Integrative Case Study
Smart Tech Case Study – 25%
Smart Tech Mfg., a Canadian company is changing suppliers because the current supplier has proven to be unreliable. The company plans to maintain 20 days of inventory. This equates to 9,000 cases. (20 days = 1 month based on a working week of 5 days and a working month of 4 weeks). This inventory consists of preci- sion parts necessary to assemble its final products in their plant in Toronto and they are very fragile. The parts are under quota restrictions because the Canadian government is trying to encourage local development of this “high tech” product. It is in a very competitive marketplace in which innovation and responsiveness to cus- tomer demand is paramount.
Smart Tech has narrowed its choice to two foreign suppliers. One supplier, HK Manufacturing is based in Beijing, China. The other, Fiesta Manufacturing is based in Mexico City, Mexico. High Tech plans to pur- chase 9,000 cases of parts at a time to ensure it meets demand for the final product.
; The MFN duty rate is 10% ad valorem.
Price Quotes from the Suppliers
; Fiesta Manufacturing = $5.00 per case, Ex Works ; (The Mexican supplier insists on Ex-Works terms of delivery and an inflexible order quantity). ; HK Manufacturing = $5.00 per case FOB (the Chinese supplier is very open to changing order quantities) Shipping Characteristics ; 1500 cases fit in a 40-foot container if they are not palletized. ; 1000 fit if they are palletized (20 pallets). ; 1500 fit in a 53-foot tractor-trailer loaded on 25 pallets (the Mexican supplier will not ship un- palletized goods). It also insists that pallets be returned at the buyer’s expense. ; 250 empty pallets can be loaded into a 53-foot trailer. Transit Times - China ; Local Delivery from Chinese supplier to Distribution Terminal = 1 day ; Inland to Port of Shanghai = 1 day ; Overseas from Shanghai to Vancouver = 14 days ; Inland Vancouver to Toronto Terminal = 3 days ; Toronto Terminal to Smart Tech = 1 day Transit Times -Mexico ; By truck from Fiesta Manufacturing to High Tech = 5 days (but there are often delays of up to 2
days at the Mexican border adding an additional 2 days to the transit time).
Transportation Costs - Full Container from China
; Local Delivery to Distribution Terminal in Beijing = $50.00 per container
; Inland transportation to Port of Shanghai = $ 150.00 per container
; Handling and loading charges at the port = $250.00 per container
; Shanghai to Vancouver = $ 3000.00 per container via Conference Line or
$ 2700.00 via Non Conference Line (The Non Conference
Carrier flies a Panamanian flag but is actually Canadian.)
; Port unloading fees = $250.00 per container ; Inland Vancouver to Toronto Terminal = $1,500.00 per container ; Local Delivery = $100.00 per container ; The cost of insurance in either case is 2% of the cost of goods and freight (transportation costs). ; Actual weight applies to the shipments.
Transportation Costs from Mexico
; Mexico to Toronto = $ 3000.00 – in a 53 foot trailer
; Toronto to Mexico = $ 2500.00 - in a 53 foot trailer
Compare the options available to you. Prepare a report and recommend a buying option for High Tech Manu-
The report must contain a:
1. A case cost comparison of your options
2. A total cost comparison of your options
3. A reasoned explanation of all those factors that influenced your decision
4. A reasoned explanation of those factors you have discounted
Prepare a Report
The report must contain:
1. Diagrams of the 2 Supply Chain options
2. An Executive Abstract
3. A Cover Page
4. A Table of Contents
5. A GANNT chart detailing the contribution of group members 6. A Report including introductory, main body and concluding sections
; Consider that you may want to submit a copy of your report to the firm, and hence you should use profes-
sional standards in preparing your report
; Each group must present its proposal to the class
; Work in groups of 6 or less
; The report must be typed and double-spaced.
; It should be between 1500 and 2500 words.
; Use subheadings within the report and when necessary. ; Plan the report carefully so as to develop an organized and non-redundant report. It should be organized and
assembled as a continuous report and should not be several independent segments bound together.
Due Date: December 02. 2010
; Reports submitted after this date may be marked (with penalty) but not returned because of the due dates re-
quired for submitting final marks.
; Late reports will be penalized 10% per week. ; Report has a value of 25% of final mark.
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