Confidential “Taylor Stamping Role Play (Seller)”
Overview
Taylor Stamping Inc. runs a high-speed stamping and casting plant. They supply stamps, casts or finished pieces to many high volume manufacturers. They focus on customers who wish to operate in a JIT environment. Jewitt Production is a high volume assembly shop producing finished and assembled parts for the automotive industry. They currently buy part x from Indonesia. 
To improve efficiencies of the overall company, Jewitt has been implementing JIT/Lean processes. They are exploring suppliers close to home as they believe implementing JIT with suppliers halfway around the world will be a large challenge. The companies are only about 80 kilometres apart. 
Taylor Stamping and Jewitt Production have scheduled a meeting to attempt to negotiate an actual contract.  
Taylor Stamping will be represented by the senior sales person and their operations manager.
Jewitt Production will be represented by their purchasing manager and their operations manager. 
Role: Taylor Stamping – Senior Salesperson 

You are looking forward to meeting with Jewitt Production. Your company produces excellent quality products and is experienced in working in a JIT environment. You believe Jewitt will be an ideal customer and you will be an ideal supplier to them. They also have the potential to become a long-term customer. You hope to sell them at least 800,000 pieces per year. 

You have an opportunity to sell the same capacity to another customer whose terms would equate to approximately a $29.00 per unit, net 30 days price. Those goods would be shipped in robot ready reusable trays which fit your manufacturing process very well. You have some extra capacity but not enough to service both customers. 

Your opening offer to them will likely be $31.00 per piece, FOB Jewitt Factory, Net 30 days and delivered daily packed in cardboard boxes separated by Kraft paper as per their packing specifications. You hope to get at least $30.00 per piece from Jewitt as their packaging specifications seem to concern your operations manager.

Your finance group has expressed an interest in changing the invoicing and payment process. Your IT group have designed an electronic interface for some customers whereby they confirm receipt of all shipments from you, but then you invoice only once per month at the end of the month and receive payment shortly thereafter. Finance has also expressed willingness to discuss extended payment terms. 

You understand from industry contacts that the purchasing manager for Jewitt is a very tough negotiator. He expects to get to a deal quickly, and while he is open to creative proposals, he is interested in only hard dollar savings. He also expects your proposals to be clear, well documented, and in writing. 

Additional Data from Taylor Finance Department

Value of no per-shipment invoices, and just monthly billing with one check issued, is 1% of total transaction value, or 300,000 per year, or 30 cents per unit. 
Cost of moving from 30 days to 60 days receivables is about 2% of total transactions, or 600,000 per year or 60 cents per unit. Moving to 45 day terms would be half that, or 30 cents per unit.
Value of boxes is $8 per box or 26.7 cents per unit for materials plus 10 cents labour costs per unit, for a total of 36.7 cents per unit. 
Taylor would like monthly invoices and to not use boxes, but would resist moving to Net 45 or 60 days (payables for Jewitt, receivables for Taylor). 

Role: Taylor Stamping – Operations Manager

You are excited to be part of the negotiating team with Jewitt Production. The company has done a lot of work to become an excellent JIT/Lean supplier. Signing a contract with Jewitt will be a coup. This is because Jewitt is a famous well-known company, and because they are currently buying their parts offshore. Other potential clients would be impressed if they toured your factory and saw Jewitt materials flowing down the line. 

You have some concerns, as signing of a deal with them means displacing a current customer. The current customer is not as well known as Jewitt but is a source of steady income and stable employment for your factory. 

You are also concerned that the Jewitt packaging specification requires you to manually wrap their parts with paper and pack into cardboard boxes. Apart from the labour to pack these parts, you will be spending about $8.00 per box (each holding 30 pcs) on packing materials. Additionally, since you run many different products down your production line, manual packing labour for part of each day will be expensive. 

Additional Data from Taylor Finance Department

Value of no per-shipment invoices, and just monthly billing with one check issued, is 1% of total transaction value, or 300,000 per year, or 30 cents per unit. 
Cost of moving from 30 days to 60 days receivables is about 2% of total transactions, or 600,000 per year or 60 cents per unit. Moving to 45 day terms would be half that, or 30 cents per unit.
Value of boxes is $8 per box or 26.7 cents per unit for materials plus 10 cents labour costs per unit, for a total of 36.7 cents per unit. 
Taylor would like monthly invoices and to not use boxes, but would resist moving to Net 45 or 60 days (payables for Jewitt, receivables for Taylor).                         read and understand, do not generate