Case Study: Wiring Harness Essay

1981 Words8 Pages
Case Study:
The Global Sourcing Wire Harness Decision
Ricky J. Myers
Embry-Riddle Aeronautical University
April 25, 2013

Abstract
As Sheila Austin works out the decision to source from one of the two suppliers that have responded to her request for quotes for a new wiring harness for Autolink, she is faced with a decision to go with an international supplier in China, or from a local supplier. The initial look at the price quotes would steer towards the international source, but the underlying fees and costs associated with the international seller would make her think twice about accepting that deal. The in-depth analysis will steer her in the right decision to which supplier is the better candidate as well as how the cost per
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It defines the expenditures and also denotes the possibility of cost reductions from the supplier’s marketing representative. This, for simplicities sake, can be possibly noted as the better of the two. The overall unit price $31.27, and with the tooling cost of $ 6,000 and 5,000 units delivered, the initial cost would be $162,350 for the first delivery (see figure 1). The $6,000 being a onetime fee for the re-tooling will only be charged during the first delivery, or may be spaced out over the course of several installments. Regardless, the re-tooling fee is not factored into the cost per unit as there is no length of time set for the contracting. With Original Wire being a local vendor, close buyer-seller relations may result from a long-term contract with price reductions. Since Original Wire claims it is ‘hungry’ for business, there is the possibility of some price negotiations as well. (Monczka, Handfield, Giunipero, Patterson, Purchasing and Supply Chain Management, 2011, pgs 805)
Quote 2 Analysis The Chinese firm, Happy Lucky Assemblies (HLA), production and re-tooling cost is much cheaper, possibly due to lower labor rates, lower materials acquisition costs and lower overhead costs. Since Autolink will be responsible for the international shipping and delivery fees, the unit price is driven up significantly. HLA’s unit price quote
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