decrease the price of its products, IBM will have to decrease the price of its inputs. Spindle motors are a major cost in the manufacture of a hard disk drive. More than 40 parts go into the production of a drive, and spindle motors alone make up more than 10 percent of this cost (Stevens, interview). Selecting Nidec as a supplier will automatically lower IBM’s cost 12 percent with successive decreases in the future. As IBM steps up production and orders more motors, the price will drop at least 50 percent over two years (see next page for detailed cost plan). In addition, Nidec’s cooperation with other IBM suppliers will enable them to lower costs as well. The result benefits IBM by providing a long-term plan to cut costs. Strategic Planning Form A Buying Condition Proof DeviceFeatureBenefitConfirmation Question Agreement to lower motor prices over time Proven history of partnering with the customer to provide high quality products at low cost DPPM must not exceed .5% Production line consistent with IBM’s specifications of cleanliness and quality See Figure 2, which outlines a plan for price reductions See page 9 above specifying Nidec’s commitment to partnerships See Appendix, Exhibit 3 for ISO certificate See Annual Report page 12 (currently not available to be turned in) Economies of scale allow Nidec to offer lower prices Nidec takes a partnership approach in dealing with its clients Nidec’s DPPM is at .3% Nidec uses a Class 100 clean room for SPM manufacturing Lower costs will help IBM compete in the industry Decreases product design time Scrap rate for IBM will improve IBM will receive SPM’s that are higher in quality Is an agreement to lower costs by 50% over two years satisfactory? Are we correct in concluding that you would like to decrease the time involved in your design process? Is this rate of DPPM acceptable for you? Does this meet your specifi...
