Supply Chain Management

Case Study Analysis

Important Figures

Unit Cost Analysis

Asia-Pac: $437.22 (Rank 1/4)

CanDo: $437.28 (Rank 2/4)

Davis: $439.92 (Rank 4/4)

Dihachi: $437.51 (Rank 3/4)

Supplier Performance Scores

Asia-Pac: 61.80% (3/4)

CanDo: 49.00% (4/4)

Davis: 71.80% (1/4)

Dihachi:71.60% (4/4)

Financial Analysis Scores (Weighted)

Asia-Pac: 50.4% (3/4)

CanDo: 84.2% (1/4)

Davis: 64.6% (2/4)

Dihachi: 40% (4/4)

Calculated Safety Stock

	Asia-Pac	CanDo	Davis	Dihachi
Year 1	2227	1560	2327	3905
Year 2	2717	1903	2839	4764

Calculated Reorder Points

	Asia-Pac	CanDo	Davis	Dihachi
R* (Year 1)	78940	30327	31094	99796
R* (Year 2)	94520	36329	37265	119518

Calculated Total Cost (Year 1 and Year 2, including calculated Safety Stock Costs)

AP	$169,060,000
CD	$168,770,000
DI	$171,705,000
DT	$169,410,000

Alternatives:

1. Davis

a. Best supplier performance scores

a. Second best financial analysis scores

a. Very close to second in safety stock

a. Second lowest need for reorder points

a. Second highest current installed capacity for monitor production

a. Tied shortest lead times (shortest for transportation)

a. Shortest frequency of shipment by far

a. Shortest ramp up time

a. Highest calculated total cost (and unit cost) but other factors make up for cost

1. CanDo

b. By far lowest safety stock costs, lowest reorder points

b. Lowest total cost

b. Second best unit cost

b. Tied shortest lead time

b. Best financial analysis score

b. Highest ramp up time

b. Worst supplier performance score

Priorities in Supplier and Definition

· Supplier Quality- Confidence in a supplier's ability to deliver a good or service that will satisfy the customer's needs

· Process and Technological Capability- amount of resources, facilities, and equipment to manage full production of our contract and business relationship

· Percentage of Business Devoted to PC Production- volume in units, sales, and percentage of business done exclusively in PC production

· Management and Personnel Capability- strength of management and personnel expertise, experience in their field

· IT Systems Capability- strength of IT infrastructure

· Long-term Partnership Potential- ability to visualize, develop, and improve relationship with supplier

· History / Reputation- long-term reputation of positive business reviews

· Supply Management Effort- effort devoted to relationship management

· Product Quality- degree to which product meets customer demand

· Product Quality Track Record

· Tolerance for Defects

· Delivery Reliability- Demonstrates 100 percent on-time delivery performance and is capable of participating in your organization's automatic ordering systems

· History of on-time delivery- reputation for delivering on-time

· Frequency of Shipment- how quickly we can expect to receive a shipment of product

· Lead time- length of time to deliver after production

· Supplier Responsiveness to Demand and Customers Needs- ability to adjust production of output by product, volume and delivery, in response to an external stimulus, e.g. a customer order

· i.e. 25% in four weeks

· Demand Flexibility- ability to produce or increase production demand depending on demand fluctuation

· Customization Flexibility- ability to improve design of product quickly to accommodate customer needs

· Cost Competitiveness- ability to produce quality of competition while maintaining low costs

· Product Cost Competitiveness- unit price comparative to competitors

· Total Cost Competitiveness- total unit cost comparative to customers

· Potential to Negotiate Lower Costs- potential to lower prices over course of relationship based on business relationship and available space in profit margin

What We Know About Systems Technologies”

Marketing

· Marketing- rapid growth in home sector

· Emphasizes state-of-the-art technology

· “Selling high-quality computers at affordable prices

· No tolerance for poor quality- $250 plus loss of goodwill per defect

· Launch new PC line in August- 7 months

Service

· Ship directly to customers

Production

· Pull system

· Willing to take on component inventory (monitors)- safety stock

· Assembly in facility

· Approximately 500,000 units, expect 20% growth in year 2 (600,000)

· Expected rapid depreciation in product value

· Monitors unit price- $125 - 150

· Systems controls transportation link (responsibility for transportation) from supplier to facility

· Systems does not assume responsibility for ownership of inventory from the supplier’s facility

SWOT Analysis- Systems Technologies

	Helpful	Harmful
Internal	Strengths · Manufacturing high-quality products with on-time customer delivery · State-of-the-art technology in its production, information, and delivery systems · Customer reputation · Introducing new products and being successful	Weaknesses · Weak bargaining power as buyer with larger PC suppliers · Lack of experience in PC sector
External	Opportunities · Personal computer (home use) market forecasted to grow faster than any other sector (i.e. business sector) · With excellent execution, potential to make serious revenue	Threats · New, small player in the market · Same make-to-order business model as giants Dell and Gateway · More major PC producers expected to move towards same business model · Recent trends indicated that maintaining this level of pricing over an extended period would be difficult · The market price of the technology embedded in the personal computer will undoubtedly decrease in the future

Kraljic Matrix- Systems Technologies PC Components

High	Leverage · 16 GB memory · 800 GB hard drive · CD-ROM Drive · Pentium i7 microprocessor	Strategic* · Standard 17” color monitors
Profit Impact
	Non-Critical	Bottleneck
Low
	Low	Supply Risk	High

*explain why the monitors are strategic products