Stryker Corporation: in-Sourcing Pcbs

1209 WordsOct 23, 20125 Pages
1. State the business case for option #3, the PCB In-sourcing proposal. What is the benefit? What is the risk? How do you compare this proposal to option #1 and #2? Benefit: a. Better performance in management, quality and delivery. When PCB is in-souring facility, the management team of Stryker Corporation can directly control the production process, which is more efficient and could obtain better quality in products. Secondly, when the production of PCB is in-sourcing, it will be much easier for Stryker Corporation to make a delivery plan of PCB. This will considerably reduce the logistic losses. b. More flexible in outputs. Under current sourcing, the flexibility of PCB’s outputs depends on the frequency of order, resulting…show more content…
Even that manufacturer is able to maintain a low supply; it will take long time for Stryker Corporation to strengthen it by increased business and partnership. For the long run, everything is precarious. c. Comparing these two options above, option 3 is much more reliable. Having an in-sourcing facility will bring more flexibility as we mentioned before. With a developed in-sourcing proposal, there are a lot of detail estimations about the Option 3. It’s easier for Stryker Corporation to implement this plan step by step. 2. Use the projections provided in the case to compute the incremental cash flows for the PCB project. Provide a reasonable estimate for cash flows after 2009 as well. The explanations and details are presented in “640 case appendix”. There are 4 explanations on how to predict the data after 2009 as below: a. Decrease in purchases from contract manufacturers: Setting up the new project will gradually bring more free cash flow to the corporate. However, at the very beginning, the corporate must continue buying products from the former suppliers. The company stopped purchasing PCB from out-sourcing in 2006. Therefore, it is reasonable to suppose that Stryker will not buy PCBs from contract manufacturers anymore. Through linear regression, we use Least Square Method to predict the “Projected PCB purchases under current sourcing” in

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