Reference no: EM132424548

Godwin Corporation

Godwin Corporation is a $4 billion dollar manufacturer of consumer products to distributors and retailers in the United States.  Godwin currently has four manufacturing plants (Seattle, Washington; Reno, Nevada; Memphis, Tennessee; and Greensboro, NC) and eight distribution centers (Vancouver, BC; Oakland, CA; Omaha, NE; Dallas, TX; Chicago, IL; Scranton, PA; Nashville, TN; and Macon, GA) through the Untied States and Canada.  Godwin has a reputation for producing a number of leading consumer products such as baby products and accessories, paper products, detergents, and various plastics products for the home. 

Godwin desires to start a new product line in the specialty kitchen appliance market.  Godwin is currently marketing a new countertop kitchen fryer and oven concept to potential channel members that it feels will position it well in the fast growing specialty kitchen appliance market.  Godwin sees a trend of increasing use of specialty kitchen appliances by families as evidenced by the success of such products as the George Foreman Grill and the NuWave Oven.  The use of specialty kitchen appliances in many homes are driven by three consumer trends:  consumers are more health-conscious and need appliances which can remove saturated fats out of diets; dual working couples who lack the time needed to prepare family meals; and the need for appliances to do multiple functions due to the space constraints in many household kitchens.  The new countertop kitchen fryer/oven will in essence replace the need to use the traditional stove and oven in the household, and give families capabilities to cook more healthy meals in less time.  Godwin realizes consideration for this product also involves risk in the investment of a new manufacturing facility and new distribution channels to market the new appliance.  Because of its leading presence in consumer items for the home, Godwin feels it has the marketing capabilities and supply chain relationships effectively compete in this new appliance market and have a competitive advantage.  Godwin, however, does not want to take the risk of investing in new plant and equipment during the initial phase of this new venture. 

Estimated future potential business, if successful, could prove extremely profitable, as the U.S. and Canadian markets for these appliances range from $50 to $60 million dollars in the first year and $100-$110 million each year over the next two to five years.  Through sourcing these appliances overseas, Godwin estimates it can save $6.5-$8.5 million dollars annually in procurement costs.  Godwin also feels that the product will gain acceptance worldwide once consumers see the health, time and space benefits of the appliance.

Because of Godwin's reputation for high quality consumer products, it has been able to secure a number of contracts worth about $40 million so far with distributors and retailers who want to sell the appliances.  Godwin knows that the market for portable, multi-function appliances is very competitive and totally different than its current manufacturing of baby products and plastics, so cost containment in all areas is critical in achieving profit margin objectives.  After looking at its current manufacturing operations, overall cost structure, and required industry margins, Godwin determines that it is more cost effective to outsource the manufacture the subassemblies and frames for the appliances to an overseas supplier than to make the appliances in house.  While Godwin would offer research support and technical expertise regarding the design of the subassemblies and frames, the chosen supplier will need to have the appropriate manufacturing infrastructure, technical personnel, and information systems necessary to design and make the oven frames and subassemblies as well as provide visibility into the entire process for Godwin.

Godwin received several inquiries to make the components through the request for information (RFI) process sent to a number of prospective suppliers to make the frames and subassemblies.  After analyzing the inquiries, Godwin has narrowed the field and contacted five suppliers in China that can make the necessary components.

Godwin's CEO has delegated the responsibility to you as the VP of Procurement to represent Godwin in this strategic procurement initiative.  The CEO has also informed the VPs of Finance, Marketing, Logistics, Production, and R&D to provide any support needed for this initiative.  Your role, along with other members of the procurement project team is to use the request for proposal (RFP) process as the first step in receiving prices for the appliances.

Godwin estimates a 6 month timeframe for the RFP beginning in January 10, 2015.  There is an additional three month timeframe from the first manufacture of the subassemblies to the Godwin distribution centers until the first appliance models end up in the stores and in other distribution channels.  Once the supply chain gets up and running, the estimated lead time from manufacture of appliance subassemblies to the retail stores is five to six weeks.

While the RFP is not a contract, Godwin prefers proposals to contract for at least one year.  Godwin will look at longer term proposals if a potential supplier shows a compelling business case.

Part One of Assignment:  Write the RFP

Answer the questions below first.  These questions will serve as a reference point for you to write the RFP.

1. What key players (by functional title) will need to be on the procurement team for this RFP?

2. What types of information does Godwin need to give suppliers in order for them to respond to the RFP, and how does Godwin incorporate this information in the document?  Use the format from your AQSCIR reading to help you with this exercise.  Please ensure to submit your AQSCIR worksheet along with the RFP for this assignment.

3. What types of supply chain risks would Godwin require China suppliers to clarify in their response to the RFP?  Keep things practical to what would be needed to complete the RFP and for a supplier to complete a Statement of Work (SOW).

4. From a logistics and supply chain perspective, what kind of issues would Godwin need to clarify to prospective suppliers in responding to the RFP?

Taking the scenario listed above, each work group will formalize an RFP document for this bid.  You have examples of RFPs in the Course Documents section of the course and feel free use them as a guide and as a template.  Each RFP should have as a minimum the following:

• Introduction, Company Background and Overview, and the reason for the RFP
• RFP project timeline
• Contract terms
• Insurance and shipping requirements
• Confidentiality
• RFP Timing and Submission Instructions
• Intention to Bid from suppliers
• Coordination to submit subassemblies for quality examinations
• Proposal Completion Guidelines
• Evaluation Process and Criteria
• RFP components required for an acceptable response, which include compliance through the Statement of Work (SOW)
• Pricing guidelines
• Question and Answer instructions
• Any other requirements deemed necessary for suppliers to respond to the RFP.

The RFP should be no more than 8 to 12 pages (preferably shorter), and should reflect Godwin's need to manage procurement of the subassemblies.

Shanghai Appliance Corporation

Shanghai Appliance Corporation is a $560 million (US dollars), 40 year supplier of small consumer appliances such as microwave ovens, toasters, small refrigerating units, and small heating units located near Shanghai, China.  Corporation has six manufacturing plants and two storage warehouses near Shanghai, China, and is very experienced in international packaging and shipping of these items.  Shanghai Corporation has a very extensive supply chain, with access to raw material and subcomponent suppliers worldwide.

Shanghai Appliance services its customers with state of the art ERP systems linked to a web portal which provide real time total visibility into the production and distribution of customer orders.  Customers can access this information via the Shanghai company portal on the World Wide Web, or call its customer service line anytime, 24 hours a day, seven days a week.  Consideration is given to those customers who are in different time zones.

Shanghai is known for the quality of its products and customer service through its on time delivery of finished goods to its customers.  Shanghai leverages its logistics relationships and supply chain visibility to ensure every customer gets its supply chain bill of rights: the right product, at the right place, at the right time, in the right condition, and at the right cost.

Shanghai has received the RFP from Godwin and desires to submit a bid to manufacture the small appliances.  Shanghai's CEO is very excited about the possible relationship which it could form with Godwin, and Shanghai wants to put its best foot forward in responding to the RFP.

From the preliminary information given by Godwin based on its design requirements, Godwin desires some preassembly of the ovens before arrival to any of Godwin's facilities.  Godwin also desires that each oven contains instructions in English, French, Spanish, and Chinese.

Part Two of the Assignment:

Answer the following questions first:

1. What kind of questions would Shanghai ask (or e-mail) of Godwin during the RFP process?

2. What could Shanghai leverage in its capabilities that could give it a competitive advantage over other potential suppliers?

3. Assume Shanghai receives all of the oven/fryer design/quality requirements from Godwin.  What would Shanghai need to do to clarify about the design specifications with Godwin?

4. Why does Shanghai Appliance consider this possible relationship with Godwin a very important strategic initiative?

You will respond to the RFP by writing a Statement of Work (SOW that represents Shanghai's response to the RFP) showing itemized costing information and an estimated price for the appliance (which will include the profit margin), schematics for a preliminary fryer design and a possible implementation strategy plan.  For simplicity purposes, do not include any terms of sale for the products (which will be done during the negotiations).  You have been given a spreadsheet with internal costing information for Shanghai Appliance and financials from the company's 12/31/2014 balance sheet and income statement.  The SOW should be no more than 2 to 5 pages in length.