Supply Chain Procurement Case Study Case Study Samples

Objective

The objective of this paper is to answer all the questions posed in the case study by providing a thorough but comprehensive discussion of the pertinent findings from the case.

Executive Summary

In summary, the author of this paper suggests that PSC push through with the Dell Approach mainly because of the fact that it has already been proven by other companies; to give a high level of attention and priority to its suppliers’ production capacity; and to rely on a multi-supplier method of supply chain management.
The recommended sourcing strategy in this case would be the Dell Approach. One of the benefits of this sourcing strategy is the fact that it has already been tested by a bigger company, Dell, and fortunately for them, it came out successful. In fact, it may be safe to say that the unique supply chain management strategy that Dell used in selling pre-assembled computers to its target markets and consumers is one of the major reasons why it become one of the largest distributors of pre-assembled computers in the U.S. and other foreign markets. In the case, the company Pacific Systems Corporation already has a rough outline of the things that they would do in terms of their sourcing strategies. All that they should do now is follow it. The only risk that they are facing as of now is the risk that their suppliers would not be able to comply with the rapid and frequent changes in demands of raw materials for their computers. In order to address this risk, then PSC should negotiate with their suppliers early so that misunderstandings and supply chain gaps would be prevented in the future.
There can be many reliable sources of supplier financial information. In PSC’s case, they apparently chose to deal with the suppliers themselves. That is, they asked the suppliers directly for their financial information. In reality, this is the best thing to do because there would be no other party or entity who can present accurate and reliable information about a company’s finances than the company itself. However, in PSC’s case, there were some companies who failed both intentionally and non-intentionally to provide the financial information they were requesting. Based on the case, the companies who did not supply them the necessary information appeared to be uninterested with the idea of being one of PSC’s suppliers. In that case, they may have seen no reason to expose their financial information. This is indeed one of the high impact factors that played a role in PSCs inability to gather all of their target suppliers’ financial information.
It is important to note that when it comes to supply chain management, a lot of things may vary. The same thing applies to the resource and time commitments that were highlighted in this case. The magnitude of sourcing decisions and commitments in this case was the result of the complexity of the supply chain management operations involved in PSC’s business model. Basically PSC is planning to sell pre-assembled computers and DVDs and other electronic products and components to their target markets and in order to successfully pull this business model off, the company has to make sure that they have solid and highly integrated relationships with their suppliers, hence the high magnitude of time and resource commitments that they exhibited. Now, this may not be the case for another company that operates differently from PSC. So, to answer the current question, no, commitment of resources and time in supply chain management is never uniform; rather, it greatly varies.
Supplier capacity is one of the most important factors that PSC must consider because even a slight limitation in the company’s suppliers’ ability to do its job—which is to supply it with parts, can already lead to tremendous loss in sales opportunities, especially if the weak sales forecast they released for the computer market gets wrong and it actually turns out that the computer market would be set for a tremendous growth over the coming years. In this case, the supplier capacity was evaluated based on their ability to adapt to rapidly changing demands for the materials or components they are supplying. This is because this is the most important part of dealing with suppliers. PSC should therefore put a high level of importance or attention on their suppliers’ ability to meet the capacity that they require. Otherwise, if the computer and consumer electronics market picks up, they would lose a lot of sales opportunities because of the throttling of their production capacity.
The most ideal way to shorten the time from the recognition of a purchase to reaching the agreement with the selected supplier is to negotiate about it with the supplier as early as possible; inform the supplier that there may be times when they would have to be flexible with regards to their production capacity so that whenever the demand for PSC’s products experience a spike, they, the suppliers, can duly accommodate. In order to encourage the suppliers to follow this request, PSC may give incentives or they can simply offer to buy the products from the suppliers for slightly higher rates whenever the demand changes all of a sudden. That way, both PSC and its suppliers win, without losing any single sales opportunity.
PSC cannot turn its business model into a successful one if it is only going to rely on one supplier. Most literatures would suggest that a multi-supplier system be implemented because this way, the company would be able to ensure the stability of supply and raw material inflows.. This is one of the major advantages of a multi-supplier system. A single supplier system is simply not applicable to PSC’s business model because in order to build just one unit of its main product (i.e. computers), it has to rely on a certain number, but certainly not one, suppliers. Additionally, a single supplier system’s major disadvantage is that it exposes the buyer, which in this case is PSC, to a lot of risk. So, the best choice for PSC would be to use a multi-supplier system.

References

Arda, Y., & Hennet, J. (2006). Inventory Control in a Multi-Supplier System. International Journal of Production Economics.