High Supply Risk: Climate change is disrupting major rice-producing countries like Thailand and Vietnam. Limited global trade availability (only 7-10% of total production is exported). Currency fluctuations, freight costs, and government policies further threaten supply stability. 2. High Impact on Business: Rice is a staple food in Singapore, crucial for national food security. A supply shortage could lead to price inflation and food security concerns. Dependence on a few key suppliers makes supply chain diversification challenging. Procurement Strategy for Singapore: Diversify sourcing (e.g., increase imports from Myanmar). Invest in climate-smart rice research to improve resilience. Stockpile rice reserves to buffer against supply shocks. Strengthen trade agreements with key exporters like Thailand and Vietnam. Solution Rice should be positioned as a Strategic Item in Singapore's Kraljic Matrix due to its high supply risk and high impact on business (food security). Based on above are my earlier assessment and categorisation of rice in Singapore’s overall foodsupply, appraise three (3) strategies for existing supplier base management. Useown words and avoid giving generic answers.
Q: I need typing clear urjent no chatgpt used i will give 5 upvotes pls full explain
A: Step 1:M1 and M2 are measures of the money supply used in economics to assess the amount of money…
Q: QUESTION 4 (20 Marks) Discuss what stakeholders are, and Who are the key stakeholders (internal and…
A: Understanding Stakeholders Stakeholders may be defined as persons or organizations that have a…
Q: Rank in order
A: To rank the vendors based on the seasonal product team's needs, let's analyze the key factors: Key…
Q: The Baldwin Company currently has the following balances on their balance sheet: Total Liabilities…
A: The basic accounting equation is Assets = Liabilities + Equity. This equation must always be in…
Q: what are some of the ideas that you can learn from the reading a leadership book?
A: Leadership books often discuss various leadership styles, such as autocratic, democratic,…
Q: What roles do consumers and users play in creative collaborations to innovate new products?
A: Feel free to ask for any clarification
Q: Can you kindly asisst with below question Select a company that has implemented a culture change…
A: IntroductionCulture change is a crucial element in organizational transformation, particularly in…
Q: you are the president of a small business what are some OF THE WAYS YOU EXPECT GOING INTERNATIONAL…
A: : Key references:Dowling, P. J., Festing, M., & Engle, A. D. (2017). International human…
Q: TRUE or FALSE: It is not worth the loss of instructional time to have students process and act upon…
A: Feedback is an important factor especially to students as it allows them to be aware to something…
Q: Describe with example Why is it important that we recognize and respond to concerns that we may have…
A: Recognizing and responding to concerns about children in school is crucial for several reasons.…
Q: Dubai man-made islands What would be your quality assurance recommendations for such projects in the…
A: Quality Assurance Recommendations for Future Dubai Man-Made Island Projects 1. Comprehensive…
Q: According to the following case study,detail the methodology Rachel should employ to collect…
A: This mixed-methods approach is the best method to utilize because it balances the need for…
Q: Organizational Culture and Succession Planning I need help Creating, a summary identifying 3 key…
A: These differences can influence how individuals interact, lead, and contribute to the organization's…
Q: If a article discusses Dyson’s decision to terminate its business relationship with Malaysian…
A: Dyson's choice to end its agreements with ATA IMS Berhad demonstrates the increased scrutiny that…
Q: The St. Louis Cardinals would like to improve their post season performance this year. They have…
A: Consulting for the St. Louis Cardinals: Using Sampling and Estimation to Improve Performance The St.…
Q: . Briefly describe the five decision-making techniques.
A: Brainstorming is a decision-making technique that involves generating a list of ideas in a creative,…
Q: Hi! Can you guys help me with this? Thank you! Here's the article by Owen Tucker-Smith from Wall…
A: **1. Raw Material Shortages and Agricultural Supply Chains** Chocolate production depends on…
Q: Formal Topic-to-sentence Outline Topic: Integrating life skills in the classroom Thesis statement:…
A: I critically appraised Saudi's outline on "Integrating Life Skills in the Classroom" by evaluating…
Q: How can I fill the bullet points below to my strength? Strength: Received University Grant:…
A: Start by describing the situation that led to you receiving the university grant. For example, you…
Q: imagine you have the sole marketing rights to a new herbal shampoo that you developed from local…
A: - **No harmful chemicals or synthetic additives**—100% natural. - **Exclusive online…
Q: The linkage between HRM and the strategic management process is critical to the success of any…
A: From its origins as an online bookstore to becoming a global e-commerce, cloud computing, and…
Q: Based on the Apple Inc.'s Success During the Global Recession: A Strategic Management Case Study…
A: Apple Inc. operates on a unique business model, which is different from traditional manufacturing…
Q: Propose findings on the ethical challenges faced by Walmart Inc in recent history and the near…
A: **Recent Ethical Challenges and Response Strategies** **1. Labor Practices and Fair Wages**…
Q: Identify and explain the legal and regulatory frameworks governing companies in your jurisdiction.…
A: Legal and Regulatory Frameworks Governing CompaniesEvery jurisdiction has specific laws and…
Q: Hi! Can you guys help me with this? Thank you! Here's the article by Julie Watson from Los Angeles…
A: **1. Ethical Sourcing and Corporate Responsibility** In modern global supply chains, companies rely…
Q: Can you guys help me on this? Thank you! Here's the authentic insight for the article written by my…
A: Let's analyze the insightful comment on the article about inflation.Comment:"The article explained…
Q: Please explain how your past personal and professional experience makes you a quality candidate for…
A: My personal and professional experiences have prepared me to thrive in an elementary school setting…
Q: The number of children reported by each respondent. correct options are nominal, ordinal or…
A: The number of children reported by each respondent is a quantitative variable because it represents…
Q: I need help answering the following questions below What does succession planning entail and what…
A: **Essential Steps in Succession Planning:** 1. **Identify Key Positions** - Determine which roles…
Q: Examine the articles ‘The Five Dimensions of Responsible Leadership’ by de Bettignies (2014),…
A: 1. Henri-Claude de Bettignies, in his article "The Five Dimensions of Responsible Leadership,"…
Q: 2. (a) Control charts are tools used to monitor the stability of processes over time. Explain the…
A: Solution- (a) Control Charts i) Median Chart- Purpose: The median chart is used to monitor the…
Q: According to lecture, the lost in translation gap refers to… (1 Point) A. When practitioners…
A: The 'Lost in Translation' gap refers to the disconnect that often occurs between academic research…
Q: Why does a dietitian manager need to know about the importance of employee scheduling and weekly…
A: Approach to Solving the QuestionTo answer the question, we need to break it down into key…
Q: Ashley Industries can make 1,330 units of a necessary component with the following costs: Direct…
A: Concept of Cost Indifference PointThe Cost Indifference Point refers to the situation where the…
Q: I need answer typing clear urjent no chatgpt used pls i will give 5 Upvotes.
A: Step 1: Circuit Parameters• Resistors: R_{1} = 2Omega , R_{2} = 1Omega• Inductor: L = 1H• Capacitor:…
Q: introductory information in paragraphs on organizational change models including kotter's change…
A: **Kotter's 8-Step Change Model** One of the most widely used change models is **Kotter's 8-Step…
Q: Which articles can be used? Where could we get the articles? How to provide three annotations from…
A: The articles that can be used need to be academic, peer-reviewed and aboveall, they should be from…
Q: Which of the following statements could signal a group might be susceptible in groupthink? What data…
A: The statement 'Don’t you agree?' could signal a group might be susceptible to groupthink. This is…
Q: business value reinforces the need for constant alignment with strategic objectives and adapting to…
A: Business value impacts budgeting by guaranteeing congruence with strategic objectives and market…
Q: As for The Soup Kitchen Project, why is managing and addressing risk is very important? After…
A: 1. **Ensure Food Safety & Public Health Compliance** - Proper food handling reduces risks of…
Q: Here's the authentic insight on the article that my classmate just wrote. Please give a brief…
A: Comprehensive Comment on Ian Flores' Insight on the ArticleIntroductionIan Flores provides an…
Q: Which statement indicates that you are making an unstated assumption? It seems that . . . I…
A: An unstated assumption is something that is not explicitly mentioned but is taken for granted in a…
Q: Please original work Background information: Mergers and acquisitions are inherently risky. No…
A: The $35 billion Sprint-Nextel merger in 2005 failed because of cultural conflicts, technology…
Q: OSHA cited a manufacturing company for a(n) ______ violation for the company's failure to report the…
A: The question is asking us to identify the type of violation that the Occupational Safety and Health…
Q: Your firm has been the auditor of Caribild Products, a listed company, for a number of years. The…
A: (a) Importance of Planning Audit WorkPlanning ensures the audit is done correctly, quickly, and…
Q: has this topic been researched? " The Impact of Onsite Daycare Centers on Employee Retention"
A: 1. Overview of Research on the Topic:Researchers have examined the relationship between onsite…
Q: Please original work Identify and talk about the most relevant issues in CRM implementation. Please…
A: Systems for managing customer relationships (CRM) have become crucial for companies looking to…
Q: Can you guys help me on this? Thank you! Here's the authentic insight my classmate wrote about the…
A: I found your post very insightful and well-articulated! Your explanation of Advance Auto Parts'…
Q: The Africa Continental Free Trade Area (AfCFTA) Agreement is a relatively new and evolving agreement…
A: **Key Features of the Qualitative Case Study Design**1. **Focus on Contextual Depth**: A case study…
Q: Please original work Do consumers really want one-to-one marketing?” Relate your personal…
A: However, the flip side is that such personalization can sometimes feel invasive. When I notice…
- High Supply Risk:
- Climate change is disrupting major rice-producing countries like Thailand and Vietnam.
- Limited global trade availability (only 7-10% of total production is exported).
- Currency fluctuations, freight costs, and government policies further threaten supply stability.
2. High Impact on Business:
- Rice is a staple food in Singapore, crucial for national food security.
- A supply shortage could lead to price inflation and food security concerns.
- Dependence on a few key suppliers makes supply chain diversification challenging.
Procurement Strategy for Singapore:
- Diversify sourcing (e.g., increase imports from Myanmar).
- Invest in climate-smart rice research to improve resilience.
- Stockpile rice reserves to buffer against supply shocks.
- Strengthen trade agreements with key exporters like Thailand and Vietnam.
- Rice should be positioned as a Strategic Item in Singapore's Kraljic Matrix due to its high supply risk and high impact on business (food security).
Based on above are my earlier assessment and categorisation of rice in Singapore’s overall food
supply, appraise three (3) strategies for existing supplier base management. Use
own words and avoid giving generic answers.
Step by step
Solved in 2 steps
- Avion, Inc. Susan Dey and Bill Mifflin, procurement managers at Avion, Inc., sat across from each other and reviewed a troubling performance report concerning a key supplier, Foster Technologies. The report detailed the deteriorating performance of Foster Technologies in the areas of material quality and on-time delivery. At this point, Kevin ODonnell, another procurement manager, entered the room. What parts of the supply chain are most closely involved with the situation in this case? What is the responsibility of each part in order to maintain a smooth flow of material?Hi! Can you guys help me with this? Thank you! Here's the article by Amrith Ramkumar & John McCormick from Wall Street Journal called Signal Shifts On Tech Cloud Tariff Outlook --- Commerce chief says some products face separate levies after exemption notice Please offer authentic insights on how this article connects with global supply chain management.Elaborate on the need for and the benefits of an effective supply chain management (SCM) system in the context of a globalized and networked economy. In your answer, explain how organizations like Dell and Hewlett-Packard leverage supply chain networks to maintain competitiveness, and analyse the impact of globalization, technological advancements, and business environment changes on supply chain structures. Additionally, evaluate the key components of SCM, including distribution network configuration, inventory management, and cash-flow management, and discuss how these components contribute to creating an effective and integrated supply chain. (15) 3.2. Critically evaluate the requirements for effective inventory management within an organization. In your answer, discuss the importance of inventory accounting systems, the role of cost information (holding, ordering, and shortage costs), and the significance of classification systems like ABC analysis. Additionally, analyse how…
- The Global Sourcing Wire Harness Decision Sheila Austin, a buyer at Autolink, a Detroit-based producer of subassemblies for the automotive market, has sent out requests for quotations for a wiring harness to four prospective suppliers. Only two of the four suppliers indicated an interest in quoting the business: Original Wire (Auburn Hills, MI) and Happy Lucky Assemblies (HLA) of Guangdong Province, China. The estimated demand for the harnesses is 5,000 units a month. Both suppliers will incur some costs to retool for this particular harness. The harnesses will be prepackaged in 24 12 6-inch cartons. Each packaged unit weighs approximately 10 pounds. Quote 1 The first quote received is from Original Wire. Auburn Hills is about 20 miles from Autolinks corporate headquarters, so the quote was delivered in person. When Sheila went down to the lobby, she was greeted by the sales agent and an engineering representative. After the quote was handed over, the sales agent noted that engineering would be happy to work closely with Autolink in developing the unit and would also be interested in future business that might involve finding ways to reduce costs. The sales agent also noted that they were hungry for business, as they were losing a lot of customers to companies from China. The quote included unit price, tooling, and packaging. The quoted unit price does not include shipping costs. Original Wire requires no special warehousing of inventory, and daily deliveries from its manufacturing site directly to Autolinks assembly operations are possible. Original Wire Quote: Unit price = 30 Packing costs = 0.75 per unit Tooling = 6,000 one-time fixed charge Freight cost = 5.20 per hundred pounds Quote 2 The second quote received is from Happy Lucky Assemblies of Guangdong Province, China. The supplier must pack the harnesses in a container and ship via inland transportation to the port of Shanghai in China, have the shipment transferred to a container ship, ship material to Seattle, and then have material transported inland to Detroit. The quoted unit price does not include international shipping costs, which the buyer will assume. HLA Quote: Unit price = 19.50 Shipping lead time = Eight weeks Tooling = 3,000 In addition to the suppliers quote, Sheila must consider additional costs and information before preparing a comparison of the Chinese suppliers quotation: Each monthly shipment requires three 40-foot containers. Packing costs for containerization = 2 per unit. Cost of inland transportation to port of export = 200 per container. Freight forwarders fee = 100 per shipment (letter of credit, documentation, etc.). Cost of ocean transport = 4,000 per container. This has risen significantly in recent years due to a shortage of ocean freight capacity. Marine insurance = 0.50 per 100 of shipment. U.S. port handling charges = 1,200 per container. This fee has also risen considerably this year, due to increased security. Ports have also been complaining that the charges may increase in the future. Customs duty = 5% of unit cost. Customs broker fees per shipment = 300. Transportation from Seattle to Detroit = 18.60 per hundred pounds. Need to warehouse at least four weeks of inventory in Detroit at a warehousing cost of 1.00 per cubic foot per month, to compensate for lead time uncertainty. Sheila must also figure the costs associated with committing corporate capital for holding inventory. She has spoken to some accountants, who typically use a corporate cost of capital rate of 15%. Cost of hedging currencybroker fees = 400 per shipment Additional administrative time due to international shipping = 4 hours per shipment 25 per hour (estimated) At least two five-day visits per year to travel to China to meet with supplier and provide updates on performance and shipping = 20,000 per year (estimated) The international sourcing costs must be absorbed by Sheila, as the supplier does not assume any of the additional estimated costs and invoice Sheila later, or build the costs into a revised unit price. Sheila feels that the U.S. supplier is probably less expensive, even though it quoted a higher price. Sheila also knows that this is a standard technology that is unlikely to change during the next three years, but which could be a contract that extends multiple years out. There is also a lot of hall talk amongst the engineers on her floor about next-generation automotive electronics, which will completely eliminate the need for wire harnesses, which will be replaced by electronic components that are smaller, lighter, and more reliable. She is unsure about how to calculate the total costs for each option, and she is even more unsure about how to factor these other variables into the decision. Calculate the total cost per unit of purchasing from Original Wire.The Global Sourcing Wire Harness Decision Sheila Austin, a buyer at Autolink, a Detroit-based producer of subassemblies for the automotive market, has sent out requests for quotations for a wiring harness to four prospective suppliers. Only two of the four suppliers indicated an interest in quoting the business: Original Wire (Auburn Hills, MI) and Happy Lucky Assemblies (HLA) of Guangdong Province, China. The estimated demand for the harnesses is 5,000 units a month. Both suppliers will incur some costs to retool for this particular harness. The harnesses will be prepackaged in 24 12 6-inch cartons. Each packaged unit weighs approximately 10 pounds. Quote 1 The first quote received is from Original Wire. Auburn Hills is about 20 miles from Autolinks corporate headquarters, so the quote was delivered in person. When Sheila went down to the lobby, she was greeted by the sales agent and an engineering representative. After the quote was handed over, the sales agent noted that engineering would be happy to work closely with Autolink in developing the unit and would also be interested in future business that might involve finding ways to reduce costs. The sales agent also noted that they were hungry for business, as they were losing a lot of customers to companies from China. The quote included unit price, tooling, and packaging. The quoted unit price does not include shipping costs. Original Wire requires no special warehousing of inventory, and daily deliveries from its manufacturing site directly to Autolinks assembly operations are possible. Original Wire Quote: Unit price = 30 Packing costs = 0.75 per unit Tooling = 6,000 one-time fixed charge Freight cost = 5.20 per hundred pounds Quote 2 The second quote received is from Happy Lucky Assemblies of Guangdong Province, China. The supplier must pack the harnesses in a container and ship via inland transportation to the port of Shanghai in China, have the shipment transferred to a container ship, ship material to Seattle, and then have material transported inland to Detroit. The quoted unit price does not include international shipping costs, which the buyer will assume. HLA Quote: Unit price = 19.50 Shipping lead time = Eight weeks Tooling = 3,000 In addition to the suppliers quote, Sheila must consider additional costs and information before preparing a comparison of the Chinese suppliers quotation: Each monthly shipment requires three 40-foot containers. Packing costs for containerization = 2 per unit. Cost of inland transportation to port of export = 200 per container. Freight forwarders fee = 100 per shipment (letter of credit, documentation, etc.). Cost of ocean transport = 4,000 per container. This has risen significantly in recent years due to a shortage of ocean freight capacity. Marine insurance = 0.50 per 100 of shipment. U.S. port handling charges = 1,200 per container. This fee has also risen considerably this year, due to increased security. Ports have also been complaining that the charges may increase in the future. Customs duty = 5% of unit cost. Customs broker fees per shipment = 300. Transportation from Seattle to Detroit = 18.60 per hundred pounds. Need to warehouse at least four weeks of inventory in Detroit at a warehousing cost of 1.00 per cubic foot per month, to compensate for lead time uncertainty. Sheila must also figure the costs associated with committing corporate capital for holding inventory. She has spoken to some accountants, who typically use a corporate cost of capital rate of 15%. Cost of hedging currencybroker fees = 400 per shipment Additional administrative time due to international shipping = 4 hours per shipment 25 per hour (estimated) At least two five-day visits per year to travel to China to meet with supplier and provide updates on performance and shipping = 20,000 per year (estimated) The international sourcing costs must be absorbed by Sheila, as the supplier does not assume any of the additional estimated costs and invoice Sheila later, or build the costs into a revised unit price. Sheila feels that the U.S. supplier is probably less expensive, even though it quoted a higher price. Sheila also knows that this is a standard technology that is unlikely to change during the next three years, but which could be a contract that extends multiple years out. There is also a lot of hall talk amongst the engineers on her floor about next-generation automotive electronics, which will completely eliminate the need for wire harnesses, which will be replaced by electronic components that are smaller, lighter, and more reliable. She is unsure about how to calculate the total costs for each option, and she is even more unsure about how to factor these other variables into the decision. Calculate the total cost per unit of purchasing from Happy Lucky Assemblies.The Global Sourcing Wire Harness Decision Sheila Austin, a buyer at Autolink, a Detroit-based producer of subassemblies for the automotive market, has sent out requests for quotations for a wiring harness to four prospective suppliers. Only two of the four suppliers indicated an interest in quoting the business: Original Wire (Auburn Hills, MI) and Happy Lucky Assemblies (HLA) of Guangdong Province, China. The estimated demand for the harnesses is 5,000 units a month. Both suppliers will incur some costs to retool for this particular harness. The harnesses will be prepackaged in 24 12 6-inch cartons. Each packaged unit weighs approximately 10 pounds. Quote 1 The first quote received is from Original Wire. Auburn Hills is about 20 miles from Autolinks corporate headquarters, so the quote was delivered in person. When Sheila went down to the lobby, she was greeted by the sales agent and an engineering representative. After the quote was handed over, the sales agent noted that engineering would be happy to work closely with Autolink in developing the unit and would also be interested in future business that might involve finding ways to reduce costs. The sales agent also noted that they were hungry for business, as they were losing a lot of customers to companies from China. The quote included unit price, tooling, and packaging. The quoted unit price does not include shipping costs. Original Wire requires no special warehousing of inventory, and daily deliveries from its manufacturing site directly to Autolinks assembly operations are possible. Original Wire Quote: Unit price = 30 Packing costs = 0.75 per unit Tooling = 6,000 one-time fixed charge Freight cost = 5.20 per hundred pounds Quote 2 The second quote received is from Happy Lucky Assemblies of Guangdong Province, China. The supplier must pack the harnesses in a container and ship via inland transportation to the port of Shanghai in China, have the shipment transferred to a container ship, ship material to Seattle, and then have material transported inland to Detroit. The quoted unit price does not include international shipping costs, which the buyer will assume. HLA Quote: Unit price = 19.50 Shipping lead time = Eight weeks Tooling = 3,000 In addition to the suppliers quote, Sheila must consider additional costs and information before preparing a comparison of the Chinese suppliers quotation: Each monthly shipment requires three 40-foot containers. Packing costs for containerization = 2 per unit. Cost of inland transportation to port of export = 200 per container. Freight forwarders fee = 100 per shipment (letter of credit, documentation, etc.). Cost of ocean transport = 4,000 per container. This has risen significantly in recent years due to a shortage of ocean freight capacity. Marine insurance = 0.50 per 100 of shipment. U.S. port handling charges = 1,200 per container. This fee has also risen considerably this year, due to increased security. Ports have also been complaining that the charges may increase in the future. Customs duty = 5% of unit cost. Customs broker fees per shipment = 300. Transportation from Seattle to Detroit = 18.60 per hundred pounds. Need to warehouse at least four weeks of inventory in Detroit at a warehousing cost of 1.00 per cubic foot per month, to compensate for lead time uncertainty. Sheila must also figure the costs associated with committing corporate capital for holding inventory. She has spoken to some accountants, who typically use a corporate cost of capital rate of 15%. Cost of hedging currencybroker fees = 400 per shipment Additional administrative time due to international shipping = 4 hours per shipment 25 per hour (estimated) At least two five-day visits per year to travel to China to meet with supplier and provide updates on performance and shipping = 20,000 per year (estimated) The international sourcing costs must be absorbed by Sheila, as the supplier does not assume any of the additional estimated costs and invoice Sheila later, or build the costs into a revised unit price. Sheila feels that the U.S. supplier is probably less expensive, even though it quoted a higher price. Sheila also knows that this is a standard technology that is unlikely to change during the next three years, but which could be a contract that extends multiple years out. There is also a lot of hall talk amongst the engineers on her floor about next-generation automotive electronics, which will completely eliminate the need for wire harnesses, which will be replaced by electronic components that are smaller, lighter, and more reliable. She is unsure about how to calculate the total costs for each option, and she is even more unsure about how to factor these other variables into the decision. Based on the total cost per unit, which supplier should Sheila recommend?
- The Global Sourcing Wire Harness Decision Sheila Austin, a buyer at Autolink, a Detroit-based producer of subassemblies for the automotive market, has sent out requests for quotations for a wiring harness to four prospective suppliers. Only two of the four suppliers indicated an interest in quoting the business: Original Wire (Auburn Hills, MI) and Happy Lucky Assemblies (HLA) of Guangdong Province, China. The estimated demand for the harnesses is 5,000 units a month. Both suppliers will incur some costs to retool for this particular harness. The harnesses will be prepackaged in 24 12 6-inch cartons. Each packaged unit weighs approximately 10 pounds. Quote 1 The first quote received is from Original Wire. Auburn Hills is about 20 miles from Autolinks corporate headquarters, so the quote was delivered in person. When Sheila went down to the lobby, she was greeted by the sales agent and an engineering representative. After the quote was handed over, the sales agent noted that engineering would be happy to work closely with Autolink in developing the unit and would also be interested in future business that might involve finding ways to reduce costs. The sales agent also noted that they were hungry for business, as they were losing a lot of customers to companies from China. The quote included unit price, tooling, and packaging. The quoted unit price does not include shipping costs. Original Wire requires no special warehousing of inventory, and daily deliveries from its manufacturing site directly to Autolinks assembly operations are possible. Original Wire Quote: Unit price = 30 Packing costs = 0.75 per unit Tooling = 6,000 one-time fixed charge Freight cost = 5.20 per hundred pounds Quote 2 The second quote received is from Happy Lucky Assemblies of Guangdong Province, China. The supplier must pack the harnesses in a container and ship via inland transportation to the port of Shanghai in China, have the shipment transferred to a container ship, ship material to Seattle, and then have material transported inland to Detroit. The quoted unit price does not include international shipping costs, which the buyer will assume. HLA Quote: Unit price = 19.50 Shipping lead time = Eight weeks Tooling = 3,000 In addition to the suppliers quote, Sheila must consider additional costs and information before preparing a comparison of the Chinese suppliers quotation: Each monthly shipment requires three 40-foot containers. Packing costs for containerization = 2 per unit. Cost of inland transportation to port of export = 200 per container. Freight forwarders fee = 100 per shipment (letter of credit, documentation, etc.). Cost of ocean transport = 4,000 per container. This has risen significantly in recent years due to a shortage of ocean freight capacity. Marine insurance = 0.50 per 100 of shipment. U.S. port handling charges = 1,200 per container. This fee has also risen considerably this year, due to increased security. Ports have also been complaining that the charges may increase in the future. Customs duty = 5% of unit cost. Customs broker fees per shipment = 300. Transportation from Seattle to Detroit = 18.60 per hundred pounds. Need to warehouse at least four weeks of inventory in Detroit at a warehousing cost of 1.00 per cubic foot per month, to compensate for lead time uncertainty. Sheila must also figure the costs associated with committing corporate capital for holding inventory. She has spoken to some accountants, who typically use a corporate cost of capital rate of 15%. Cost of hedging currencybroker fees = 400 per shipment Additional administrative time due to international shipping = 4 hours per shipment 25 per hour (estimated) At least two five-day visits per year to travel to China to meet with supplier and provide updates on performance and shipping = 20,000 per year (estimated) The international sourcing costs must be absorbed by Sheila, as the supplier does not assume any of the additional estimated costs and invoice Sheila later, or build the costs into a revised unit price. Sheila feels that the U.S. supplier is probably less expensive, even though it quoted a higher price. Sheila also knows that this is a standard technology that is unlikely to change during the next three years, but which could be a contract that extends multiple years out. There is also a lot of hall talk amongst the engineers on her floor about next-generation automotive electronics, which will completely eliminate the need for wire harnesses, which will be replaced by electronic components that are smaller, lighter, and more reliable. She is unsure about how to calculate the total costs for each option, and she is even more unsure about how to factor these other variables into the decision. Are there any other issues besides cost that Sheila should evaluate?The Global Sourcing Wire Harness Decision Sheila Austin, a buyer at Autolink, a Detroit-based producer of subassemblies for the automotive market, has sent out requests for quotations for a wiring harness to four prospective suppliers. Only two of the four suppliers indicated an interest in quoting the business: Original Wire (Auburn Hills, MI) and Happy Lucky Assemblies (HLA) of Guangdong Province, China. The estimated demand for the harnesses is 5,000 units a month. Both suppliers will incur some costs to retool for this particular harness. The harnesses will be prepackaged in 24 12 6-inch cartons. Each packaged unit weighs approximately 10 pounds. Quote 1 The first quote received is from Original Wire. Auburn Hills is about 20 miles from Autolinks corporate headquarters, so the quote was delivered in person. When Sheila went down to the lobby, she was greeted by the sales agent and an engineering representative. After the quote was handed over, the sales agent noted that engineering would be happy to work closely with Autolink in developing the unit and would also be interested in future business that might involve finding ways to reduce costs. The sales agent also noted that they were hungry for business, as they were losing a lot of customers to companies from China. The quote included unit price, tooling, and packaging. The quoted unit price does not include shipping costs. Original Wire requires no special warehousing of inventory, and daily deliveries from its manufacturing site directly to Autolinks assembly operations are possible. Original Wire Quote: Unit price = 30 Packing costs = 0.75 per unit Tooling = 6,000 one-time fixed charge Freight cost = 5.20 per hundred pounds Quote 2 The second quote received is from Happy Lucky Assemblies of Guangdong Province, China. The supplier must pack the harnesses in a container and ship via inland transportation to the port of Shanghai in China, have the shipment transferred to a container ship, ship material to Seattle, and then have material transported inland to Detroit. The quoted unit price does not include international shipping costs, which the buyer will assume. HLA Quote: Unit price = 19.50 Shipping lead time = Eight weeks Tooling = 3,000 In addition to the suppliers quote, Sheila must consider additional costs and information before preparing a comparison of the Chinese suppliers quotation: Each monthly shipment requires three 40-foot containers. Packing costs for containerization = 2 per unit. Cost of inland transportation to port of export = 200 per container. Freight forwarders fee = 100 per shipment (letter of credit, documentation, etc.). Cost of ocean transport = 4,000 per container. This has risen significantly in recent years due to a shortage of ocean freight capacity. Marine insurance = 0.50 per 100 of shipment. U.S. port handling charges = 1,200 per container. This fee has also risen considerably this year, due to increased security. Ports have also been complaining that the charges may increase in the future. Customs duty = 5% of unit cost. Customs broker fees per shipment = 300. Transportation from Seattle to Detroit = 18.60 per hundred pounds. Need to warehouse at least four weeks of inventory in Detroit at a warehousing cost of 1.00 per cubic foot per month, to compensate for lead time uncertainty. Sheila must also figure the costs associated with committing corporate capital for holding inventory. She has spoken to some accountants, who typically use a corporate cost of capital rate of 15%. Cost of hedging currencybroker fees = 400 per shipment Additional administrative time due to international shipping = 4 hours per shipment 25 per hour (estimated) At least two five-day visits per year to travel to China to meet with supplier and provide updates on performance and shipping = 20,000 per year (estimated) The international sourcing costs must be absorbed by Sheila, as the supplier does not assume any of the additional estimated costs and invoice Sheila later, or build the costs into a revised unit price. Sheila feels that the U.S. supplier is probably less expensive, even though it quoted a higher price. Sheila also knows that this is a standard technology that is unlikely to change during the next three years, but which could be a contract that extends multiple years out. There is also a lot of hall talk amongst the engineers on her floor about next-generation automotive electronics, which will completely eliminate the need for wire harnesses, which will be replaced by electronic components that are smaller, lighter, and more reliable. She is unsure about how to calculate the total costs for each option, and she is even more unsure about how to factor these other variables into the decision. Based on this case, do you think international purchasing is more or less complex than domestic purchasing? Why? Is it worth the additional effort?
