High-Tech Metal Components: Finding Local Suppliers
(4 pages of text)
In May 2009, High-Tech Metal Components (HTMC) inaugurated its brand new production plant of forgings and castings for automotive supplies in Suzhou, a city of 13 million close to Shanghai, China. After the successful installation of machinery and placement of workers, the company was prepared to begin production. A month later, the general manager of the Chinese division of HTMC received a phone call from the chief operating officer of its German headquarters; it was decided that it was necessary to cut costs for 2009 by more than five per cent. The cost structure was way too high, with many components imported from Europe. How could cost-cutting be done with the existing supply chain design in China? What long-term measures could be taken to realize the goal?
This case was written for a graduate course in purchasing and supply management or supply chain management. The case study gives students the chance to develop their analytical and decision-making skills on a complex strategic sourcing decision. The case study should motivate students to think about the important dimensions of supply chain design in order to reduce costs while ensuring quality and delivery performance. The case should also motivate students to think about redesigning local suppliers and developing stronger supplier relationships.
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