In our previous episode, we learned that the CFO of Poly Wise challenged 'old dog' Ralph the Purchasing Manager to convert their polypropylene supply from an index price - which exposes Poly Wise to higher resins prices and offers little choice but to try to pass along higher costs to customers - to a fair and easily managed crude oil differential price. Ralph says he's up to the challenge, though the CFO has his doubts and is willing to replace Ralph with someone who understands and appreciates the advantages of the new resins pricing paradigm.
To emphasize his point to Ralph, and the rationale for the new pricing paradigm to all his direct reports in Purchasing, Sales, and Finance, the CFO sends out the following email:
Making It Abundantly Clear
"As most of you are aware, Poly Wise is determined to switch from defense to offense on our profit margins so we can wrest control of our success from the market - particularly the resins market, the source of our biggest cost - to ourselves. In short, we are going to break the mold in plastics processing. The 'old mold' and its challenges for processors and customers are epitomized in the following excerpts from recent articles. Read these stories and be prepared to discuss them (particularly the highlighted parts) and the opportunities they present to Poly Wise at our staff meeting next week, where Ralph will also report progress on his efforts."...