St. Lucia, a small island developing country, the service sector has been dominated by fourcompanies: LightingPros Ltd., Island Solutions Inc., Real Services Co., and EntertainmentEnterprises. Each company offers similar services, including event planning, catering,transportation, equipment rental, and audio-visual production. At present clients engage differentcompanies for specific services, creating a balanced distribution of business across the market.However, recent shifts in client preferences have disrupted this equilibrium. Clients now prefer theconvenience and efficiency of working with a single provider that can offer a comprehensivepackage of services. This has led to a significant decline in business for some companies that areunable to offer the full suite of services on their own. Some of the challenged faces by thecompanies include limited service offerings, client convenience where clients prefer working witha single vendor to simplify communication, reduce costs, and ensure seamless service delivery, aswell as market saturation. With all four companies competing for the same client base, the markethas become oversaturated, leaving some businesses without any opportunities. Discuss the MOST APPROPRIATE type of alliance from those discussed in the course,that the companies can form to improve their competitiveness and meet client demands.Provide a real-world example of a similar alliance in a local or regional context to justifyyour recommendation.
Q: Entrepreneurial creativity and Innovation. The creative pursuit of ideas. Sources of innovation…
A: Entrepreneurial Creativity and InnovationEntrepreneurial creativity and innovation are fundamental…
Q: 1. Give one new distribution channels for Virtual Assistance (freelance business) - show a visual…
A: One new distribution channel for a Virtual Assistance (VA) freelance business could be through…
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: As done in the laboratory, show the circuit diagram and give all component values for your design…
A: A. DC Regulated Power Supply to Convert Line Voltage to 10V DC for a 50Ω Load A DC regulated power…
Q: Research proposal (Organisation Eskom Rotek Industries) Template 1. Introduction 2. Research…
A: Discussion on Career Development Opportunities and Job Satisfaction. Career advancement…
Q: One of the challenging issues in determining the appropriate sourcing strategy is whether a company…
A: 1. **Quality** - **Why Single Sourcing?** A single supplier can ensure consistent quality as…
Q: The primary purpose of this coordination is to establish company-wide agreementsto leverage volumes…
A: Explanation: In **Phase 3: Limited Integration**, organizations begin to focus on **coordination…
Q: How can people (be it leaders in professional or personal contexts) leverage their current platform…
A: Leaders in both professional and personal contexts can leverage their platforms to inspire and…
Q: Is Gino, the CEO, out of line for asking employees to accept a small raise (after not getting pay…
A: Approach to solving the question:Freeform Detailed explanation: Ethics of Gino's Decision: The first…
Q: . Explain why leaders might fail to delegate as much as they should, despite the potential benefits.
A: Delegation is a critical skill in leadership and management. It involves the process of assigning…
Q: Please elaborate on the answers and give explnatation as well as examples.
A: Question 1(a): Stakeholders to Exert More 'Good Judgement'The balance between "good judgement" and…
Q: Analyze the decision to support Batten's disease versus the Ride for Life. How do each of these two…
A: Strategic philanthropy involves aligning charitable initiatives with an organization's core…
Q: How do they implement the Lean management paradigm in manufacturing? What is the Six Sigma business…
A: Implementation of the Lean Management Paradigm in Manufacturing Lean management is a philosophy…
Q: Explain how you will ensure that your educational policies will demonstrate characteristics of…
A: The first step in ensuring quality in educational policies is to develop clear and comprehensive…
Q: The federal minimum wage was last updated to $7.25 in 2009. Is this enough money to live on?…
A: The federal minimum wage is $7.25, which has not changed since 2009. Most people feel that this wage…
Q: Detail how Apple’s brand allowed it to flourish even during the 2008 recession.
A: Apple's brand is one of the most valuable and recognizable in the world. The company has built a…
Q: I need help with answering the following What are the best and worst traits of leaders that I will…
A: Approach to solving the question:Allow me to thoughtfully respond to these leadership queries while…
Q: 1. Give one new distribution channels for Virtual Assistance (freelance business) that is not…
A: A new distribution channel that is not commonly used for Virtual Assistance (freelance business) is…
Q: Examples of reflective journals using Gibbs reflective cycle for completing research proposal
A: The reflective process would follow a similar pattern. First, in the Description stage, the…
Q: Accounting 15
A: Concept of Activity-Based Costing (ABC):Activity-Based Costing is a method used to allocate overhead…
Q: I need typing clear urjent no chatgpt used i will give 5 upvotes pls full explain with diagram
A: Step 1:Step 2:Step 3:Step 4:Step 5:Step 6:
Q: Describe TWO traditional grading practices that are now considered ineffective, inaccurate, or…
A: The bell curve or norm-referenced grading is a traditional grading practice where the grades are…
Q: . Assess the leadership skills, competencies and traits of the new human resource director
A: Assessing the Leadership Skills, Competencies, and Traits of the New Human Resource…
Q: do fast
A: Explanation of the Answers:Federal Funds Rate: 0.35%The federal funds rate is the rate at which…
Q: Please original work Propose a customer relationship management program to upper management, at a…
A: **Rationale for CRM** Customer Relationship Management (CRM) is a strategic approach to building…
Q: Strategic Plan ReviewYou are a member of the finance organization of a midsized manufacturer, with…
A: Strategic Plan ReviewHallmarks of a Good Strategic PlanA good strategic plan, in my opinion, should…
Q: In regards to minimum wage, should there be a national standard or should minimum wage be regulated…
A: Minimum wage should be decided by states and not set as a federal requirement. The economic…
Q: St. Lucia, a small island developing country, the service sector has been dominated by four…
A: Using the SWOT (Strengths, Weaknesses, Opportunities, and Threats) framework, here is a strategic…
Q: A crash plan is something we often forget to consider. What happens if my internet goes down or…
A: Approach to Solving the QuestionIdentify potential problems: internet outages and power…
Q: Develop a written proposal outlining solutions to the potential limitation in CoffeeVille’s delivery…
A: The purpose of this proposal is to address the inconsistency in meeting the set benchmarks for both…
Q: Design the e-commerce website for the Walmart traditional company Design should include description…
A: Introduction to the Walmart E-Commerce Website DesignThe Walmart e-commerce platform design is…
Q: QUESTION 3 3.1 What steps should an auditor take when approached by a prospective audit client to…
A: Detailed explanation:3.1Steps an Auditor Takes When Approached by a Prospective Audit Clienta.…
Q: What is one of the certifications HR professionals can obtain?BER BAS HHR PHR ULC
A: The question is asking for a certification that Human Resources (HR) professionals can obtain. The…
Q: the importance of aligning the scope delivery with the scope definition and maintaining a formal…
A: Based on experience, the following **strategies and tools** are highly effective for communicating…
Q: In light of the research discussed in this case, in your opinion, how should sexual harassment be…
A: Note: Hello, student. I sincerely hope I was able to answer your question, you are free to edit…
Q: Explain how Apple without a manufacturing plant made great profits margins amid fearscompetition in…
A: Approach to solving the question: Detailed explanation: Examples: Key references:
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: Kroger’s QueVision System Improves Customer Service Kroger has annual sales in excess of $100…
A: The simplest way to allay cashiers' and baggers' worries about the QueVision system is to see how…
Q: Why is it essential to have a contingency plan in place for a motorcycle shop project to handle any…
A: **Key Reasons for Having a Contingency Plan:** 1. **Managing Supply Chain Disruptions:** -…
Q: TRUE or FALSE: Giving students feedback that is tied to their sense of identity (e.g., You're so…
A: The question is asking whether giving students feedback that is tied to their sense of identity…
Q: What are benefits of Lean Six-Sigma methodology? How Six Sigma projects could help researchers…
A: 1. **Improved Efficiency:** Eliminates waste, streamlining operations and reducing costs. 2.…
Q: QUESTION 1 1.1. Aside from the legal obligation for a company to conduct an audit, briefly identify…
A: An audit provides several benefits to an entity beyond just fulfilling a legal obligation. Firstly,…
Q: What are your overall recommendations for how to deal with the employees and the company's…
A:
Q: what is header in the document?
A: A header in a document is a section of content that appears at the top of each page. It is separate…
Q: Can you guys help me with this? Thank you! Question: Examine the relationship between social…
A: The Relationship Between Social Responsibility and Organizational Effectiveness…
Q: Why does Audits not used just for problem-solving but they play a crucial role in improving…
A: Audits are not just used for problem-solving; they play a crucial role in improving processes and…
Q: DISCUSS EXTENSIVELY SOURCE OF BUSINESS FINANCES, not less than four pages, font size 12,spacing 1.5…
A: This paper extensively discusses the various sources of business finance, including **internal…
Q: Identify Apple’s biggest strength that allowed it to flourish even during the recession
A: Apple Inc. is a multinational technology company that designs, manufactures, and markets consumer…
Q: Do you need to have an organization (i.e., formal company) to innovate new products? Why or why not?
A: **Why You Don't Need an Organization to Innovate New Products**1. **Innovation Often Starts with…
Q: Midyear on July 31st, the Baldwin Corporation's balance sheet reported: Total Liabilities of…
A: The balance sheet equation is a fundamental concept in financial accounting. It states that the…
St. Lucia, a small island developing country, the service sector has been dominated by four
companies: LightingPros Ltd., Island Solutions Inc., Real Services Co., and Entertainment
Enterprises. Each company offers similar services, including event planning, catering,
transportation, equipment rental, and audio-visual production. At present clients engage different
companies for specific services, creating a balanced distribution of business across the market.
However, recent shifts in client preferences have disrupted this equilibrium. Clients now prefer the
convenience and efficiency of working with a single provider that can offer a comprehensive
package of services. This has led to a significant decline in business for some companies that are
unable to offer the full suite of services on their own. Some of the challenged faces by the
companies include limited service offerings, client convenience where clients prefer working with
a single vendor to simplify communication, reduce costs, and ensure seamless service delivery, as
well as market saturation. With all four companies competing for the same client base, the market
has become oversaturated, leaving some businesses without any opportunities.
Discuss the MOST APPROPRIATE type of alliance from those discussed in the course,
that the companies can form to improve their competitiveness and meet client demands.
Provide a real-world example of a similar alliance in a local or regional context to justify
your recommendation.
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. Why can changes within a supply chain disrupt the normal flow of goods and services within a supply chain?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?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?Scenario 4 Sharon Gillespie, a new buyer at Visionex, Inc., was reviewing quotations for a tooling contract submitted by four suppliers. She was evaluating the quotes based on price, target quality levels, and delivery lead time promises. As she was working, her manager, Dave Cox, entered her office. He asked how everything was progressing and if she needed any help. She mentioned she was reviewing quotations from suppliers for a tooling contract. Dave asked who the interested suppliers were and if she had made a decision. Sharon indicated that one supplier, Apex, appeared to fit exactly the requirements Visionex had specified in the proposal. Dave told her to keep up the good work. Later that day Dave again visited Sharons office. He stated that he had done some research on the suppliers and felt that another supplier, Micron, appeared to have the best track record with Visionex. He pointed out that Sharons first choice was a new supplier to Visionex and there was some risk involved with that choice. Dave indicated that it would please him greatly if she selected Micron for the contract. The next day Sharon was having lunch with another buyer, Mark Smith. She mentioned the conversation with Dave and said she honestly felt that Apex was the best choice. When Mark asked Sharon who Dave preferred, she answered, Micron. At that point Mark rolled his eyes and shook his head. Sharon asked what the body language was all about. Mark replied, Look, I know youre new but you should know this. I heard last week that Daves brother-in-law is a new part owner of Micron. I was wondering how soon it would be before he started steering business to that company. He is not the straightest character. Sharon was shocked. After a few moments, she announced that her original choice was still the best selection. At that point Mark reminded Sharon that she was replacing a terminated buyer who did not go along with one of Daves previous preferred suppliers. What does the Institute of Supply Management code of ethics say about financial conflicts of interest?Scenario 4 Sharon Gillespie, a new buyer at Visionex, Inc., was reviewing quotations for a tooling contract submitted by four suppliers. She was evaluating the quotes based on price, target quality levels, and delivery lead time promises. As she was working, her manager, Dave Cox, entered her office. He asked how everything was progressing and if she needed any help. She mentioned she was reviewing quotations from suppliers for a tooling contract. Dave asked who the interested suppliers were and if she had made a decision. Sharon indicated that one supplier, Apex, appeared to fit exactly the requirements Visionex had specified in the proposal. Dave told her to keep up the good work. Later that day Dave again visited Sharons office. He stated that he had done some research on the suppliers and felt that another supplier, Micron, appeared to have the best track record with Visionex. He pointed out that Sharons first choice was a new supplier to Visionex and there was some risk involved with that choice. Dave indicated that it would please him greatly if she selected Micron for the contract. The next day Sharon was having lunch with another buyer, Mark Smith. She mentioned the conversation with Dave and said she honestly felt that Apex was the best choice. When Mark asked Sharon who Dave preferred, she answered, Micron. At that point Mark rolled his eyes and shook his head. Sharon asked what the body language was all about. Mark replied, Look, I know youre new but you should know this. I heard last week that Daves brother-in-law is a new part owner of Micron. I was wondering how soon it would be before he started steering business to that company. He is not the straightest character. Sharon was shocked. After a few moments, she announced that her original choice was still the best selection. At that point Mark reminded Sharon that she was replacing a terminated buyer who did not go along with one of Daves previous preferred suppliers. Ethical decisions that affect a buyers ethical perspective usually involve the organizational environment, cultural environment, personal environment, and industry environment. Analyze this scenario using these four variables.
- Scenario 4 Sharon Gillespie, a new buyer at Visionex, Inc., was reviewing quotations for a tooling contract submitted by four suppliers. She was evaluating the quotes based on price, target quality levels, and delivery lead time promises. As she was working, her manager, Dave Cox, entered her office. He asked how everything was progressing and if she needed any help. She mentioned she was reviewing quotations from suppliers for a tooling contract. Dave asked who the interested suppliers were and if she had made a decision. Sharon indicated that one supplier, Apex, appeared to fit exactly the requirements Visionex had specified in the proposal. Dave told her to keep up the good work. Later that day Dave again visited Sharons office. He stated that he had done some research on the suppliers and felt that another supplier, Micron, appeared to have the best track record with Visionex. He pointed out that Sharons first choice was a new supplier to Visionex and there was some risk involved with that choice. Dave indicated that it would please him greatly if she selected Micron for the contract. The next day Sharon was having lunch with another buyer, Mark Smith. She mentioned the conversation with Dave and said she honestly felt that Apex was the best choice. When Mark asked Sharon who Dave preferred, she answered, Micron. At that point Mark rolled his eyes and shook his head. Sharon asked what the body language was all about. Mark replied, Look, I know youre new but you should know this. I heard last week that Daves brother-in-law is a new part owner of Micron. I was wondering how soon it would be before he started steering business to that company. He is not the straightest character. Sharon was shocked. After a few moments, she announced that her original choice was still the best selection. At that point Mark reminded Sharon that she was replacing a terminated buyer who did not go along with one of Daves previous preferred suppliers. What should Sharon do in this situation?China effectively shuts down for two weeks each year and celebrates the lunar new year. How does that resemble (or not) peak season in Western countries?
