CSC Systems Case Solution
CALIFORNIA SYSTEMS CORPORATION (CSC)
Executive Summary:
Since CSC has decided to broaden its reach by entering the personal computing industry and made a strategic decision to outsource the DVD drives due to the manufacturing costs involved, it needs to decide on the sourcing strategy and select a supplier which would optimize its cost over the long run and result in profits for the company.
On the basis of the suppliers considered, an evaluation scorecard has been formed which would rate the suppliers on the basis of the strategic and tactical factors. It has been found that the E-Drive would be the optimal option to go ahead with and the company would use single sourcing as its means or procurement. E-Drive has the maximum score of 78.4 on 100 in the supplier evaluation scorecard. Also financially E-Drive is an extremely stable organization when compared to the other three suppliers. The total cost per unit for E-Drive is the second lowest at $166.7, has the highest inventory turnover of 9.06, asset turnover ratio of 1.64 and extends credit facilities to buyers. It also operates with the highest contribution margin 35% in the industry, has cash reserves of $85 million which is evident from its high quick ratio (1.05). The total cost involved in E-Drive is $83,347,727 which is second lowest to Sure Tech but provides a saving of $1.19 million over Elecom and $2.39 million over Park Technologies which would be about 3% savings on the total cost.
E-Drive has been performing extremely well and is an innovative company implementing tools such as
Just-In-Time and Kanban cards to improve its operational efficiency. The proximity of E-Drive was within a ten miles radius from CSC which would ensure not only a reduction in the transportation cost and faster deliveries but also an opportunity for an Earlier Supplier Integration methodology. E-Drive could deliver the drives every alternate days and this ability could be proven by reports during the site
Executive Summary:
Since CSC has decided to broaden its reach by entering the personal computing industry and made a strategic decision to outsource the DVD drives due to the manufacturing costs involved, it needs to decide on the sourcing strategy and select a supplier which would optimize its cost over the long run and result in profits for the company.
On the basis of the suppliers considered, an evaluation scorecard has been formed which would rate the suppliers on the basis of the strategic and tactical factors. It has been found that the E-Drive would be the optimal option to go ahead with and the company would use single sourcing as its means or procurement. E-Drive has the maximum score of 78.4 on 100 in the supplier evaluation scorecard. Also financially E-Drive is an extremely stable organization when compared to the other three suppliers. The total cost per unit for E-Drive is the second lowest at $166.7, has the highest inventory turnover of 9.06, asset turnover ratio of 1.64 and extends credit facilities to buyers. It also operates with the highest contribution margin 35% in the industry, has cash reserves of $85 million which is evident from its high quick ratio (1.05). The total cost involved in E-Drive is $83,347,727 which is second lowest to Sure Tech but provides a saving of $1.19 million over Elecom and $2.39 million over Park Technologies which would be about 3% savings on the total cost.
E-Drive has been performing extremely well and is an innovative company implementing tools such as
Just-In-Time and Kanban cards to improve its operational efficiency. The proximity of E-Drive was within a ten miles radius from CSC which would ensure not only a reduction in the transportation cost and faster deliveries but also an opportunity for an Earlier Supplier Integration methodology. E-Drive could deliver the drives every alternate days and this ability could be proven by reports during the site