1 The COO of Super Cycles was considering her sourcing strategy. ‘I have two key questions, for each of our outsourced parts: what is the risk in the supply market, and what is the criticality of the product or service to our business?’ Four key outsourced components are shown in table below. What approaches to sourcing these components would you recommend?

Four outsourced components for Super Cycles Component Cost (as a proportion of total material cost)

Suppliers Ease of changing supplier The inner tubes 3% Many alternative suppliers Very easy. Could do it in days Frame tubing 15% Only one supplier capable at the moment. Could take a long time to develop a new supplier Difficult in the short term, possible in the longer term Carbon-fibre stem and bars 32% Relatively large number of available suppliers Relatively easy. Would probably take a few weeks for new contract

‘Groupset’ gearing system 35% Few suppliers who are capable of manufacturing these components to sufficient quality Complex to source.

Could switch supplier in the longer term but would pose quality risk