Metrovox - Bugabyte and Bugabyte Lite Products

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Question 1: Based on the risk factors associated with the Bugabyte and Bugabyte Lite, which product do you think Grunwald and Vogel will recommend as the best candidate for assembly outsourcing?

As considering the risk factors with Bugabyte and Bugabyte Lite, Grunwald and Vogel should recommend Bugabyte Lite product for assembly outsourcing. Reasons are following.

1. The product Bugabyte Lite is in the market from last few years. Many competitors have same product in the market under different name. Due to the fixed assembly process many company assemble and produce this product easily. Where, Bugabyte is new product in the market and it need some new assembly process stages due to this reason outsource product cost may increase.

1. Bugabyte is very unique and latest product in the market. So, for the outsourcing they have to give their proprietary document to the other company. It may threat for their product uniqueness.

Question 2: Based on Grunwald and Vogel’s decision, what will be the benefits and disadvantages of outsourcing the assembly function?

Benefits:

• Metrovox will get enough time for assembly and testing process for Bugabyte.  
• From the outsourcing company reduce their assembly cost which help to leads the revenue.
• If company assemble Bugabyte and Bugabyte Lite in German assembly plant, it increases the Production delays and late delivery ratio. By the outsourcing of Bugabyte Lite assembly process, company can meet production target and reduce the late delivery ratio.

Disadvantages:

• Bugabyte Lite is in the market from last six years which has maintained brand image and revenue. Due to the assembly outsourcing, if any product quality issue come it will directly affect the company’s revenue. Moreover, it also affects the selling of Bugabyte.
• Few outsourcing company may focus more on the profit instead of product quality and also, they may use lower quality parts. Which directly affect the product quality. So, in the outsourcing company will lost the quality control. (Small business trends, 2017)
• Due to the outsourcing, Bugabyte Lite may not deliver on time in the market. Because, Metrovox have not command on outsourcing company’s shipment. (Small business trends, 2017)

Question 3: In the event that Metrovox can outsource the assembly of the circuit boards to an existing supplier, discuss the key contract issue Metrovox will need to consider with their supplier.

• Delivery Commitments: Metrovox has agreement with their Distributor and retailors that Metrovox will deliver both the product in the same shipment. In order to meet this agreement, Outsourcing company have to meet Metrovox’s delivery timing. So, in the contract Metrovox would add fix delivery schedule and fine for late shipment.
• Payments Method: Metrovox and other supplier would fix the assembly cost for the Bugabyte Lite. They would include in the contract that how, where and when payment would be made. In addition, payment timing and due date also add in the contract.
• Product Quality: To be in the market in the same position Metrovox has necessary to maintain Bugabyte Lite’s quality. So, in the contract Metrovox would add the detailed product specification and the specific material which would must be used in assembly of the circuit board. In addition, it would be including some penalty in money if any product won’t meet quality standard.
• Confidentiality: Bugabyte Lite is reputed product for Metrovox, their assembly and testing evaluation process make different from another competitor. For the security reason Metrovox would restrict on outsourcing company for sharing any proprietary information with another competitor.
• Assembly Process: Metrovox is using a specific assembly and testing process for Bugabyte Lite. So, in the contract outsourcing company would follow same process which is followed by Metrovox. 

Question 4: What inventory management strategy should Grunwald and Vogel recommend Metrovox adopt to ensure efficiencies throughout their entire supply chain?

• In this case, Grunwald and Vogel should recommend Vendor managed inventory (VMI) in order to maintain the supply chain efficiency. Moreover, also use the EDI (Electronic Data interchange) inventory as a backup.
• Material shortage is the main reason of the production delays. In the VMI (Vendor managed inventory), inventory managed by the supplier or the vendor welfare of the Metrovox. Supplier monitor the inventory and when Metrovox has less part or raw material. Supplier deliver the raw material by themselves. Metrovox do not need to worry about their inventory if they use this VMI method. (True commerce Datallince, n.d.)

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(Edicom connecting business, 2018)

• In addition, one more reason to use this method is that Metrovox developed currently Bugabyte product in the market and it has 300% over demand as per forecasting. So, this method will help to maintain inventory line as per market demand also it will help to maintain constant inventory level.
• With the VMI method, EDI (Electronic Data interchange) method help to monitor the invoice.

References

Edicom connecting business. (2018). Retrieved from www.edicomgroup.com: https://www.edicomgroup.com/solutions/VMI/what_is/main/01/contentImage_en_USScaled/contentImage_en_US.jpg