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Assignment # 05 SCM

The document discusses outsourcing options for two products in a company's portfolio that have low market prospects. The supply chain manager was asked to evaluate five outsourcing offers on cost, quality, minimum order quantities, and risks. The best option depends on the company's priorities around cost, quality or flexibility. Outsourcing to a supplier with a 30% higher cost but superior quality and flexibility best balances priorities, while keeping production in-house or a 25% higher cost offer saves most on costs.

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shary khan
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42 views

Assignment # 05 SCM

The document discusses outsourcing options for two products in a company's portfolio that have low market prospects. The supply chain manager was asked to evaluate five outsourcing offers on cost, quality, minimum order quantities, and risks. The best option depends on the company's priorities around cost, quality or flexibility. Outsourcing to a supplier with a 30% higher cost but superior quality and flexibility best balances priorities, while keeping production in-house or a 25% higher cost offer saves most on costs.

Uploaded by

shary khan
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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ASSIGNMENT # 05

SUPPLY CHAIN MANAGEMENT


NAME : TAHIRA BATOOL 10352

Q-A MNC is facing problems of having its 02 products in Dog category of BCG Matrix? You are the supply
chain manager of this company and management asked you get offers for outsourcing these products
and following are the options available to you study each option by conducting cost & benefit analysis
with risk assessment?

 The company may continue its production at its facility


 An offer of manufacturing your product with conditions, like cost will be higher 25% than yours,
quality is same.
 Another offer with cost increase of 5%, but MOQ is equivalent to the annual demand and quality
is low
 Another offer is received with 15% increase in cost quality is equivalent but MOQ is higher than
the half year demand
 The last offer is 30% high cost , superior quality and quantity as per requirement

Study each option and suggest one as per instruction.

ANSWER

 Option 1: Keep up output at the company's plant. The company has the most control
over the production process with this choice, despite being the most expensive.
 Option 2: Outsource to a supplier who charges a 25% price premium. The corporation
would save money on production costs if they chose this option, but they would also run
the risk of having quality issues.
 Option 3: Outsource to a vendor with a high MOQ and a 5% cost increase. This choice
would reduce the company's production costs, but it would also necessitate a significant
minimum order quantity.
 Option 4: Outsource to a vendor with a smaller MOQ and a 15% cost increase.
The corporation would save money on production costs and would have more order qua
ntity flexibility with this choice.
The business would still be at danger of having quality issues, though.
 Option 5: Outsource to a provider who charges 30% more but provides better quality an
d quantity.
This is the most expensive option, but it would give the company the best of both world
s: assured quantity and superior quality goods.
The best option for the MNC will depend on its specific circumstances and priorities. If
the company is most concerned about cost, then it should choose option 1 or option 2.
If the company is most concerned about quality, then it should choose option 5. If the
company is most concerned about flexibility, then it should choose option 3 or option 4.

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