DH Electronics, Inc. manufacturing facility is located in Michigan and the company is evaluating several options for sourcing a critical processor for its new modem. Three sources are being considered: Hi-Tech in Canada, Zia in Hong Kong, and Zaragoza in Mexico. The owner of DH Electronics determines there are four critical criteria: cost, project completion reliability, competence, and supply chain/inventory. The owner of DH Electronics provides a brief reasoning for each of the criteria that she considers critical. The cost of the final product is the main driver since the modem market is a highly competitive and price sensitive market. Additionally, the product life cycle for many modems are short, so it is critical a new product is brought to the market in a timely manner. DH Electronics is proud of its reputation for providing products which are reliable at a reasonable price. DH Electronics does not want to introduce any product to the marketplace that could damage its reputation. With the relatively short product life cycles of modems, the longer the supply chain is the greater the risk of obsolescence inventory to DH Electronic that will need to be sold at a significant loss. Hi-Tech is located in Canada and their quote is the highest among the three potential suppliers. However, Hi-Tech is the current supplier of the processor in several of DH Electronic modems and there is a history of the two companies working together to bring products to the market on time.
Zia is located in Hong Kong and their quote is the lowest among the three potential suppliers. Zia is not currently, nor has it ever been, a supplier to DH Electronics. Zia currently produces electronic processors, but none that are used in modems.
Zaragoza is located in Mexico and their quote is roughly half way between Hi-Tech’s and Zia’s quotes. Zaragoza is not currently a supplier of DH Electronics; however, Zaragoza does produce modem processors for several of DH Electronic’s competitors.
You are the project manager of a team at DH Electronics responsible for developing and bringing a new modem to market. Your team needs to select the supplier of a critical component. This supplier will become part of the team and will work closely with your team to insure project objectives are achieved. Use the provided scoring model form to evaluate and select a supplier for the critical processor. Report your rankings (10 Points) and justify your rankings and decision (15 Points). Grammar and sentence structure will be graded.
Factor Cost Project Completion Reliability Competence Supply Chain /Inventory Score
Weight 0.45 0.15 0.25 0.15 1.00
Hi-Tech 1 .45 5 .75 5 1.25 5 .75 3.20
Zia 5 2.25 3 .45 1 .25 1 .15 3.10
Zaragoza 3 1.35 3 .45 3 .75 3 .45 3.00