This sourcing strategy report represents the result of our analysis of four potential suppliers both domestic and international in an attempt of the company to outsource many key product components and subassemblies, including the 9000x series DVD drives. The identified suppliers include:
- Elecom Technologies: a global firm with solid reputation, and has price as a competitive edge. Their net sale is 1.5 times more than the other three suppliers combined.
- SureTech is a small firm, but located in the US, which will ensure shorter lead time, but has PSC would be their largest contract.
- E-Drive is a large firm and located locally, but has some issues lately with quality and technologies.
- Park Technologies is an …show more content…
Other factors include management capacity, cost structure, financial condition, etc…
We should evaluate and select the potential supplier as “no one best way.” We should do this process to reduce the risk dealing with many suppliers and get the best price, long-term contract and maximize value to the buyer. Also, supplier evaluation and selection reduce the risks due to poor existing supplier performance and new product development, buying new equipment, etc.
The suppliers are rated based on current benchmarks of the industry and the level of importance of the category to the purchaser. The points were assigned and multiplied with their respected weights, then added up to an overall score. There are 3 rating levels:
- 0-70: unapproved - none
- 70-80: approved – Elecom, Park, and SureTech
- 80-100: preferred – E-Drive
The following 4 tables summarize the weighted point supplier evaluation:
Category Weight Sub-weight Score Weighted score Subtotal
- PPM defect performance 20 20 3 12 12
- Management/labor relations
- Ramp-up time 15 8
- Total cost per unit 10
4 8 8
- Turnover ratios 15 15 4 12 12
- Frequency of shipment
- On-time delivery record 20 7
Technical/ Process Capability