50,000 The following chart shows the historical spot buy price graph of nickel on the London Metal Exchange (LME) from 1 May 2021 to 30 Nov 2022. US$ per tonne 45,000 40,000 2/9/2021 35,000 US$19,365/ton 1/5/2021 US$17,477/ton 30,000 25,000 20,000 15,000 30/04/2021 26/05/2021 21/06/2021 14/07/2021 06/08/2021 01/09/2021 24/09/2021 19/10/2021 11/11/2021 06/12/2021 31/12/2021 26/01/2022 18/02/2022 1/5/2022 -US$32,000/ton 15/03/2022 07/04/2022 05/05/2022 30/05/2022 24/06/2022 19/07/2022 11/08/2022 2/9/2022 US$20,175/ton 06/09/2022 29/09/2022 24/10/2022 16/11/2022 Nick is the non-ferrous metals category manager (in-charge of nickel cathodes) of Better Battery Co., a battery manufacturer. He has sourced his nickel cathode supplies from two suppliers: Supplier A and Supplier B. Throughout 2021, both Suppliers A and B complained of increasing nickel costs and wanted to raise prices for the cathodes supplied to Nick's company. As Nick had a firm fixed price contract with Suppliers A and B, he did not accede to their request. A cathode price increase would raise the cost of Better Battery Co's end product - the battery. It would also impact Nick's Key Performance Indicator and his personal performance appraisal. However in 2022, Nick felt that he was overpaying for his nickel cathodes from Supplier A, as nickel prices declined. Nick is preparing for negotiations with Supplier A, as its annual 2022/23 contract is expiring. The supplier's firm fixed price contract periods and prices are summarised as follows. Contract 2021/22 Contract 2022/23 Nickel cathode Contract supplier period Contract price Supplier A 1 May 2021 US$32/kg Contract period 1 May 2022 Status Contract price US$60/kg Contract - 30 Apr 2022 - 30 Apr 2023 expiring, negotiations in progress Supplier B 2 Sep 2021 US$35/kg 2 Sep 2022 US$38/kg Active - 1 Sep 2022 - 1 Sep 2023 contract Nick used the historical prices to prepare for his negotiations with Supplier A. Based on nickel price analysis referencing the LME Nickel, Nick expects the nickel price to continue to rise above US$25,000 per tonne. Analyse the "fair and reasonable" price of nickel cathode (US$ per kg) for Nick to negotiate a new firm fixed price contract with Supplier A in 2023/2024. State your reasons and show any calculations. The nickel cathode prices of Suppliers A and B had increased by 28.1% and 8.6% respectively in the last contract periods. The increasing nickel cathode prices has increased the cost of Better Battery Co's batteries. Nick's Chief Financial Officer (CFO) tasked him to lead a Cross-Functional Team to find ways to cost-mitigate this worrisome price trend. Suggest cost management measures for Nick to initiate, and which functional department he needs to engage (in this Cross-Functional Team) to pursue these initiatives. Continuing from Question 3 on Better Battery Co. Nick started the internal cost management project with the Cross Functional Team (CFT). Most team members are generally supportive as they are stakeholders in ensuring their company's continued competitiveness. However, there was some pushback with remarks such as ... "Are you sure you are getting competitive prices?" "There's a limit to what we can achieve internally.” "Can your suppliers do better?" "Can't you purchase differently to manage the nickel price increase/fluctuations?" Nick starts to feel sandwiched between his internal stakeholders and suppliers. What are the CFT project management approaches that Nick can take to address his internal stakeholders' concerns? Give reasons to support your answer. Propose how Nick can involve the suppliers as well as secure his CFT colleagues buy-in to make the project a success.

50,000 The following chart shows the historical spot buy price graph of nickel on the London Metal Exchange (LME) from 1 May 2021 to 30 Nov 2022. US$ per tonne 45,000 40,000 2/9/2021 35,000 US$19,365/ton 1/5/2021 US$17,477/ton 30,000 25,000 20,000 15,000 30/04/2021 26/05/2021 21/06/2021 14/07/2021 06/08/2021 01/09/2021 24/09/2021 19/10/2021 11/11/2021 06/12/2021 31/12/2021 26/01/2022 18/02/2022 1/5/2022 -US$32,000/ton 15/03/2022 07/04/2022 05/05/2022 30/05/2022 24/06/2022 19/07/2022 11/08/2022 2/9/2022 US$20,175/ton 06/09/2022 29/09/2022 24/10/2022 16/11/2022 Nick is the non-ferrous metals category manager (in-charge of nickel cathodes) of Better Battery Co., a battery manufacturer. He has sourced his nickel cathode supplies from two suppliers: Supplier A and Supplier B. Throughout 2021, both Suppliers A and B complained of increasing nickel costs and wanted to raise prices for the cathodes supplied to Nick's company. As Nick had a firm fixed price contract with Suppliers A and B, he did not accede to their request. A cathode price increase would raise the cost of Better Battery Co's end product - the battery. It would also impact Nick's Key Performance Indicator and his personal performance appraisal. However in 2022, Nick felt that he was overpaying for his nickel cathodes from Supplier A, as nickel prices declined. Nick is preparing for negotiations with Supplier A, as its annual 2022/23 contract is expiring. The supplier's firm fixed price contract periods and prices are summarised as follows. Contract 2021/22 Contract 2022/23 Nickel cathode Contract supplier period Contract price Supplier A 1 May 2021 US$32/kg Contract period 1 May 2022 Status Contract price US$60/kg Contract - 30 Apr 2022 - 30 Apr 2023 expiring, negotiations in progress Supplier B 2 Sep 2021 US$35/kg 2 Sep 2022 US$38/kg Active - 1 Sep 2022 - 1 Sep 2023 contract Nick used the historical prices to prepare for his negotiations with Supplier A. Based on nickel price analysis referencing the LME Nickel, Nick expects the nickel price to continue to rise above US$25,000 per tonne. Analyse the "fair and reasonable" price of nickel cathode (US$ per kg) for Nick to negotiate a new firm fixed price contract with Supplier A in 2023/2024. State your reasons and show any calculations. The nickel cathode prices of Suppliers A and B had increased by 28.1% and 8.6% respectively in the last contract periods. The increasing nickel cathode prices has increased the cost of Better Battery Co's batteries. Nick's Chief Financial Officer (CFO) tasked him to lead a Cross-Functional Team to find ways to cost-mitigate this worrisome price trend. Suggest cost management measures for Nick to initiate, and which functional department he needs to engage (in this Cross-Functional Team) to pursue these initiatives. Continuing from Question 3 on Better Battery Co. Nick started the internal cost management project with the Cross Functional Team (CFT). Most team members are generally supportive as they are stakeholders in ensuring their company's continued competitiveness. However, there was some pushback with remarks such as ... "Are you sure you are getting competitive prices?" "There's a limit to what we can achieve internally.” "Can your suppliers do better?" "Can't you purchase differently to manage the nickel price increase/fluctuations?" Nick starts to feel sandwiched between his internal stakeholders and suppliers. What are the CFT project management approaches that Nick can take to address his internal stakeholders' concerns? Give reasons to support your answer. Propose how Nick can involve the suppliers as well as secure his CFT colleagues buy-in to make the project a success.

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

ChapterC: Cases

Section: Chapter Questions

Problem 3.10A

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