What Should Us Tech’s Sourcing Strategy Be?

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What Should US Tech’s Sourcing Strategy be? US Tech is considering discontinue the cooperation with its primary product supplier: TaiSource. The two main reasons that drive the company for doing so are (1) reducing cost and broaden the market by collaborating with a new Chinese supplier; (2) eliminating the threat of a future strong competitor who knows almost everything about US Tech’s products. After carefully examining the entire situation, we hold that US Tech should find an alternative Chinese supplier to cooperate while keeping the relationship with TaiSource. Several aspects that US Tech needs to take into consideration are as follows: First of all, the company should carefully deal with the trusting relationship…show more content…
However, TaiSource shows that they want the market too. If they do so in the near future, USTech will be in a crisis. To avoid the potential threat, US Tech should consider cooperating with a Chinese supplier as an alternative. Another aspect is about Chinese policy, it’s complex, changeable and kind of lean the balance to domestic enterprises. Although TaiSource currently hold the mainland resources and relationships, to have USTech’s own Chinese suppliers could better ease the burden of policy issues and polices to the business if USTech want to explore and expand Chinese market. If US Tech decides to find an alternative supplier while remaining cooperation with Tai Source, it has to think about the costs. Paul Gaffney, the executive vice president for supply chain at Staples, refers that after sourcing a new line of products bearing the Staples barn, Staples had to weigh the costs of taking on a new range of tasks -product design, packaging design, product life cycle management- that their branded suppliers had always done for them. This was the price they paid to obtain the lower initial costs of dealing directly with factory. Barry C. Lynn states that Greg can now choose to diversify US Tech’s ODM relationships; source directly in China and Taiwan, which would require quickly mastering certain management and assembly tasks; or combine these approaches, thereby enabling US Tech to expand in China at

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