Term Project 1

Integrating Techsofts New Vision Graphics Card into the Supply Chain

Company Background

Techsoft, a leading technology company specializing in graphics processing, has just developed a new version of their Vision graphics card. The card is 10% smaller than its predecessor and is breaking new ground in cost as it is projected to sell at half the price of their current card. The need for faster, more affordable graphics cards that can be networked to scale according to processing needs has driven both the lower selling prices and the demand for processing higher than ever before. The issue Techsoft faces now are that its supply chain costs are now proportionally a much larger percentage of the overall graphics card selling price.

Changing Landscape

The technology industry evolves rapidly, and each day an unsold graphics card or another piece of advanced hardware loses value as new chips and versions are researched, released, and retired. Techsoft is an OEM and sells to other manufacturers and distributors. For the Vision graphics card, in particular, all sales are included in other consumer and industrial products and not to be sold directly to consumers themselves. The challenge is with rapidly changing products in the market and intense competition, Techsoft has to compete on not only the functionality front but cost as well. Due to this, its current supply chain cost is unacceptable when the cost of the card itself has been reduced by 50%. Techsoft expects innovation in all aspects of its business beyond just R&D. Therefore, Management has requested your team investigate ways to reduce the per card supply chain costs as much as possible.

Incumbent Suppliers

Techsoft currently has four major suppliers for its raw materials. Techsoft has been looking to bring down its supplier expenses through consolidation to just two suppliers. Flexit has been Techsofts oldest partner and has been recently awarded the Electronic Industry award for its pioneering work in maintaining its quality standards. Techsoft has been the largest customer for Worldcomm, which has always provided Techsoft with the best prices. Worldcomm has even designed its processes to provide flexibility in its services to cater to the changing demands of Techsoft. Maxo Inc has been recently audited by ISO and has been provided with a few observations that could put their eligibility for renewal of its ISO 9001 certification at risk. Nanotech is a relatively new supplier but has innovative processes and customer service, which initially attracted Techsoft to contract with it.

Current Supply Chain Operations

Techsoft produces all its products at its manufacturing units in Singapore and South Germany. They must continue with their current manufacturing units as the capital expense and risk to intellectual property are too high to consider outsourcing to reduce costs. Techsoft does not foresee any changes to production capacity or set up costs at this time. The lead time for order processing and Quality Assurance activity is two days, and the lead time for manufacturing can be assumed to be one week.

Techsoft manages all of its own transportation and warehousing from pre-production to final storage. The company uses a third-party shipper to deliver the Vision cards directly to customers. As the Vision card is just one of many products that Techsoft creates, the company doesnt intend to adjust its transportation practices from factory to warehouse as its been optimized for the existing mix of products. Techsoft currently supplies the North American market from its manufacturing plant in Singapore. The plant in Germany caters to the European market.

During the 7 weeks from the initial order, Techsofts customers have the luxury to often change their volumes and specifications multiple times. Each vision card remains in the Singapore warehouse for 7 weeks, whereas, the actual order details are typically locked in by 2-3 weeks before production.

In North America, Techsoft does not have warehouses to store finished inventory; instead, they have a docking location for immediate shipping of finished goods. From its California docking location, Techsoft directly ships the cards straight to customers, as soon as the chips arrive. This docking location is conveniently located for easy access by ship and air.

Overall, Techsofts most significant concern is to retain its high quality and balance the overall availability and inventory as the technology industry, particularly the graphics card industry, changes rapidly.

Looking to the Future

Techsoft is planning to pilot this supply chain reduction program for its Singapore unit. In preparation, Techsoft has started engaging all of its 200 customers affected by the pilot program through interviews and questionnaires. It aims to gain insights into desired customer engagement levels that can impact supply chain and associated costs.

With respect to this pilot program, Techsoft has asked for your teams help to determine which aspects of the supply chain provide opportunities to reduce costs and by how much. A few data exhibits are attached to help assess the supply chain costs and the savings potential.

AutoSave Tem Project 1 (1) - Fle Home Insert Draw Page Layout Formulas Data View Help Search Share X out Copy - Paste Format Painter - 11 - ' 15 Wap Text F Merge SA 2 General $ . % 9 A. + It Out Clipboard Conditional Format CHI Home Styles Styles Tent M R2 du A B D F G 1 K 1 M N 0 P Techsolt in the past has outlined four major factors to evaluate suppliers. All the four suppliers have been ranked on a scale of 1 to 5, 5 being the best based on their performance in the past Leaders from Category A and Category have been surveyed to understand the importance of each of the factors for its customers. For Category A, the importance of each of the factors can be best outlined though a ratio of 1:12:2 whereas for 2 Category through 12:21 Tecture des from all the four aplies it tooking to reconstruction to one app Category Technotects the uncertainty insurely to be similar to the past performance even after the scale up of the cheese Techroexpects each of the supplies to have fulfillment target of Marine Flexit Maxeine Worldcomm Nanotech enotech Orderplaced by Tech for the material of Mase ine World Nanotech umentament uitment the the date the due dan 12 24 100 25 ION of Werdem hatch Factor 3 4 Quality the due to the fue date date 22 77 1 4 101N 5 1 5 4 4 4 4 4 79 25 25 25 75 3 17 14 97 LOON Week W W Web Week Weeks Week Week Weeks Week Week 10 Week 11 Week 12 25 26 7 25 74 M 22 to 100 104N 101N 72 78 10 IN 101N 25 13 75 5 104 104 24 6 Service 7 Delivery B 9 10 11 12 13 14 15 16 17 18 19 M 77 M 104 72 25 71 25 Production Service levels actor Warehouse Sales Shipping & Transportation Supplier information + o e C Type here to search Page Layout Formulas Data Review View Help Search Calibri X cut In Copy Format Painter Paste -AA == . 25 Wrap Text M.A. Merge & Center - General BIU. $ . % 849 Clipboard Condi Forma Font Alignment Number G20 fx A B C D F 1 Figure 2. First Quarter Sales Projections for 2019 2 Below is the historical 1st quarter sales for the past year. The future demand is expected to follow the same pattern Week 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Actual Graphics Cards Sales Category A (95%) Category B (90%) 187 96 187 186 140 167 159 136 146 177 157 101 159 186 168 139 98 170 137 164 185 186 127 166.7 144.8 179 283 373 307 295 323 258 338 354 237 307 349 313 File Home Insert Draw Page Layout Formats Data Review Help Search Xul Copy - Format Calibri 13 Weaplex A. 3 Merge Center Chboard $ - % Confort 29 o A22 C 1 Figure 3. Current Shipping and Transportation Costs for Vale Grape Card There is currently no import taillon Graphics Cards into the US from Singapore D Mume War Time Direction Asian Plant to Warehe Alan Warehouse to North America Air Expedited Asian Warehouse to North America Air Cargo Asian Warehouets North Amedea Domestic Houte press Domestic Route Party Domestic wote Ground Cost 0.01 65 15 Unit Card Per Card Per Card 30 PerCard Per Card 2 40 . Due to last minute finaleation of order quantities met cards are current Add to US import Tarif Second 4 Service level &z factor Sales Warehouse Production Supplier information Shipping & Transportation e - O Type here to search Home Insert Draw Page Layout Formulas Data Review View Paste 11 X cut In Copy Format Painter Clipboard Calibri - A 2 Wrap Te BIU...A. Merge & Font D20 Alignment D A 1 Figure 7. Warehousing costs including operations and handling B 2 3 4 Warehouse Facility 5 Area (SqM) Singapore, SG 15000 6 Monthly Operating Costs (Per SqM) 2.3 7 Handling Costs (S/per Item) 1.95 8 % of Warehouse Dedicated to Vision Card 35% 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Supplier information Sales Shipping & Transportation Warehouse Production Ready Hi Type here to search 21 e Data Review View Calibri Paste - 11 X Cut [Copy Format Painter Clipboard == BIU. A a A 2 Wrap Te Merge & Font K20 *** Alignment fx A B 1 C D E F G Service Level 85.00% 86.00% 87.00% 88.00% 89.00% 90.00% 91.00% 92.00% 93.00% 94.00% 95.00% 96.00% 97.00% 98.00% 99.00% 99.50% 99.60% 99.70% 99.80% 99.90% 99.99% Service Factor (z) 1.04 1.08 1.13 1.17 1.23 1.28 1.34 1.41 1.48 1.55 1.64 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 1.75 1.88 2.05 2.33 2.58 2.65 2.75 2.88 3.09 3.72 Supplier information Sales Shipping & Transportation Warehouse Production Ready Type here to search e Customer Survey 2018 Result Supplier information Sales Shipping & Tr Figure I. Customer Surwy Data Based on the recent survey of all of its 200 customers, Techsoft Sales team has prepared the following report: Currently Techsoft has an exceptionally high customer service level of 98%, much higher than any of its competitors. Customers showed positive response towards a possible lower but acceptable service level. Results of the survey showed 45 of the customers would be serviced at 90% (classified heroen as Category B) and the rest would have to be serviced at 95% (Category A). Ses Categwy BOON No Category 1 Category B Category A (95%) 153 14 2 1 200 Question What is your order lead time? Customers willing to submit freeze orders 6 weeks before receipt Customers willing to submit freeze orders 4 weeks before receipt Customers willing to submit/freeze your orders 2 weeks before you receive them! 152 42 3 200 50 42 105 3 200 Customer Survey 2018 Result Supplier information S Figure 3. Supplier related information Figure 4. Supplier Techsoft in the past has outlined four major factors to evaluate its suppliers. All the four suppliers have been ranked (on a scale of 1 to 5,5 being the best) based on their performance in the past. Leaders from Techsoft currently Category A and Category B have been surveyed to understand the expects the uncerta importance of each of the factors for its customers. For Category A, the to have a fulfillmei importance of each of the factors can be best outlined through a ratio of 1:1:2:2 whereas for Category B through 1:2:2:1. Factor Flexit Maxo Inc Worldcomm Nanotech Week To Quality Price Service Delivery 5 3 5 4 3 4 4 3 5 5 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 vey 2018 Result Supplier information Pipare & Supplier antalety related information Sales Shipping & Transportation War Techsoft currently onders ww materials from all the four suppliers. It is looking to see the expects the uncertainty in apply to be similar to the past performance caller to have a fulfillment target of into one appli per Category Techo edhesenli Techsoll expects each of the suppliers Werk Flest Mare Inc fulfillment fulfillment sill the destill the de Fulfillment Fulfillment. Fulfillment Masal World of Nanotect 90 1015 WE 25 74 77 74 75 w Order placed by Techielt for the materials 75 75 75 75 75 75 75 75 75 75 75 75 100% 100% 100% WORS Week 6 Wok? Ws TOUS 77 75 72 78 78 75 100% 1019 74 74 78 76 14 78 72 14 100 Work 10 We Werk TO 996 TO 75 71 55 95 TO TO To Door Customer Survey 2018 Result Supplier information Sa Figure 2. First Owarter Sales Projections for 2019 Below is the historical 1st quarter sales for the past year. The future demand is expected to follow the same pattern Week Weck ! Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Actual Graphics Cards Sales Category A (95%) Category 8 (90%) 187 96 187 186 140 167 159 136 146 177 157 101 179 159 186 168 139 98 170 137 164 185 186 127 166.7 144.8 283 373 307 295 323 258 338 354 237 307 349 313 Sales Shippir Customer Survey 2018 Result Supplier information Figure. Current Shipping and Transportation Costs for Vision Graphics Card There is currently no import tarriffon Graphics Cards into the US from Singapore Time Cest 0.01 2 Days 5 days Direction Asian Plant to Warehouse Asian Warehouse to North America Air Expedited Asian Warehouse to North America Air Cargo Asian Warehouse to North America - Sea Domestic Route - Express Domestie Route Fiority Domestie Route - Ground 2.19 Per Card Per Card Per Card Per Card | Per Card Per Card 4.35 4 Days Dus Due to last minute finalization of order quantities most cards are currently sent via Air Expedited to North America Simon Twitter Searchewwwporn.com impende Warehouse upplier information Sales Shipping & Transportation Figure 6. Map of Sheping Rates from Singapore Washes 2-day Singapore Customer Survey 2018 Result Supplier inte Figure 7. Warehousing costs including operations and handling Warehouse Facility Area (SqM) Monthly Operating Costs (Per SqM) Handling Costs (S/per Item) % of Warehouse Dedicated to Vision Card Singapore, SG 15000 2.3 1.95 35% Customer Survey 2018 Result Supplier information Service Factor (2) 1.04 1.08 1.13 1.17 1.23 1.28 1.34 Service Level 85.00% 86.00% 87.00% 88.00% 89.00% 90.00% 91.00% 92.00% 93.00% 94.00% 95.00% 96.00% 97.00% 98.00% 99.00% 99.50% 99.60% 99.70% 99.80% 99.90% 99.99% 1.48 1.55 1.64 1.75 1.88 2.05 2.33 2.58 2.63 2.75 2.88 3.09 3.72 AutoSave Tem Project 1 (1) - Fle Home Insert Draw Page Layout Formulas Data View Help Search Share X out Copy - Paste Format Painter - 11 - ' 15 Wap Text F Merge SA 2 General $ . % 9 A. + It Out Clipboard Conditional Format CHI Home Styles Styles Tent M R2 du A B D F G 1 K 1 M N 0 P Techsolt in the past has outlined four major factors to evaluate suppliers. All the four suppliers have been ranked on a scale of 1 to 5, 5 being the best based on their performance in the past Leaders from Category A and Category have been surveyed to understand the importance of each of the factors for its customers. For Category A, the importance of each of the factors can be best outlined though a ratio of 1:12:2 whereas for 2 Category through 12:21 Tecture des from all the four aplies it tooking to reconstruction to one app Category Technotects the uncertainty insurely to be similar to the past performance even after the scale up of the cheese Techroexpects each of the supplies to have fulfillment target of Marine Flexit Maxeine Worldcomm Nanotech enotech Orderplaced by Tech for the material of Mase ine World Nanotech umentament uitment the the date the due dan 12 24 100 25 ION of Werdem hatch Factor 3 4 Quality the due to the fue date date 22 77 1 4 101N 5 1 5 4 4 4 4 4 79 25 25 25 75 3 17 14 97 LOON Week W W Web Week Weeks Week Week Weeks Week Week 10 Week 11 Week 12 25 26 7 25 74 M 22 to 100 104N 101N 72 78 10 IN 101N 25 13 75 5 104 104 24 6 Service 7 Delivery B 9 10 11 12 13 14 15 16 17 18 19 M 77 M 104 72 25 71 25 Production Service levels actor Warehouse Sales Shipping & Transportation Supplier information + o e C Type here to search Page Layout Formulas Data Review View Help Search Calibri X cut In Copy Format Painter Paste -AA == . 25 Wrap Text M.A. Merge & Center - General BIU. $ . % 849 Clipboard Condi Forma Font Alignment Number G20 fx A B C D F 1 Figure 2. First Quarter Sales Projections for 2019 2 Below is the historical 1st quarter sales for the past year. The future demand is expected to follow the same pattern Week 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Actual Graphics Cards Sales Category A (95%) Category B (90%) 187 96 187 186 140 167 159 136 146 177 157 101 159 186 168 139 98 170 137 164 185 186 127 166.7 144.8 179 283 373 307 295 323 258 338 354 237 307 349 313 File Home Insert Draw Page Layout Formats Data Review Help Search Xul Copy - Format Calibri 13 Weaplex A. 3 Merge Center Chboard $ - % Confort 29 o A22 C 1 Figure 3. Current Shipping and Transportation Costs for Vale Grape Card There is currently no import taillon Graphics Cards into the US from Singapore D Mume War Time Direction Asian Plant to Warehe Alan Warehouse to North America Air Expedited Asian Warehouse to North America Air Cargo Asian Warehouets North Amedea Domestic Houte press Domestic Route Party Domestic wote Ground Cost 0.01 65 15 Unit Card Per Card Per Card 30 PerCard Per Card 2 40 . Due to last minute finaleation of order quantities met cards are current Add to US import Tarif Second 4 Service level &z factor Sales Warehouse Production Supplier information Shipping & Transportation e - O Type here to search Home Insert Draw Page Layout Formulas Data Review View Paste 11 X cut In Copy Format Painter Clipboard Calibri - A 2 Wrap Te BIU...A. Merge & Font D20 Alignment D A 1 Figure 7. Warehousing costs including operations and handling B 2 3 4 Warehouse Facility 5 Area (SqM) Singapore, SG 15000 6 Monthly Operating Costs (Per SqM) 2.3 7 Handling Costs (S/per Item) 1.95 8 % of Warehouse Dedicated to Vision Card 35% 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Supplier information Sales Shipping & Transportation Warehouse Production Ready Hi Type here to search 21 e Data Review View Calibri Paste - 11 X Cut [Copy Format Painter Clipboard == BIU. A a A 2 Wrap Te Merge & Font K20 *** Alignment fx A B 1 C D E F G Service Level 85.00% 86.00% 87.00% 88.00% 89.00% 90.00% 91.00% 92.00% 93.00% 94.00% 95.00% 96.00% 97.00% 98.00% 99.00% 99.50% 99.60% 99.70% 99.80% 99.90% 99.99% Service Factor (z) 1.04 1.08 1.13 1.17 1.23 1.28 1.34 1.41 1.48 1.55 1.64 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 1.75 1.88 2.05 2.33 2.58 2.65 2.75 2.88 3.09 3.72 Supplier information Sales Shipping & Transportation Warehouse Production Ready Type here to search e Customer Survey 2018 Result Supplier information Sales Shipping & Tr Figure I. Customer Surwy Data Based on the recent survey of all of its 200 customers, Techsoft Sales team has prepared the following report: Currently Techsoft has an exceptionally high customer service level of 98%, much higher than any of its competitors. Customers showed positive response towards a possible lower but acceptable service level. Results of the survey showed 45 of the customers would be serviced at 90% (classified heroen as Category B) and the rest would have to be serviced at 95% (Category A). Ses Categwy BOON No Category 1 Category B Category A (95%) 153 14 2 1 200 Question What is your order lead time? Customers willing to submit freeze orders 6 weeks before receipt Customers willing to submit freeze orders 4 weeks before receipt Customers willing to submit/freeze your orders 2 weeks before you receive them! 152 42 3 200 50 42 105 3 200 Customer Survey 2018 Result Supplier information S Figure 3. Supplier related information Figure 4. Supplier Techsoft in the past has outlined four major factors to evaluate its suppliers. All the four suppliers have been ranked (on a scale of 1 to 5,5 being the best) based on their performance in the past. Leaders from Techsoft currently Category A and Category B have been surveyed to understand the expects the uncerta importance of each of the factors for its customers. For Category A, the to have a fulfillmei importance of each of the factors can be best outlined through a ratio of 1:1:2:2 whereas for Category B through 1:2:2:1. Factor Flexit Maxo Inc Worldcomm Nanotech Week To Quality Price Service Delivery 5 3 5 4 3 4 4 3 5 5 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 vey 2018 Result Supplier information Pipare & Supplier antalety related information Sales Shipping & Transportation War Techsoft currently onders ww materials from all the four suppliers. It is looking to see the expects the uncertainty in apply to be similar to the past performance caller to have a fulfillment target of into one appli per Category Techo edhesenli Techsoll expects each of the suppliers Werk Flest Mare Inc fulfillment fulfillment sill the destill the de Fulfillment Fulfillment. Fulfillment Masal World of Nanotect 90 1015 WE 25 74 77 74 75 w Order placed by Techielt for the materials 75 75 75 75 75 75 75 75 75 75 75 75 100% 100% 100% WORS Week 6 Wok? Ws TOUS 77 75 72 78 78 75 100% 1019 74 74 78 76 14 78 72 14 100 Work 10 We Werk TO 996 TO 75 71 55 95 TO TO To Door Customer Survey 2018 Result Supplier information Sa Figure 2. First Owarter Sales Projections for 2019 Below is the historical 1st quarter sales for the past year. The future demand is expected to follow the same pattern Week Weck ! Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Actual Graphics Cards Sales Category A (95%) Category 8 (90%) 187 96 187 186 140 167 159 136 146 177 157 101 179 159 186 168 139 98 170 137 164 185 186 127 166.7 144.8 283 373 307 295 323 258 338 354 237 307 349 313 Sales Shippir Customer Survey 2018 Result Supplier information Figure. Current Shipping and Transportation Costs for Vision Graphics Card There is currently no import tarriffon Graphics Cards into the US from Singapore Time Cest 0.01 2 Days 5 days Direction Asian Plant to Warehouse Asian Warehouse to North America Air Expedited Asian Warehouse to North America Air Cargo Asian Warehouse to North America - Sea Domestic Route - Express Domestie Route Fiority Domestie Route - Ground 2.19 Per Card Per Card Per Card Per Card | Per Card Per Card 4.35 4 Days Dus Due to last minute finalization of order quantities most cards are currently sent via Air Expedited to North America Simon Twitter Searchewwwporn.com impende Warehouse upplier information Sales Shipping & Transportation Figure 6. Map of Sheping Rates from Singapore Washes 2-day Singapore Customer Survey 2018 Result Supplier inte Figure 7. Warehousing costs including operations and handling Warehouse Facility Area (SqM) Monthly Operating Costs (Per SqM) Handling Costs (S/per Item) % of Warehouse Dedicated to Vision Card Singapore, SG 15000 2.3 1.95 35% Customer Survey 2018 Result Supplier information Service Factor (2) 1.04 1.08 1.13 1.17 1.23 1.28 1.34 Service Level 85.00% 86.00% 87.00% 88.00% 89.00% 90.00% 91.00% 92.00% 93.00% 94.00% 95.00% 96.00% 97.00% 98.00% 99.00% 99.50% 99.60% 99.70% 99.80% 99.90% 99.99% 1.48 1.55 1.64 1.75 1.88 2.05 2.33 2.58 2.63 2.75 2.88 3.09 3.72