Pacific systems - Case Study Example

Pacific Systems When determining the most appropriate sourcing strategy, the buyer must assess market conditions and minimize both cost and risks. Bearing in mind that the market is growing for PSC and its products, the company should then consider risk and cost when determining the most appropriate supplier. From a personal perspective, the most appropriate sourcing strategy is the single sourcing strategy. This is because since the company intends to produce high quality products and sell them at affordable prices, cost must be considered.

Risks must also be reduced since defects lead to loss of customer confidence and trust, which the company is struggling to acquire and retain. While considering the four supplier companies, the company could narrow down the suppliers to two when assessing Elecom’s currency difference and lack of interest in lower contracts and SureTech’s technical problems. Although Park Technologies has a good supply capability, it presents other problems that include regional instability risks. This leaves E-Drive systems as the choice with regard to low transport cost, good quoted price, good delivery lead-time and honesty with regard to the idea that the quality manager informed the team that the company was working to resolve a clicking problem in previous products.

This will reduce the risks associated with cost and quality of the product. The quality of the chosen information database is critical when considering outsourcing. The manufacturing viability as well as the technical parameters of a component help a team in making better decisions when choosing the most appropriate supplier. This is because such aspects determine steady productivity of the buying company, acceleration or deceleration of the design process, and the size of the market share. Supplier information can be acquired from specific databases available in the contemporary world.

These databases provide reliable information regarding the design of a product and manufacturing efficiencies and include Ubiquidata, Partminer, and Aprisa. For publicly traded companies, financial information is freely available to the public but could be inaccurate since the trading company provides it. The purchaser’s capability to obtain supplier financial data may be impacted by the urge to determine the most effective and the most reliable supplier. This provides the purchaser with assurance that defects would be minimal.

A purchaser looks for an accuracy rate of 99.95% and above. The type of commitment, with regard to time and effort, undertaken by PSC is not necessary for all sourcing decisions. The startup businesses require undertaking extensive sourcing to support the young business and reduce the quantity of risks involved in sourcing so that the business can make a good first impression in the market. Additionally, businesses undertaking a huge turn in the mode of business such as the PSC’s case need extensive sourcing since the business is also young in the projected business field.

On the other hand, some businesses do not require extensive sourcing and these include those looking for additional suppliers and businesses that have been in the specific line of business for a long time. These businesses might not need extensive sourcing because they are already aware of how most suppliers in their line of business operate. Therefore, they would require little information for assuring them that a supplier has maintained the quality of the products. Supply hitches could affect the productivity of the organization severely since it can bring the production processes to a standstill.

This could affect the organization’s reputation with regard to meeting market demand (Skjott-Larsen and Philip 234). When selecting a supplier, a company should also assess the supplier’s sources to ensure that the customer will reliably meet the demand requirements. PSC took supplier capacity with adequate seriousness when the company decided to undertake extensive evaluation of potential suppliers. This is because of the impact that the supplier can have on a purchasing company. Supplier capacity can be evaluated with regard to the quantity of products that they can produce in a specified amount of time.

Supplier capacity should be given the highest level of attention during sourcing. This is because an organization can suffer due to inadequacies resulting from supply problems. In the same way, supplier competence could lead to creation of a competitive advantage and high profitability for the buyer. Since sourcing could take a very long time, a company should apply creativity to reduce the process. One of the most important ideas is to use the Internet as a channel to pass the information gathered in the field to another team in the organization’s offices who would then evaluate it to determine whether it fulfills the requirements.

Therefore, teamwork could be of great importance in reducing the overall time required to complete the process. Type of Sourcing Advantages Disadvantages Single i. Less work required to settle on a source. ii. Builds strong and long-term relationships. iii. Better quality due to continuous improvement. iv. Better pricing on high volumes. v. Better communication (Skjott-Larsen and Philip 236). a. Might be difficult keeping the company competitive with a single source. b. During tight supply, buyer may be disadvantaged when asking other suppliers to supply due to time wastage. c. There is a high risk if the supplier runs into catastrophic events such as financial issues.

Multiple a. The chosen suppliers compete within themselves to provide a high quality product at affordable price, which is a benefit for the buyer. b. The products provided are usually very high quality. c. The buyer influences the decision of the supplier with regard to quality of the product. i. Since the suppliers should be monitored, this becomes tedious especially when some suppliers are located overseas. ii. High cost required for setting up since multiple suppliers need multiple deals. iii. Leads to less engaged suppliers as it is less likely to engage several suppliers extensively. iv. High cost required to manage the vendors both operationally and commercially (Skjott-Larsen and Philip 235) Works Cited Skjott-Larsen, Tage, and Philip B. Schary. Managing the Global Supply Chain.

Denmark: Copenhagen Business School Press, 2007. Print.