It is now Today (May 2023). You have recently been appointed as the Procurement lead role on the cross functional team at Alset conducting market research to source a new miniature data projector - a component in a new line of Alset multimedia device branded SPARKi's. The SPARKi combines the two functions of tablet PC and smartphone. For new product development capital projects, it is estimated that a thorough sourcing process takes between eight and twelve months to complete, and an additional 2 - 6 months is often required by new suppliers to invest in any specific tooling requirements, so although the new SPARKi is not expected to be released until February 2024, time is already of the essence. The Lead Team at Alset have requested your team prepare briefing paper on the sourcing recommendation pre-reading prior to the 15th June 2023 Executive Lead Team meeting, when you will be advised of approval to proceed.

The cross-functional team realised this supplier selection decision, which is one of the most critical involving the new product line, is going to be difficult. It is clear that no consensus exists among the various functions of engineering, marketing or operations concerning which supplier(s) to select. You have collated information and data from various departments in the business, and have summarised everything you know into the following market and business summary. As the Procurement lead, you are now responsible for determining the final supplier selection and document your proposed sourcing strategy in your company format of the sourcing recommendation briefing paper.

COMPANY OVERVIEW Alset is a medium-sized high technology company located south of Sydney in Wollongong, Australia. In its early years, Alset produced component parts and subsystems for personal computers and engineering workstations. In 2008, Alset added its own line of hand held palm pilots and mini computers to its product offering. Recently, the company decided to expand its product line to include fully assembled wireless smart phones called "SPARKi". The company, recognised as a well-established component and subsystem manufacturer, has grown from a single product manufacturer with annual sales of $2.3 million, to a multiproduct $3.2 billion firm in just 15 years. This growth was helped in part through acquisitions in server markets and related computer industries. Alset has a vision to be a trusted partner to business customers requiring innovative business products with its motto 'Connect, Revolutionize, Inspire' describing its mission to continually adapt to change, challenge and stretch boundaries of technology, and focus on customer solutions and channels through continually improving and innovating. The company also emphasizes state-of-the-art technology in its product design, production, information, and delivery systems, safety and environment solutions.

Alset's decision to enter the wireless mobile computer market occurred during the peak of the business mobility boom in 2017. In particular, the marketing department decided to focus on the corporate executive user, to exploit the booming growth in mobility of the office. According to the Australian Bureau of Statistics, Millennials will be the largest generation in the workforce by the end of 2025 (which is fast approaching). Having very much re-imagined the 40-hour work week, Millennials expect flexible work environments, with the ability to work remotely and at hours which suit their lifestyles. Mobile is the clear platform of choice for the Millennial generation. Industry research indicates that by 2025, 80% or e-commerce will become m-commerce. In order to create the most Millennial-friendly workplace, employers know that they need to provide flexible work environments and enabling technology that supports this new environment. The projected growth rate of SPARKi sales to the business sector far exceeded the home sector, and is predicted to surpass the home sector in total share of shipments.

Alset is a small player in the global market, hence the business decided to pursue an aggressive strategy of selling high quality smartphones to the Australian / New Zealand market at affordable prices. If the SPARKi is successful, it is anticipated to increase the earnings of the business substantially, ultimately accounting for 25% of company revenue after consolidation of its current portfolio of manufactured products. Alset has already started a pre-marketing campaign direct to medium and large Australian and New Zealand business customers, promising prototypes in January 2024 and delivery for businesses first in line from February 2024. This is designed to provide interest, foresight of the product coming, and hopefully a market penetration strategy prior to any competitors trying to infiltrate the Australian and New Zealand markets.

THE SPARKi The new line of wireless mobile computers, called the SPARKi will be the flagship product of the company. It will allow a customer to use the SPARKi as a computer without the need to link into a monitor or hard fixed keyboard, and comes in a choice of the signature Alset design, textured black, rose gold or Perspex. The stand-alone SPARKi allows customers to make phone calls, video conference, receive and respond to emails, access the internet, view and edit documents and make presentations without the inconvenience of a bulky laptop or the immobility of a desktop or the constraint of a tablet. It will be compatible with all current market applications and windows software and allows the user to utilise cloud storage of files, so the system operates exceptionally fast. The SPARKi would come with an Intel Core i9 processor, 8GB of memory, 4TB of PCle-based SSD storage, Bluetooth wireless access, HDTV tuner stick, a headphone level stereo with Bluetooth enabled Alset ear buds, a portable recharging battery for consistent maximum power, a virtually projected touch keyboard and a projector that provides high definition 40 inch screen onto any blank surface up to thirteen metres away. The SPARKi will charge wirelessly from any charger within a 15 metre radius and also had the ability to link to a keyring device that functions as an external hard drive containing two USB Type C ports. As an added incentive and value added offering for business customers, each SPARKi will be provided with a protective cover case that is guaranteed against scratches or glass cracks. The case will be co-branded with the customer business logo. This has been confirmed by market intelligence as a security feature in addition to a brand recognition value proposition for business customers. Although the cost of the laser printing of the customer logo is low, the printing must be done to the cases prior to assembly. This requires that SPARKi's are assembled in the Alset factory as make-to-order.

Over the past decade the market for PCs has been in continual decline while the level of spending on smartphones has skyrocketed. Smartphone shipments are expected to grow 3.1% in 2022, which is a substantial slowdown from the 10.5% growth in 2020 and 27.8% in2019. Shipments are expected to hit 1.48 billion in 2021 and grow to 1.84 billion by 2022. The deceleration is the result of a rapidly shrinking pool of first-time smartphone buyers. Despite this, Alset still believe that there is significant room for growth for business mobile workers. Alset's analysis indicated that consumer spending on PCs will be redirected to the smartphone market where, in some cases, smartphones has acted as a direct replacement as the need for a personal PC is reduced or negated. The falling price of smartphones makes the technology more accessible across all levels of the organizational hierarchy (previously the use of smartphone technology had been restricted to upper management). Research indicates that in 2023, the most common vehicle to access the internet will be the mobile phone. The decision was made to pursue the business computer user, through a strategy focused on shipping low-cost, high-quality guaranteed, logo personalized SPARKi's directly to business customers as orders are received (make-to-order). This decision poses some risks, given that there is a "mixed bag" of opinions regarding the growth of the electronics sector. Lead time in the value proposition is delivery would be a maximum of 4 weeks from initial order, so stock will be on a monthly turnover and SPARKis will be generally manufactured in the month of expected sales. This production model is similar to the Dell approach, and appears to be the model that will dominate the PC industry. Because the company does not plan to build finished SPARKi's (i.e., make-to-stock) in anticipation of future sales, market demand forecasts, supplier quality, supplier capacity, lead time, and delivery reliability are critical factors. The company is willing to carry units in component inventory as safety stock as a buffer against missing customer order commitments. Alset will assemble the SPARKi's in its own facilities, but intends to outsource many of the key product components and subassemblies, including the miniature data projector, a feature that will be standard on each Alset SPARKi. The decision to outsource the miniature data projector resulted from an executive-level insourcing outsourcing study that concluded the cost to manufacture these in-house was highly prohibitive, with initial analysis identifying more than two million units manufactured per annum would be required to be anywhere near cost competitive. The product requires production capabilities that are far beyond Alset's current expertise. Marketing estimates that first year demand for the SPARKi, and therefore the data projector, would be approximately 500,000 units, with a 20% growth expected for year two. Expected pricing for the SPARKi will be around $1,700 to $1,900. Data projector demand depends totally on final product demand, which can be volatile. The table below details the monthly sales forecast for the SPARKi. However, given the volatility of the computer market and Alset's limited experience with marketing directly to end users, marketing estimates, with 95% confidence, that actual demand for year one will likely be between 400,000 and 600,000 units. As with most high technology companies, adequate supplier capacity is a critical issue. Taking a lesson from the demands placed on it by its current customers, Alset will seek some assurance from its suppliers that they can increase the supply of components by 25% within four weeks' notice of changing market conditions. Supplier responsiveness and ability to satisfy Alset's volume requirements will be critical.

Year 1

Expected Sales (Units)

Year 2

Expected Sales (Units)

February	30,000	February	36,000
March	38,000	March	46,000
April	49,000	April	59,000
May	55,000	May	66,000
June	50,000	June	60,000
July	42,000	July	50,000
August	33,000	August	40,000
September	36,000	September	43,000
October	38,000	October	46,000
November	39,000	November	47,000
December	47,000	December	56,000
January	43,000	January	51,000

The company expects the SPARKi to have a two-year life cycle. The company fully expects to introduce its next generation of wireless mobile devices at the end of two years - the SPARKi2. The SPARKi2 is now in concept feasibility stage and will be the first of its kind to integrate 3D scanner and print functionality.

The company plans to introduce the new line of SPARKi's directly to the marketplace in February 2024. It must have inventory by the 1st January 2024 to begin process proving and pilot production of prototypes to provide to key business customers to trial and influence decision markers. The February date coincides with other new technology promotions prior to the end of the financial year, which is the busiest time of year for businesses investing in technology assets. This means that you will need to gain approval of the Executive Leadership Team of the recommended decision at the 15th June 2023 Executive Lead Team Meeting prior to final negotiations or contractual commitments. All suppliers have indicated they would need a written and signed contract prior to expenditure for tooling and ramping up of production. Waiting for the July or August Executive Lead Team Meeting could be disastrous for the timeline. Question:

Document the process from concept requirements from 2021 through to the point of February 2024 sales. Present this process in the form of a Gantt chart with key decision points, start date and time required for each step clearly identified (attach the snapshot of the Gantt chart). Use the information from the case study, and explain that your team has been through a logical process to provide your management confidence that you have been thorough and the time allowed to Alset's SPARKi production process is adequate. Highlight any risks or concerns with the timeline.