SCLE Deliverable #1

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Feb 20, 2024

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SCLE Deliverable #1 Madison Jolley, Amanda Sievert, Kentrice Frison, & Yousef Alhaj Omar College of Business, Northern Illinois University OMIS 680: Global Supply Chain Management Dr. Jim Heyland February 12, 2022

Overview of Negotiation Environment Founded in 1979, Triton Industries serves as a distributor of pharmaceutical products, such as cold and flu products, and is looking to expand into the allergy medication market. We recently became one of the four companies in the US licensed to produce an allergy tablet that is the result of a major breakthrough in allergy medication innovation. In order to achieve our goals, and maximize profits as a manufacturer, we are looking forward to setting up distribution networks and negotiating contracts with the two closest distributors, Cardinal and Lobos Distribution Centers. Key Cost and Profit Drivers Based on our analysis of Triton Industries and the factors that affect the company, we found several key cost drivers in the facility creation, production, and overall parameters in our contract. Considering an annual production of 464,808,760 units across Cardinal and Lobos Distribution Centers, we came to a total annual cost of $9,439,015,972.75 with an annual cost per unit of $20.31, which we decided to sell to our two distributors a per unit price of $30. Included in our annual cost are our facility creation of $239,782,300 and overall production costs of $3,372,049,824. Considering our parameters associated with facility creation, we valued semi- automated technology in both our distribution and production technology, and a high level of information flow as essential to running efficient operations. In regards to our wages and work environment choices, we ultimately strive for our employees to be compensated well and have great benefits for working at Triton. In regards to profit drivers, our biggest drivers were our cost

per unit mark-up to $30, as well as our supplier strategy in choosing the middle-tier supplier at a $9 per unit cost. Analysis This section will provide an analysis on Triton Industries manufacturer, specifically volume to cost per unit sold to the two selected distributors, Cardinal and Lobo distribution centers. In Figure 1, we utilized our calculated demand across our two distribution centers and calculated what-ifs for volume (Low Sales Volume and High Sales Volume) and for sales price (Low Sales Price and High Sales Price). In Figure 1, our Most Likely Sales Price ($30 per unit) reflects the Sale Price selected by Triton, the Low and High Sales Prices were calculated by taking the Most Likely Sale Price and subtracting and adding $10, respectively. Furthermore, the Most Likely Volume reflects the predicted orders for both distribution centers, our Low and High Volumes were calculated by taking the Most Likely Volume by subtracting and adding 30%, respectively. With this said, the potential profit is shown at all three price points, considering both pessimistic and optimistic sales volumes. Figure 1:

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Conclusion Overall, Triton Industries is at the forefront of leading technological change in pharmaceutical products. To achieve our goals, we will dive into market research, data analysis, relationship development and contract signing. The main key cost drivers for setting up distribution networks and negotiating with the two closest distributors, Cardinal and Lobos Distribution Centers, include, but are not limited to: facility creation, production costs, compensation benefits, and information flow. The main key profit drivers were cost per unit mark-up and supplier strategies. In Figure 1, we thoroughly analyzed volume to cost per unit sold to the closest distribution centers. Our findings reflect predictions of potential profits at all three price points. The data we have collected has prepared us for setting up distribution networks and negotiating contracts with Cardinal and Lobo Distribution Centers.

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