SUPPLY CHAIN COST ANALYSIS

Q1.

You are negotiating a supplier contract with a supplier in China for your company (If you do not have a company you can use the same one that you used in Assignment 1 or another)

(a)   Briefly describe in 2-3 sentences your company and your supplier

(b)   What INCO terms would you like to apply to the contact and WHY?

(c)    Suppose your supplier wants diametrically opposite INCO terms.  Briefly describe 2-3 different approaches that you could use to negotiate with her to reach the outcome you described in (a)

(d)   Your supplier is not budging.  What will you give up in INCO terms and what will you expect in return?  Why?

Please make your responses specific to the situation – not generic “copy and paste” from text books/ internet sources

Q2.

You have narrowed down your sourcing choices to two potential suppliers for Part A.  Your demand for Part A ranges between 80,000 to 120,000 units per month with an expected average of 100,000.   Part A is used by your operations in Miami, FL USA.  You want to sign a contract for a year.

The parts are heavy so air shipment is not a standard option but can be used in emergencies.  50,000 parts constitute a full 40ft sea container load.

Some information on the suppliers:

Supplier 1                    Supplier 2

Piece price at supplier dock                                US$ 1.25                        US$ 1.10

Supplier location                                                  Sao Paulo                       Chengdu

Brazil                         China

Scrapped defects per 1000 parts                             25                              60

Developed a detailed total cost analysis for both options and make a recommendation as to which supplier to choose.  You will have to find a lot of data online e.g., transportation time and costs.  List all such input and also what assumptions you make.

 

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