Global Sourcing Case

The Global Sourcing Wire Harness Decision

Sheila Austin, a buyer at Autolink, a Detroit-based producer of subassemblies for the automotive market, has sent out requests for quotations for a wiring harness to four prospective suppliers. Only two of the four suppliers indicated an interest in quoting the business: Original Wire (Auburn Hills, MI) and Happy Lucky Assemblies (HLA) of Guangdong Province, China. The estimated demand for the harnesses is 5000 units a month. Both suppliers will incur some costs to retool for this particular harness. The harnesses will be prepackaged in 24*12*6” cartons. Each packaged unit weighs approximately 10 pounds (~4.5 kg). Quote 1 The first quote received is from Original Wire. Auburn Hills is about 20 miles (~32.18688 km) from Autolink’s corporate headquarters, so the quote was delivered in person. When Sheila went down to the lobby, she was greeted by the sales agent and an engineering representative. After the quote was handed over, the sales agent noted that engineering would be happy to work closely with Autolink in developing the unit and would also be interested in future business that might involve finding ways to reduce costs. The sales agent also noted that they were hungry for business, as they were losing a lot of customers to companies from China. The quote included unit price, tooling and packaging. The quoted unit price does not include shipping costs. Original Wire requires no special warehousing of inventory, and daily deliveries from its manufacturing site directly to Autolink’s assembly operations are possible Original Wire Quote:     Unit price=30€ Packing costs=0.75€/unit Tooling=6000 (one time fixed charge) Freight cost=5.20€/100 pounds

Quote 2 The second quote received is from Happy Lucky Assemblies of Guangdong Province, China. The supplier must pack the harnesses in a container and ship via inland transportation to the port of Shangai in China, have the shipment transferred to a container ship, ship...