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.

The engineering team visited the production site of the supplier(Taegeuk Nangja) and the observations are as below:

Taegeuk Nangja:

The highest ranked supplier by the Engineering team, Taegeuk Nangja, is a South Korean company based in Inch'on, near Seoul with almost 12% of global market share in mini data projector sales. More than ten million people live in Seoul, and most of the modern city has been built in the last sixty years since the end of the Korean war. Seoul has concentrated to producing exporting manufactured goods, setting up huge industrial companies, known as chaebol to make shoes, clothes, ships, cars and more recently computers and video sets. A secure government and encouragement of foreign investment have helped generate trade and continue the rate of economic growth. South Korea now has one of the most successful economies in the world.

On arrival at the Seoul airport late afternoon Tuesday, the team were impressed with the excellent public transport system, with one easy to follow timetable linking all buses, trains, boats and planes. This made moving to the hotel extremely stress-free. The Plant Manager met them at the hotel and joined them for dinner, but did not offer to pay for the meal as it was only himself in attendance. He ordered for the group, and the team enjoyed a meal of rice with barley and red beans, with side dishes of spicy vegetables, herbs and meats. For dessert, a sweet called "jeolme" was described as a type of rice cake powdered with soya flour. The Plant Manager spoke excellent English, and advised that he had studied abroad due to his family travelling through Asia and America for his father's business. He did explain that South Korea has an excellent schooling system which is now resulting in a very well educated and multi-lingual workforce, stating this had been strongly influenced by Japan.

The team felt much more comfortable at Taegeuk Nangja than at Nadeshiko Tech. While this supplier has no experience doing business with Australian firms, the company seemed quite anxious for the contract. The company has several large Hong Kong, Taiwan, Thailand and Singapore PC manufacturers as customers. At this time Taegeuk Nangja has no Australian facilities or support staff. The team had some concerns about becoming Taegeuk Nangja first major Australian customer. During the team's visit the Plant Manager claimed that capacity was not an issue, and that the company would be willing to commit the required production capacity to the Alset contract.

The company's product was excellent. Every data projector went through an extensive testing procedure that assured few problems would occur. In fact, Taegeuk Nangja process control and testing were more thorough than any other supplier the team visited. However, the combination of the testing process and geographic distance meant that delivery cycle times were much longer, up to 5 weeks per order, although the on-time delivery performance of 97.5% for the facility was excellent. The team was not sure if current Asian delivery performance would be indicative of delivery performance to Australia.

The facility was new, only built approximately 4 years ago. Although the plant appeared well maintained, clean, and orderly, the team observed there was an extremely high number of employees. Around one machine that seemed to be down for maintenance, there was at least twelve employees all sitting on nearby pallets talking and smoking. After visiting the other three suppliers, the team was expecting employees to be wearing PPE, and when questioned, the manager advised their safety performance was excellent and PPE was deemed to not be required inside the building. The sales manager said that work days are only six days a week, up to twelve hours but the employees were transported to and from Inch'on by public transport bus. He also took some pains to explain they did not employee children younger than fourteen, and were very good employers.

A young lady introduced by the Plant Manager as the head of accounts kindly provided a one page print out of the operations financials. She explained that Taegeuk Nangja has many operations and could not provide the information for the entire company, but she completed the financial balance sheet and profit and loss just for the miniature data projector operations in Inch'on and hoped it would please us. She provided this in South Korean Won and also AUD, although on review post the visit, some of the currency exchange calculations seemed to be incorrect. She also confirmed that payment terms were important and required prior to release on board the ship due to the cash flow and inflation issues.

The team noticed that the data projector facility was extremely busy and wondered if the plant manager's claim about adequate capacity was accurate. Industry experts viewedTaegeuk Nangja as one of the most promising and dynamic companies in the industry who had a real ability to replicate any new technology being released within an extremely short period of time. The team was quite impressed at the insistence of the Plant Manager who was quite convincing that the tooling costs were accurate and could be completed for $1.1 million. The ramp-up time for the production of the first shipment ready for delivery was quoted as about 13 weeks

Relevant Taegeuk Nangja data from their tender response include:

FOB quoted price = $134 AUD, however quoted as currency in South Korean Won Ramp up time = 13 weeks Delivery lead time = 5 weeks (from time to order to day received) Line capacity = 12,000,000 units Current installed capacity for data projector production = 95% On-time delivery record = 98% on-time (for current customers) Quality = 8,000 defects ppm Currency denomination = South Korean Won Price basis = FOB = Free On Board Tooling cost = $1.1 million plus any extras deemed required on final contract Payment Terms - payment on Bill Of Lading (prior to departure of ship) - approx 4 weeks prior to delivery

It must be noted that regional instabilities between South Korea and North Korea pose a threat to international sourcing as there is potential political and economic risks with region predicted within the next two years

QUESTION:

Based on the case study above give a rating (from 1 to 10) to supplier Taegeuk Nangja for each subcategories and make comments for each of the subcategories. Please fill up the table as below:

Criteria	Sub Criteria	Weight	Rating (1 to 10)	Comments based on the rating
Specification	Quality of Product - The quality of the miniature data projector against engineering specifications	10
Quality Defect Rate - The quality performance of suppliers based on quality defect rate ppm	10
Criteria Total
Manufacturing	Quality Systems - Commitment to quality processes and systems	10
Capacity - Capacity to satisfy volume forecasts	10
Capacity Increase - Capacity to increase supply by 25% on provision of 4 weeks' notice	10
Criteria Total
Costs	Cost per Unit/Term - Manufacturers quoted total cost per unit	10
Tooling Costs - Manufacturers ability to minimise total tooling costs	10

	Total Cost of Ownership - Minimise total cost of purchase including inventory holding and logistics	10
Cost Reductions - Manufacturers ability to maintain or reduce costs over the term	10
Criteria Total
Logistics	Implementation Schedule - Ability to meet tooling, ramp-up and lead time implementation schedule	10
Lead Time - Lead time and ability to change requirements	10
Delivery Performance - Delivery Reliability based on delivery performance and systems	10
Order Processing - Ability to use forecasts and reduce administrative processing	10
Criteria Total
Organisational Alignment	Customer Status - Priority customer status (ie high level of attractiveness of account to Supplier)	10
Organisational Fit - Organisational fit with our mission statements and potential to build a strong working relationship	10
Technological Innovation - Investment in research and development and commitment to continually improving and innovating	10
Long term Partnership - An ability to have a potential long term partnering relationship	10
Criteria Total
Corporate Citizen	Safety - Record and priority of safety	10
Social Responsibility - Community perception of partnering with supplier	10
Criteria Total
Management Capability	Supplier Reputation - Reputable Supplier (inc. staff) who possess a high level of knowledge, expertise and resources	10
Financial Stability - Business is financially stable for future	10
Information and reporting - Management reporting capability including market intelligence	10
Criteria Total
TOTAL SCORE