically or essentially doing duplication of Work. Both are looking for long term objectives of establishing co-operative contracts with suppliers on a minimum five (5) year, but the long term objective seems to be lost in process. Duplications of selecting of the BSB is to first review the past, forecast the future purchase and from here estimate the cost and select a vendor or list of vendors.
• A second process by the SSB of analyzing the vendors with an additional three (3) step process for price target, materials, and financial stability is completed. This is a timely process that may be have been completed in the first (1) step.

1. Standardizations

• Currently for the flap shrouds there are 11 different options that could be used, six (6) for the Series 300 and five (5) for the Series 100+ addition shroud options for the bay doors.
• The options above also have four (4) different materials (Kevlar, Nickel, Graphite, and Aluminum) available which could possibly consider forty- four (44) different skews for three (3) or four (4) needed items. As well the shrouds were never a duplicated set, and that may lead to less consistency.
• With-out having the shrouds for the Series 300, Series 100 and Bay doors standardized, and each individually molded,  fabrication processes may be cumbersome and costly in production.
• With-out simplicity in production, the cost for non-recurring molding of tools and products with have an additional impact on the cost that De Havilland is paying
• With the above non-standardization, technology has not been a consideration or mentioned in the strategic plan from either the BSB or the SSB

1. Number of Considered Vendors

• Currently nine (9) vendors have been solicited to participate in the bid, which is far too many to evaluate for the Scope of Work and Spend that is being considered.

1. Geographic Location

• De Havilland is a Canadian Based company, but little to no mention of considering the geographic location of where the shrouds will be shipped from has been mentioned. Marton is a subsidiary of an international company Devon, but the shrouds would come all the way from Phoenix, Arizona. Whether these were trucked, or transported via air, there would be duty and a significant amount of transport. Most likely in the long run, there would be more cost associated to transport than the two hundred ninety-six dollar ($296.00) difference between the two companies Lakeside Industries. This is a qualitive consideration, and should always be looked at over and above just cost of the product.

1. Goals/Objectives

BATNA  De Havilland

With consideration to the Economic and Environmental issues in the pretense, some of the following considerations should be had prior to De Havilland’s Source Selection Board meeting with Proponents;

• Short listed the number of proponents from nine (9) to three (3) or four (4) to get the eliminate noise in the bidding process.
• Utilize a predetermined Aspiration, Focal, and Reservation Point to short list the number of vendors.
• Determine strategically if geographic location will play a driving force behind some of the final desired outcome not only on cost, but JIT (Just in Time) delivery scenarios as well for building new planes.
• Determine what are options in each Vendors has in their ordering processes to reduce the amount of PO’s and use larger volumes to amalgamate the orders
• Include rebate options as a way of short listing the proponents
• Scheduling a clarification meeting at the Canadian Site where the Bay doors will be installed as well as the shrouds to determine if the Vendors have any better alternatives to De Havilland’s current operations
• Consider if the Proponents can manage to build these shrouds in the facility that De Havilland has as a VMI (Vendor Managed Inventory)
• Measure the pros and cons of inviting the current vendor to the clarification meeting with all other vendors present
• Measure the Pros and Cons of what the Vendors can suggest as alternative ways to build a partnership with De Havilland that would be a strategic consideration of long-tern cost saving initiatives.
• Determine after the clarification meeting what new items  De Havilland is willing to Satisfice (Sacrifice, and be satisfied)

BATNA Marton and Other Proponents

Marton and Other Proponents should take in their options as well when considering De Havilland’s history, location, and product that is being RFP’d.

• Can they utilize relationships with other proponents to merge and provide cost effective products that are viable long term and well as available immediately with little to no delivery delays
• Will the option of supplying De Havilland be considered for the much larger consideration with options to work with Boeing as well.
• What alternatives are there to simplify De Havilland production processes to become more cost effective
• Can they simplify the product by utilizing a single choice of material for all three(3) shrouds
• Can they use any of the Subsidiary companies that they own to build the shrouds in a better geographic location for De Havilland
• Are there machines and tools now available to simplify the production process into one(1) simple mold for all three (3) shrouds
• Beyond this product line, are there other additional lines that may assist De Havilland in a more strategic approach
• Utilize a predetermined Aspiration, Focal, and Reservation Point to negotiate the Best Alternatives to negotiate the Agreement as well.

1. Recommendations and Implementation

Looking at many of the immediate issues that De Havilland has, it is determined that a number of steps needs to be implemented into the Policies and Procedures with so many historic acquisitions through the decades. It appears that a corporate strategy should be reevaluated to eliminate duplication in process throughout the company that may cause delays in the “Request for Proposal” (RFP) bids. Therefore, it is recommended first that the Source Selection Board (SSB) and the Bidder Selection Board (BSB) be amalgamated into one unit.