Global Sourcing –Supply Chain Management
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Background
Customer ABC is evaluating various supply chain strategies for their next generation server product for the US Market. Their current manufacturing location is based in Columbus, Ohio. The Columbus facility makes all the components and final configuration/assembly of the server. The end customer points are the top 4 locations (states) in the US by Population. The annual volume of demand for this server product in the US is estimated to be 50K units. The product flows directly from Columbus to the end customer locations. The mode of transport in general is FTL with 5% of the product shipments expedited via Air. BOM Structure# The BOM of the server product is composed of the following components: 2 PCBA's Power Supply Unit Chassis Backplane Fan Tray
Alternative Scenarios
The customer has expressed interest in setting up an alternative manufacturing facility either in Guadalajara, Mexico or Zhuhai China. With the proposed Guadalajara solution, the split in regular/expedited shipments will be the same as in the case of shipments from the Columbus facility to US customers. With the proposed Zhuhai solution, there is to be a DC located in Fontana, California where product is warehoused before being shipped to final end customer locations. The amount of inventory held in the Fontana DC facility is 21 DOI to cover for transit time of shipments from China. It is estimated that 10% of shipments from China will need to be expedited and 10% of shipments out of the Fontana DC are expedited as well. All manufacturing facilities are to hold 2 weeks’ worth of components in inventory. No FG inventory is held in any of the locations apart from the DC in Fontana.
Input Data
Product Properties
Product Inventory Value (USD) Weight (lbs) Items Per Pallet
Server 12,000 153 4
Chassis 750 100 8
PCBA 4,000 5 120
Backplane 800 25 20
PSU 200 8 80
Fan Tray 250 10 48
Material & Value Added Costs
Facility Product Material Costs (USD) Value Added Costs (USD)
Columbus Server 325.00
Chassis575.00 150.00
PCBA 3,600.00 1,100.00
Backplane 648.00 152.00
PSU 164.00 36.00
Fan Tray 200.00 50.00
Zhuhai Server 225.00
Chassis 575.00 110.00
PCBA 3,500.00 850.00
Backplane 600.00 100.00
PSU 160.00 25.00
Fan Tray 200.00 40.00
Guadalajara Server 250.00
Chassis 560.00 120.00
PCBA 3,600.00 900.00
Backplane 650.00 120.00
PSU 160.00 30.00
Fan Tray 200.00 45.00
Fixed Costs of Sites
Columbus Zhuhai Guadalajara Fontana DC
Fixed Costs (USD) 1,200,000 1,080,000 1,134,000 200,000
Warehousing Costs
Fontana DC Warehousing costs (USD)
Dispatching Storage Unit 2.00
Monthly Cost per Storage Unit 2.00
Reception of Storage Unit 1.50
Important: Please Use the SimFlex Lite tool to evaluate the trade-offs among the proposed supply chains. Where would you locate the manufacturing facility—Columbus, Guadalajara, or Zhuhai? Provide a brief report with supporting tables to justify your choice.