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5. NEGOTIATION Victoria has asked you to analyze the supply chain for the N95 masks that CareMed produces in Grand Rapids. N95 masks have four
5. NEGOTIATION Victoria has asked you to analyze the supply chain for the N95 masks that CareMed produces in Grand Rapids. N95 masks have four layers, and two of the layers are spun-bond polypropylene (SBPP). CareMed considers SBPP as a Leverage item and currently buys this item from multiple suppliers. Victoria believes that CareMed could reduce its cost and increase supply chain consistency if CareMed bought from only one supplier. CareMed is still developing its supplier scorecards, however, based on information gathered from Operations, Supply Chain, and Victoria, you were able to estimate the suppliers' scorecard ratings for the past 12 months. Victoria asks you to evaluate your sourcing recommendation based on the suppliers with the best performance and the lowest total cost. All of this information is in the table below. Lucky Quant Poly Wed Tupelo Gold Poly Two Chemical LLC Price / SBPPlayer| $0.060 $0.080 $0.075 $0.070 $0. 100 Logistics cost / SBPPlayer | $0.045 $0.020 $0.020 $0.010 $0.025 Scorecard Rating 90's 90's low 80's mid-70's 90's Asheville, | Dayton, Supplier Location Hong Lansing, Tupelo, Kong NC OH MI MS You have negotiated all of the suppliers except Tupelo, LLC-which is the final negotiation. You want to take a structured approach to the negotiations with Tupelo. To do this, answer the following questions. Be sure to consider total cost of ownership and supplier scorecard ratings in your decisions. a. What is the total cost per SBPP layer from each supplier? b. Comparing Tupelo's total cost per SBPP layer to the prices you have negotiated with the other suppliers, what is your best alternative to a negotiated agreement (BATNA) price/ SBPP layer with which supplier? Why? C. What is your reservation level price/SBPP layer with Tupelo? Why
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