Essay Questions

Question 1

Considerations of Choosing Sourcing Location

Answer 1

1. Labor Rates and Intensity
2. Variability: product and scheduling
3. Energy costs: natural gas and electricity
4. Flexibility in production response: lead time
5. Growth of local customer segment
6. Government: regular and corruption (IP)
7. Labor talent and industry core competencies (capabilities)
8. Inventory value of product/lead time
9. SC risks for longer chains:
   - Transportation % costs
   - Geographic diversity

Question 2

Supply Base Risk

Answer 2

1. Political risk of where you’re sourcing from: government laws, tariffs, and stability
2. Marketing risk related to products and commodities: number of buyers competing, innovation, capacity, IP
3. Sourcing risk: make/buy/domestic/international, supplier competition, SC disruptions
4. Financial risks incurred internally to the buyer’s firm: inventory, current exchange, transportation costs, storage
5. Supplier risk: financial stability, future viability, capabilities (knowledge, abilities, skills)

Question 3

Supply Base Risk Mitigation

Answer 3

1.