Metrovox Electronics - Global Supply Chain Management

GLOBAL SUPPLY CHAIN MANAGEMENT

ASSIGNMENT-1

METROVOX ELECTRONICS

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SUBMITTED BY:

ARPIT MALASI

STUDENT ID: 0870808

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

Answer:  I think Grunwald and Vogel will recommend Bugabyte Lite as the best candidate for assembly outsourcing because         outsourcing both products have common risks associated to it.

• The major concern for Metrovox will be not being able to control and maintain the quality standards of both Bugabyte and Bugabyte Lite. Outsourcing Bugabyte will be riskier as Metrovox has included several new stages to their assembly line and there is also a significant amount of proprietary information that is used to design the circuit board.
• Since the manufacturing process of Bugabyte is more complex than that of Bugabyte lite, the chances of errors in the production and manufacturing will increase the cost of the device and which will result in poor quality of the devices produced.
•  Bugabyte Lite already has a well-organized manufacturing process and it has been there in the market for quite some time, so there will be no concerns related to the confidentiality regarding the manufacturing process of the product. Since Bugabyte is a new product and in the future, it will help the company to grow, so its better to manufacture Bugabyte within the company itself.

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

Answer: Advantages of outsourcing the assembly function are

• Outsourcing Bugabyte Lite will help Metrovox to free up some more space in the factory to manufacture Bugabyte on a larger scale and manage bulk or large orders effectively in the near future by maintaining the quality of the product as well.
• Since Bugabyte Lite has been there in the market for a while, the manufacturing and assembling process is well known by the other competitors as well, Metrovox could more effectively manage their assembling process and produce the Bugabyte Lite at a cheaper cost than its competitors. Metrovox can hire a single supplier in China where all the assembling work is done, this may help Metrovox to reduce the labour cost as well.
• As the demand for Bugabyte Lite is stable, it is easy to create a delivery pattern or timetable. This also reduces the risk of late shipments from the suppliers. Less amount of buffer inventory will be needed to manage any mishaps that may take place as the demand for Bugabyte Lite is stable.
• Metrovox has more focused control over the production of Bugabyte. Quality of the product plays an important role as Metrovox believes in high quality standards. The circuit testing method for Bugabyte Lite is well known, while the circuit testing method for Bugabyte contains some proprietary information with it. Assuming that Bugabyte will contribute in company’s growth in the coming years, maintaining good quality standards and keep the proprietary information to themselves will help Metrovox in many ways.

Disadvantages related to outsourcing assembly functions are

• The major disadvantage of outsourcing a product is that Metrovox will loose the control over the quality of it’s product. Since quality is important for products competitive advantage.
• Sometime due to large orders or bulk orders shipment could be delayed and the products could not be delivered to the customers on time. While handling large orders, some small orders could be neglected which will in return damage the company’s name.
• Having an external supplier or vendor could lead to misuse the company’s information and some other confidential matters. There are chances that the supplier could tell the trade secrets or company strategy to the competitor.
• If the supplier is from China, there are more chances that the company information or strategy could me misused by other competitors, as the patent laws in China are not so strict as compared to rest of the world. (OUTSOURCING, 2017)

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

Answer: The issues that Metrovox needs to consider are

• Maintaining the quality (Quality assurance)

Metrovox would like the maintain the quality of their product even if they are outsourcing it from some other suppliers. They would mention the product specification and the materials that are going to be used to make the product. Other processes related to quality will also be mentioned in the contract, such as the type of solder and soldering process used. Warranty of the product may also be included in the contract. Other features like the quality check and testing requirements will also be included in the contract. Since Metrovox believes in high quality, suppliers or vendors failing to match up the quality standards can be fined after assessing the delivered product to Metrovox.