Emerson Electric Company ACP Division The Fan Subpack Sourcing Decision Case Solution

If the vendor is also serious about continuing this relationship then they will consider changing their operational strategy and create solutions that can tackle these minor issues. In this way, the company will be successful in keeping the current vendor intact while helping them to innovate and improve their processes. In the long run, this will prove beneficial to both these parties.

2. Change to alternate Taiwan vendor

There are several benefits to this alternative. The company will obtain a lesser price as far as the comparison from the previous vendor is concerned. Assembly is also in one place while the process is already automated. However, the risks associated with this option should also be kept in mind. This vendor does not share a history with the company so the relationship will be completely new. The process might take time and costs might increase. A relationship with an existing vendor might also suffer. Keeping this in mind, it would be better for the company to first ask this new vendor to provide them a test batch of a certain amount of products. During this time, they can keep the main orders with the previous vendor and keep testing the new vendor on the sideline by checking some small orders that were given to them. If the quality and product features are consistent then the company can choose to establish a proper partnership with new vendors otherwise cancel any further orders.