Case Study: Eliminate the Middleman?
US Tech
?Ü Market positioning ¡V more features than commodity and lower price than higher-end rivals
?Ü Goal ¡V number 3 spot in the global market
?Ü Competitors ¡V CaliTech and TexaTech
?c Produce innovative products and pull down price (20% cost cutting by sourcing directly from China)
?Ü Sourcing directly from China
?c Indirect cost (government bureaucracies and long distance logistics breakdown) and low quality
?c Prices were undeniably attractive
?c Access to Chinese market
?Ü TaiSource
?c World-class research and design and lower manufacturing costs
?c Can become USTech¡¦s competitor if it decided to enter China using its own brand
?Ü Multi-sourcing ¡V increase operating cost
?Ü TaiSource strategic initiatives
?c Broadening our production base to other Chinese cities
?Þ Improve economic of scale (purchasing and manufacturing)
?Þ Cost saving
?c Establish an R&D office in the U.S.
?Þ Work closely with USTech on product innovation
?c Ship products directly to your U.S. warehouse
?Þ Cutting logistic cost
Problems of sole-sourcing
?Ü The major benefit of sole-sourcing is simple management and the cost of managing multi-sourcing is seen to be higher. Whereas, relying on a sole original design manufacturer (ODM) for both development and production of technology products is risky because U ...