Pranav Goyal Patricia Guht Michaela Novotna Margarida Tenente Case overview The memory industry Power Quontient International Co. Ldt (PQI): Taiwan-based electronics company, specialized in memory manufacturing
Established in 1997
2008: PQI was ranked the 10th largest supplier in DRAM modules, flash cards and USB flash drives in the world
Manufacturing plants in Taiwan and Suzhou in China
Subsidiaries in the US, Netherlands, Japan, Korea, Hong Kong and China more than 900 employees around the world
PQIs purchasing department is divided into general purchasers (70 people) and strategic purchasers (20 people)
Suppliers are classified within Tier 1, Tier 2 and Tier 3 groups . Classification of suppliers Transaction costs and risk Transaction costs Risk Tier 1 Suppliers
- Global - Strategic partners search and information cost bargaining cost (economies of scale) policing and enforcement cost Higher risk suppliers are strategically important need for close relationships Tier 2 Suppliers
-Regional -Standard products search and information cost bargaining cost policing and enforcement cost Lower risk Tier 3 Suppliers
-Local -Low-end/structural components search and information cost bargaining cost policing and enforcement cost
Highest transaction cost Responsiveness - Suppliers who can work fast will become long-term strategic partners Protection of IP Analysis of the biannual score sheets Multiple tier 3 suppliers who were strong in technical and commercial performance received average scores
PQI had not reviewed its supplier evaluation process . The evaluation TODAY: The analysis is the sum of points for each criteria
Same criteria for all suppliers
Possible trade off between being fast and responsive vs. cost effective (lower prices) . Recommendations Assign different weights to each criteria according to the importance of the criteria to PQI more quantitative approach Group the criteria into different categories specific to the suppliers business:
Cost: 5-6, Responsiveness: 9-13, Good Relationship with customer: 14-16, Quality control: 17-19 & 7 Technological capacity: 20, 8, 1-4. Attribute average points in those categories Based on the importance for PQI, a decision on suppliers can be taken Sharing of results with suppliers The impact on management Results should be shown and discussed with suppliers Sharing develops two-way mutually beneficial relationships
Reduces risk and suppliers realize new value
Motivates suppliers to work in the direction of PQIs ultimate strategy
Expands the scope of interaction with key suppliers
Would help supplier know about the expectations of the PQI . Choosing a supplier using established method with weights for grouped criteria
Order involves die casting Tier 3 suppliers (standardized process) Supplier A B C Score Choose supplier C
Important criteria:
Responsiveness rush order Lower volume less emphasis on cost Thank you for your attention.