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Midland Motors submitted an annual order for 250,000 ECUs and 35,000 RFIDs. This request far exceeds Kuiper's capability to fill in-house and thus it must determine how the demand can be met. Many factors must be addressed starting with inventory cost. "The average cost of inventory in the United States is 30 to 35% of its value (Chase, Jacobs, & Aqiulano, 2006)."
Identify domestic and global best practices in supply chain management.
The way that a company configures its supply chain can lead to a competitive advantage. Inventory is a buffer in the supply chain and each buffer in the process increases the amount of money tied up in the process. The inventory investment is measured on the total cost of goods sold (Chase, Jacobs & Aqiulano, 2007).
"Outsourcing is the act of moving some of the firm's internal activities and decision responsibility to outside providers. Outsourcing can help a company achieve an competitive advantage while reducing costs (Chase, Jacobs & Aqiulano, 2007)."
Nintendo's best selling console, the Wii, has been in such high demand since its launch one year ago that Nintendo can not keep up. The company is moving to increase production but contract manufacturers are unable to increase production as quickly as Nintendo needs (Schaffler, 2007). Unfortunately, you cannot ask a contract manufacturer to make a million a month and later five million. The production shortage has a financial impact on the company. During Christmas 2007, Nintendo was set to miss out on an estimated $1.3 billion in sales by failing to meet global demand (Blakely, 2007). According to MDB Capital Group, senior analyst, James Lin, the company could sell twice the 1.8 million Wii consoles it manufactures each month (Blakely, 2007) increase the request to five million. Nintendo has raised production targets several times, and now plans to ship 17.5 million units globally this year, up from 1.4 million.
*Global sourcing allows...
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