Purchasing Negotiation - Apex Aviation

        Apex Aviation is working with Hawk Manufacturing on negotiating the….. We want to maintain our current relationship/ improve the relationship we currently have with Apex, keep the learning curve where we currently have it, keep profit at $146,025, to keep overhead at 150%, to keep G&A expenses at 18%, to point out the fact that we will be giving Apex on time delivery, and the length of agreement.

One of our biggest objectives needs is to get our hours per strut reduced.  Currently Hawk is manufacturing at 120 hours per strut.  At a rate of one hundred struts, it comes out to 12,000 hours.  We believe with cross-training and observation, that we can reduce this number to an objective 77 struts, which would equal out to 7700 hours.  In order to obtain this objective, communication must be increase.  This is one way we can reduce both of our cost so that we both receive a better profit.  Our ultimate goal would be to see this number reduced to 65 hours per strut.  We understand though that may be asking for too much, but the maximum we can accept is and need that number to 90 hours per strut.  Hawk Manufacturing is currently using hard tooling verses temporary tooling, as a result it is increasing their overhead costs.  If   If Hawk  Also, if we were able to get this new job we would be operating near capacity, which we are always aiming for. The strategy for continuing the relationship we have with Apex and why they should pick us is because they can easily look at the history they have with our company. We feel we have been doing a great job supplying good quality parts with on time delivery to Apex. This would make Apex have good faith about Hawk Manufacturing taking on another job for Apex. Our strategy for creating a better relationship with Apex would be to be more involved and to make sure a supplier assessment tool is completed once a month. To be more involved Hawk Manufacturing would have some of its managers come on site to Apex once every two weeks. This would benefit both companies, because if our company could see how Apex operates, we could possibly be able to make the struts better/ reduce the costs of the struts. We believe a supplier assessment tool would be beneficial because we could see what we are currently doing well, and what we need to improve on.  

        Another big objective for Hawk Manufacturing Company is to keep the learning curve at what it is presently at. In our proposal, we are assuming that our employees will be able to make a strut in 120 hours. This is giving our employees somewhere between an 80%-85% learning curve (See table A). This is very high, so we do not want Apex to assume that we are able to go any lower than 120 per strut. Our strategy for this is to show Apex Aviation the table, and have them see for themselves that we are already giving our employees a high learning curve. Our employees may not even meet the learning curved that our company proposed so it is very important 120 hours per strut is not lowered anymore. This number affects all of our other prices greatly.