1. What is your recommended sourcing strategy in this case? Please support your decision with quantitative and qualitative evidence gathered during the case analysis. Also, present your plan to reduce any risks associated with your sourcing decision.
Pacific Systems Company should single source their DVD drives and build a good relationship with the chosen supplier. Not only computer industry is hungry for DVDs, other electronic sectors such as home entertainment devices are competing for this item too, making lack of supply a major issue. If Pacific Systems wants to guarantee supply in such environment, it would be a good idea to create a single source strategic alliance with a long-term contract (2 years), renewable according to satisfaction parameters.
Other major requirement of Pacific Systems is that suppliers can increase supply components by 25% within 4 weeks a change in market conditions, which is more possible in this type of relationship. Additionally, open communication in closer and long term relationships often lead to less delivery and quality issues, which is another critical point for PSC.
2. This case provided the data necessary to perform a cursory supplier financial analysis. In reality, cross-functional sourcing teams must often obtain this data during their assessment of potential suppliers. Discuss possible sources of supplier financial information. What may impact a purchaser's ability to obtain supplier financial data?
There exist sites and organizations that provide financial information divided by regions, UK, Euro zone, North America, Australasia etc. Some of the sites are subscription based, whereas some are free or pay-as-you-go. On the other hand, if a company trades on the stock market, the financial information is public therefore is free and easy to get. These sites could be company registry offices, company information sites, global information sites, discussion forums and rumors sites and commercial credit information suppliers. These are some of the most important financial information sources:
Companies House: for any public or private limited company accounts in the UK *
Northern Ireland Company Registrar *
The Institute of chartered Accountants of England & Wales (ICAEW)
Kreditschutzverban – Austria *
French Intellectual Property Organization *
Handelsregister - Germany
Central Mercantile Registry - Spain *
Bureau van Dijk’s Ruslana database – Russia/Ukraine
North America, Australasia, South Africa: *
SEDAR – Canada
Securities & Exchange Commission (SEC) – USA *
Corporate Registrations by state *
Australian Business Register (ABR) *
Companies and Intellectual Property Registration Office of South Africa
The most important factors that affect the purchaser ability to obtain financial information of a company are the Level of the Relationship and the Volume dealt with. If the relationship is really close, it will be easier to talk or ask questions about topics, which the supplier is not comfortable with, financial situation in this case. Moreover, if volume that the purchaser is trying to buy is as big as the capacity of the supplier or the buyer’s capacity, financial information has to be shared since future of the...
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