Question

Based on the case study from Pacific Systems Corporation, Inc. (PSC) – Personal Computer MarketWhat is your recommended sourcing strategy in this case? Please support your decision with quantitative and qualitative evidence gathered during the case analysis. Also, present your plan to reduce any risks associated with your sourcing decision.A sourcing decision of the magnitude highlighted in this case requires a serious commitment of resources and time. Do all sourcing decisions require similar commitments of time and effort? If not, describe the types of sourcing decisions that justify this effort. Describe the types of sourcing decisions that do not justify or require the level of effort and analysis required in this case.How important is the issue of supplier capacity in this case? How did you evaluate supplier capacity? What level of attention or importance should supplier capacity receive during the sourcing decision? Why?The issue of single versus multiple sourcing is an important consideration during supplier selection. Identify the potential advantages and disadvantages of single and multiple sourcing (not only as they relate to this case).

Answer 1

Answer:

My recommended sourcing strategy is that Pacific Systems should single source their DVD drives and they should establish a good relationship with their suppliers. Having a single supplier and having a long term contract with that supplier will be advantageous for the company. Further it should implement a just in time inventory management practice.

A quantitative analysis is provided in the attached file

To reduce any risk associated with my sourcing decision I will have to trust my supplier and try and create synergies together by building a symbiotic relationship with the supplier. Cross functional risk planning will also be useful here.

2. Not all sourcing decisions require the same quantum of commitments in terms of time and efforts. This is because a variety of suppliers are available both locally as well as globally. As a company analysis will have to be done with regards to suppliers if they are financially competent to supply, on a consistent basis, high quality materials. The type of sourcing that does not justify the level of effort and analysis are fasteners for the computers and poly bags that are used to protect products from dust.

3. The issue of supplier capacity is important in this case. This is because the market is booming and demand is about to rapidly increase due to a revival of the economy. The company should look out for a supplier that has the ability, wherewithal and capacity to cater to spikes in demands besides being able to take on new projects. A supplier should be stable enough to absorb increase in demand and having such suppliers will ensure that the company does not lose out on potential customers.

4.

Advantages of single sourcing – It helps in optimizing the company’s supply chain. Further it helps the company by lowering its production costs and provides and creates a better and incremental value for the shareholders.

Disadvantages of single sourcing – It can be detrimental to the company in the long run as greater power is provided to the suppliers. Secondly failure of a supplier may cause a total shutdown for the company.

Advantages of multiple sourcing – As competition increases among the suppliers it drives down prices in the long run. Secondly failure of a single supplier will no longer disrupt the company’s operations.

Disadvantages of multiple sourcing – Managing different suppliers can become complex as each of the suppliers will have to be managed and monitored. Secondly as there are many suppliers they will not eb able to leverage the advantages of economies of scale.

Explanation: