Page 250 - Writing Winning Business Proposals

Paramount Consulting’s Proposal Opportunity at the ABC Company 241

Gilmore would like to hear more about Metzger’s concept of increasing capac-
ity at the existing site. Metzger replies that although he doesn’t know just how
much additional capacity would be needed, there is quite a bit of land available
on the present site for expanding the manufacturing building. Although some
of that space is now used for employee parking, he thinks this could be over-
come by double-decking the remaining parking area. If the present facility were
expanded, he would have the opportunity to promote some well-deserving first-
line supervisors into positions of greater responsibility. The capital requirements
for that option would probably be less, and he has heard that Consolidated is
becoming less generous in releasing funds to the competing divisions.
In Morrison’s office, located in the same area, Gilmore remarks that the caliber
of the equipment he saw on his plant tour was evidence of his group’s success-
ful program to continually monitor and upgrade major production equipment.
Morrison thanks him and shows him a stack of reports Gilmore had requested
at last week’s meeting. They discuss the reports in some detail, and Morrison
suggests that the documents could be very useful in determining ABC’s capacity
requirements. Gilmore readily agrees.
Gilmore compliments Morrison about some of Morrison’s comments last
week: Several of the factors that would have to be considered in the proposed
study were, in Gilmore’s experience, right on the mark. But Gilmore wonders
about a factor not discussed:
“What about distribution costs?” he asks. “Distribution costs are a major com-
ponent of total operating costs throughout the industry.”
“These are very important to the division,” Morrison says, “and you’re right—
they weren’t sufficiently discussed last week. Because of the weight and configura-
tion of our product, these costs are virtually the same as those for fabricating and
assembling our product. They are such a concern,” he adds, “that my group worked
with the information systems and distribution managers to develop a computer
model. This model enabled us to analyze different logistics strategies, select the
best, and then monitor the costs of distributing product to our nearly 150 demand
points on an ongoing basis.”
Morrison explains that this model had been properly validated and could be
used to determine distribution costs for different manufacturing capacity alter-
natives. The model had been developed because Armstrong was concerned about
escalating distribution costs and their potential impact on profits. Learning that
Armstrong planned to engage a consultant to develop the model, Morrison dis-
cussed with the systems and distribution managers the possibility of developing
such a model in-house. They agreed that it could be done if Morrison, because of
his academic background, would lead the project. They subsequently met with
Armstrong and convinced him that the in-house project was feasible and cost-
effective. Armstrong also saw that the project would provide a beneficial learning