Environmental and Root Cause Analysis

Executive Summary                                                                                3

Issues Identification                                                                                 4

Environmental and Root Cause Analysis                                                        6

Alternatives and Options                                                                        7

Recommendations                                                                                9

Implementation                                                                                10

Monitor and Control                                                                                12

Executive Summary

Under our commitment to eliminate constant contract negotiations and to find a long-term, cost effective and co-operative supplier, we initiated the process to find a supplier for flap shrouds and equipment bay doors for our Dash 8 aircrafts. I, Kim Tomar was given the responsibility to evaluate all nine received bids & make recommendations to De Havilland’s Source Selection Board. Keeping De Havilland’s current policy change in mind I made sure that I recommend a cost effective firm who also has the capability of being our long-term & co-operative supplier.

In order to maximize our profitability and lower our manufacturing cost, I looked at different possible options from bringing the production in-house to staying with current supplier. Based on the initial information from normalized bids, most cost effective alternative is Marton Enterprises Inc. Their bid shows them to be 18% lower than their nearest competitors, and price comparison of specific components makes them between 54% and 75% less expensive.

Our current supplier Dollard Plastics has prices that are far too high and they are unwilling to lower their prices. I recommend that we should assess the penalties associated with cancelling the contract with Dollard plastics. If penalties do not exceed the difference between the normalized prices offered by Marton, then we will set up a post bid clarification meeting with Marton to conduct a full audit of their facility and financials. Bid clarification meeting will include experts from material, finance, engineering and quality assurance teams of De Havilland. Because Marton Enterprise is out of country supplier, in the post bid clarification meeting we will also discuss delivery terms, exchange rate terms, and shipment terms. If everything looks in order & agreement is reached in terms of delivery & exchange rate, De Havilland will terminate the Dollard Plastics contract and start one with Marton. If otherwise recommend lakeside industries and negotiate with term to start the contract when that with Dollard plastics expires. I also recommend that we (De Havilland) should follow the true model of RFQ and there should be no negotiation of prices after bids are submitted.