busines College business question
Galaxy Motors – New Electric Roadster SUV Supply Chain Network and Component Sourcing Study – Case #2 You are Jazmine Smith, Director of Purchasing and Supply Management for the new Electric Roadster SUV. Below is a summary of recent events related to the sourcing of a new Voice Navigation Radio and potential alternative global networks associated with the supply of the new radio for the new Electric Roadster SUV. Your job is to select the best supplier or suppliers and the network or networks to support these suppliers. Below are the details that have transpired recently that provide the information you need to analyze this case and make your recommendations as described at the end of this case. Detroit, MI Assembly Plant Jazmine Smith is pondering the notes on her desk. She has just returned from a meeting at the Vehicle Engineering Center (VEC) at the Galaxy Motors Technical Center in Detroit, MI. As Director of Purchasing and Supply Management for the new Electric Roadster SUV, she is responsible for decisions associated with a new Voice Navigation Radio (VNR) to be installed as an option on the 2023 model when sales start in late 2022. The new VNR would have smaller dimensions and include the latest wireless technology. Galaxy Motors sources the VNR from their strategic supplier, Starlite Technology Corporation. Starlite describes the VNR as follows: Starlite’s Voice Navigation Radios are full-featured audio and navigation systems in a single unit. Combining DVD-based map navigation with AM/FM/CD radio, Starlite Voice Navigation Radios provide vehicle occupants access to more information on the road. The systems use an onboard voice activated computer that interacts with the Global Positioning System, vehicle sensors, and a DVD map database to help guide travelers to their destination. Used as a “personal travel assistant,” these systems can help with distracted driving, minimize travel time, make travel more convenient, and increase peace of mind. Decisions on sourcing location and transportation need to be made by October 15, 2022. Jazmine has an estimate of requirements for the new navigation system, which are: Program Year 2022 2023 2024 2025 Annual Requirements 47,000 100,000 110,000 80,000 Requirements per day 410/day 425/day 470/day 470/day Note: System to be replaced in 2025 The new VNR is to be 6”x6”x3” and weigh 2 lbs. Start of production (SOP) for vehicles equipped with the system is November 15, 2022. The supply chain pipeline is to be filled by November 1, 2022, to meet SOP deadline. Jazmine grabs her cell phone and scrolls to her contact at Starlite Technology, Ronald Turner. Ronald attended the meeting at the VEC. They discussed what data needed to be obtained for consideration and what issues needed to be addressed to make decisions. Supplier Locations and Material Price Information Starlite Technology provided information on possible sourcing plants for the VNR. There are four possible production sites. The sites, and prices per product, are as follows: Supplier Location China – Shanghai US – San Jose, CA Mexico – Queretaro India – Bangalore Supplier Dock Price1 450 – Yuan/piece 75 – USD/piece 1300 – Pesos/piece 4625 – Rupees/piece Tariff / Support Tax 8.0% 0.45% 15.0% 15.0% Customs Fees 5.0% 0.0% 2.0% 10.0% It is Jazmine’s job to decide which of the above facilities (1 or more) will supply the Roadster SUV’s VNR starting October 15, 2022. Galaxy Motors estimated that their engineering costs would be $200 K for each supplier. Validation costs would be $50 K per supplier. These costs can be considered as lump sum, one-time payments two-months prior to start of production. Tooling costs, as estimated by Starlite Technology and Galaxy Motors engineers, are as follows: Supplier Tooling Volume & Costs China – Shanghai US – San Jose, CA Mexico Queretaro India Bangalore Cost for Base 255 pieces/day 3.3M Yuan $400,000 USD 8M Pesos 28.0M Rupees Incremental Volume: Cost for each additional 45 pcs/day – rounded up 0.2M – Yuan $25,000 USD 0.53M Pesos 1.8M Rupees Packaging Cost & Characteristics Expendable Purchase Cost (per unit, in US dollars) Standard Pack (parts per container) Container Dimensions (L x W x H) Full Pack Weight (incl. Tare Wgt.) $300 700 pcs. 48” x 48” x 48” 1,522 lbs. Transportation Costs and Information Jazmine’s mind turned to transportation — how to efficiently transport the VNR units to Detroit, MI. Jazmine found her notes on the logistics cost projections she was given by her on-site Logistics Engineer from Ryder Supply Chain Solutions. She noted that transport costs are one-way, inbound. Return rates, if used, equal inbound. 1 Incoterm 2020. Title transfers at supplier dock. Transportation Cost Estimates and Information Transportation/Logistics Cost Estimates and Information: Number of Pieces Per Package – 48″x48″x48″ Number of Packages Per Ocean Container (20ft) or Truck Trailer (53ft) Number of Pieces Per Ocean Container (20ft) or Truck Trailer (53ft) Product Demand – 2022 to 2025 – Total Pieces Total Number of Required Ocean Containers or Truck Trailers Mileage Unit Cost Per Ocean Container (FCL) or Truck Trailer (TL) – USD $ Transit Hours Air Charter Premium – 10 Containers (48″x48″x48″) at 14,000 lbs. Per Shipment Transit Hours China India 700 4 2,800 337,000 121 700 4 2,800 337,000 121 $4,000.00 768 $17,000 36 $4,000.00 816 $15,000 24 Mexico 700 24 16,800 337,000 21 2,222 $3.25 60 $8,000 7 US 700 24 16,800 337,000 21 2,428 $2.05 50 $7,000 8 ANALYSIS DELIVERABLES: Prepare a presentation to include the following: o Statement of major facts o Identification of major problem/problems o Description of possible solutions o Summary of your financial analysis o Recommendations and rationale – including non cost factors o Implement plan with noted constraints Prepare a spreadsheet analysis with cost calculations for each supply chain activity. In addition, identify the recommended supplying facility (or facilities) and logistics plan. Your spreadsheet should summarize the “Total Enterprise Cost” for each supplying facility that will support the best financial decision and/or defend an alternative that is not the lowest cost. Identify Non-Cost Factors that should be considered in the final recommended supplying facility or facilities (e.g., non-cost factors, supply chain risks or disruptors, geopolitical, etc.) . Possible considerations in your spreadsheet analysis are: ▪ ▪ ▪ ▪ ▪ Purchase costs Customs costs Tariff costs Engineering costs Validation costs ▪ ▪ ▪ ▪ Tooling costs Logistics costs Quality Other Potential Costs, if Any
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