Tombow Case Study

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1) What are the advantages and disadvantages of the particular sub-contracting system in this case? Tombow uses in its supply chain management both in-house production and subcontractors. The exact share of in-house production and outsourced production is not known exactly. This ratio varies across product lines. As an example, Tombow’s supply chain set up used for Object EO can be analyzed. To produce it, Tombow coordinates six vendors. Two of them - Kantoh and Nagano - are the main suppliers. Kantoh produces components and Nagano, besides production of components, is also responsible for the assembly work. In practice, Nagano outsources assembly work to residents near Nagano´s factory. There are currently challenges with supply…show more content…
Utilization of external partners gives also an important access to knowledge that companies have for production of certain components and writing instruments. One important point also is that the market forces subcontractors to keep competitive prices. It would be hard to internally coordinate the activities so well that every part of the company would be competitive if larger part of production would be done in-house. On the other hand, disadvantage of utilization of subcontractors are also important to be regarded. The coordination challenge between Tombow and key suppliers like Kantah and Nagano; possible leakage of confidential information; possibly different interest of companies in supply chain and difficulty to encourage commitment from suppliers; possibly opportunistic behavior in supply chain as different companies may not share common goals; transfer of responsibility to subcontractors may give rise to difficulty in identifying the source of fault when something goes wrong: main contractor, secondary contractor and/or sub-contractor; more effort needed to communicate and control the interfaces in manufacturing process; suppliers less likely to invest in new processes; suppliers might exert upward pressure on prices if no alternative supplier is available; production process is fragmented and
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