Rick Magness, vice president of procurement for Tiger Golf Unlimited (TGU), is looking to bring his company out of a slump. Sales have been flat and TGU is a mere six months away from the most important industry event of the year, the PGA Merchandise Show. During the trade sow, TGU will introduce a new line of golf clubs that almost magically correct the most common maladies of golfers - slices, worm burners and duck hooks. The company is very excited about the product line and has staked its future on the roll-out. Demand is expected to be very high and profits will soar - if Magness can find a low cost manufacturer to build the product and fill the US supply chain immediately following the PGA Merchandise Show. Magness has travelled the globe in search of high quality, low cost supplier for the clubs. He is also wart of product espionage that can lead to copycat clubs filling the market too quickly.

After conducting a thorough analysis of twelve different manufacturers, Magness has narrowed his consideration to three potential suppliers: Supplier 1 is located in Kuala Lumpur, Malaysia. The company has experience making golf products, boasts excess factory capacity, and produces a tremendous illegal copy of the Calloway Big Bertha line of golf clubs. Product prices are reasonable but ocean freight rates and insurance costs are high due to required transit through the Malacca Straits. The product is made available at the Port of Kelang and is 670 MYR (Malaysian Ringgit). Supplier 2is located in Wulumuqi, China. The company is a former state-owned maker of Red Army military supplies. The far inland location creates a very low labor cost but increase the length of supply lines and the distribution channel. The factory based cost of the producy is $149 US per set. Supplier 3 is located in Edinburgh, Scotland. The company is a world-class manufacturer of golf clubs and is used by nearly every major club manufacturer in the US and Europe. They are somewhat constrained by factory capacity and road congestion to port, but promise to meet all deadlines. The cost of the product, delivered to the Port of Charleston, South Carolina is 165 BPS (British Pound Sterling) . Before making a final supplier selection, Magness thought that it would be wise to confer with Moe Hanna, TGU's vice president of logistics and Larry Himmer, the director of transportation. The three executives met at company headquarters to compare the options. Hanna was impressed by the thoroughness of the supplier evaluation process and production cost analysis. In contrast to his boss, the transport director launched into a tirade. He gave a very impassioned speech about off-shore manufacturing risk and possible transportation disruptions. Himmer also kept talking in acronyms about new security regulations and more paperwork requirements. By the time the meeting was over, Magness was worried. Had he missed something in his analysis or was Himmer ranting aimlessly about a nonissue? Magness decided that the analysis of the three potential suppliers should take on another dimension - supply chain risk and what should be done about it.

1. What issues should Magness evaluate in his assessment of transportation risks?

2. Analyze each supplier option that Magness is considering. What specific risks does each supplier option present?

3. Which supplier would you recommend that Magness choose to best balance company goals with supply chain risk?

4. What types of security issues and requirements will confront TGU if they off-shore manufacturing?