TABLE OF CONTENTS Bob Neurath has concluded that all Beta's plants must develop this type of information, which will in turn be used in creating a long-term business strategy that links marketing and manufacturing into an understanding of the sensitivities for a given level of performance. Indeed, the data indicate that uptime and RoNA are mediocre at best. Further, once understood, this information can be used to position the company strategically with certain key customers in key markets. One marketing strategy is to strategically position with key customers and offer to reduce prices modestly over the coming years, in return for a minimum level of business, recognizing that manufacturing performance must also improve to provide a reliable supply to those customers, and concurrently improve RoNA. This approach is expected to create a strategic alliance between Beta and its customers, which will assure both market share, as well as an adequate return on assets. This information can in turn be used to help Beta to understand the profits/RoNA at which it can operate for a given market price and manufacturing level of performance, and then adjust business objectives consistent with current and strategic capability. Put more simply, Mr. Neurath has directed the operating units to:
Determine the unit cost of production needed to assure market share leadership (among other factors).
Determine the uptime, or overall equipment effectiveness, required to support this unit cost.
Determine any additional fixed or variable cost reductions necessary to achieve this targeted unit...
