Sourcing strategy refers to the procurement process that unceasingly advances and re- accesses the purchasing activities of a company. There are mainly four strategies: comprehensive outsourcing, selective outsourcing, licensing agreement and contracting sourcing (Vargas, 2016). The licensing agreement policies are the most suitable in this case: the approach focuses on the acquirement of tangible assets such as technology or real estate for training. The approach embraces deals spread over many years if the cost of enactment and setup are high.
Qualitatively, the Pacific Corporation System (PCS) lacks the expertise to produce quality DVDs for their computers in a market that is very competitive. Additionally PCS wants to indulge in business with a supplier who allows them to transport the commodities by their own but the cost is still on the vendors, this maintains the assets excellent quality.
Quantitatively, since the expense of the purchase is high, this strategic sourcing will relieve the financial problem because its spread over several years. To effectively alleviate the risks associated with the supply of the DVDs I have to develop a four-step plan. Initially, will analyze any possible risks that might occur then develop an effective approach to fight the risks, thirdly review the suppliers policies and certification (Vargas, 2016). Lastly, maintain standards and assess sustainable systems.
The item under consideration determines the approach required when evaluating the supplier; therefore all sourcing decision doesn't have the same commitment extent. The elements that need serious resource and time commitment include overall significant to the companys objective, technologically sophisticated; the item will be mainly modeled for the enterprise, the present suppliers lack the potential to satisfy cost or service necessities. On contrary, the ones that dont require a serious commitment of resources and time includes commodities with less strategic purchase need or one with several suppliers in the market.
The supplier capacity is very critical in PCS Company because of the escalating demand for the computer in the market and also satisfies the clients desires adequately. Additionally, supplier capacity is crucial to compete in the stiff market effectively. In order to assess their storage capacity, the following should be considered existing surplus production capacity, the reliability of their supply chain and disaster aversion (Vargas, 2016). Its important to inquire, or research on the number of facilities the supplier possess and the personnel employed; when there is a surplus of work at one branch, its easier to transfers transfer from other institutions to facilitate on-time delivery. Reliability focuses on the suppliers supplier integrity, in case of interruption might affect quality and punctuality of the DVDs (Stevens et al., 2016). Supplier capacity should be assigned fifty percent during sourcing decision since failure in the one-time supply other factors held constant will profoundly result to massive losses to PCS Company.
Single Sourcing vs. Multi Sourcing
Single sourcing is where the client chooses a maximum of one supplier to provide all the services or goods that the latter requires throughout the contract term. On the contrary, multi sourcing the client signs separate, parallel contracts with a different supplier for various services or good to be outsourced (Stevens et al., 2016). The following are pros of single sourcing: less burden of monitoring the daily operations of outsourcing; the client has only one contract; the supplier has to abide by outsourcing and integration during the contract period. The cons include full reliance on the vendor integration and quality; supplier might have a conflict of interest. The pros of multi sourcing are: clients enjoy flexibility; shorter contracts; direct contract with the supplier and easy replacement of a supplier with no impacts on the others. The cons include: the clients assume the role of the project manager; increase responsibilities translates to high cost and probability of wastage of time and finances to resolves issues with different suppliers.
Stevens, G. C., & Johnson, M. (2016). Integrating the supply chain 25 years on. International Journal of Physical Distribution & Logistics Management, 46(1), 19-42.
Vargas, F. (2016). Optimal Sourcing Strategies for Managing Supply Chain Risk for Platinum Group Metals in Automotive Catalytic (Doctoral dissertation).
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