Wiring Harness

Wiring Harness - Case Discussion: The Global Sourcing Wire...

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This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher. 1 Case Discussion: The Global Sourcing Wire Harness Decision This case is similar to the Guava Puree case, but involves an outsourcing decision. On the one hand, a Chinese supplier, has bid a low price for the business, but this incurs substantial transportation, lead-time, and inventory costs, to a domestic quote from a supplier located in Auburn Hills, Michigan. The purchase involves a wiring harness, and entails some fairly complex calculations, in terms of converting pounds, square foot, and unit costs. While the cost calculations produce what is apparently a relatively straightforward decision, students should be encouraged to consider other elements in the case that could influence the decision (especially in an automotive industry environment). Some of these other considerations include the cost of: ± Design changes ± Supplier integration in new product development ± On-going cost savings sharing agreements ± On-site technical support ± Alignment of cultures ± Other joint improvement initiatives 1. Calculate the total cost per unit of purchasing from Original Wire. The total cost calculations for purchasing from Original is shown in the attached spreadsheet, and is $31.10. This includes unit price, packing, tooling, and freight. No special warehousing of inventory is required. This assumes that daily shipments will be made and no inventory buffers held on-site at Autolink. 2. Calculate the total cost per unit of purchasing from HLA. The total cost for purchasing from HLA is $29.42, and represents a savings of $1.68
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This note was uploaded on 04/21/2011 for the course MGT 01 taught by Professor Gad during the Spring '11 term at Tanta University.

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Wiring Harness - Case Discussion: The Global Sourcing Wire...

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