The document is a case study report analyzing the supplier evaluation and selection process for Fastraq Technology Corporation (FTC). FTC is expanding into assembling personal computers and needs to outsource DVD drives. Four potential suppliers were evaluated on price, quality, capacity, financials and total cost. D-Drive Systems was recommended as they had the lowest costs and risks despite a higher quoted price. D-Drive offered the lowest lead times, highest quality and was in close proximity to FTC. Selecting D-Drive would allow FTC to launch their new PC line on schedule and minimize supply chain risks.

1. ASSIGNMENT ON CASE STUDY OF
Supplier Evaluation &
Selection
SUBJECT: SOURCING MANAGEMENT
INTERNATIONAL SUPPLY CHAIN EDUCATION ALLIANCE (ISCEA)
DHAKA, BANGLADESH
JANUARY- 2014
Supplier Evaluation & Selection, Report By: Emdadul Huq, Roll # 007, Batch # 7, PGDSCM, ISCEA

2. Submitted To:
Mr. Mirza Muhammad Masud Rana,
Instructor, Sourcing Management
PGDSCM, ISCEA
Submitted by:
Emdadul Huq,
Roll – 007, BATCH - 7, PGDSCM, ISCEA
Supplier Evaluation & Selection, Report By: Emdadul Huq, Roll # 007, Batch # 7, PGDSCM, ISCEA

3. REPORT AT A GLANCE
1. IMPORTANT FACTS OF THE CASE
A. Strength of FTC
B. Product Expansion Plan
C. Pricing Plan
D. Quality Of Products
2. KEY ISSUES OF THE CASE
A. Outsourcing & Strategic Plan
3. ALTERNATIVE COURSES OF ACTION
A. Options to Outsourcing
B. Price Comparison of Four Supplier
4. EVALUATE EACH COURSES OF ACTION
A. Financial Risk Analysis
B. Total Cost Analysis
C. Supplier Evaluation & Selection Analysis
5. RECOMANDATION
Supplier Evaluation & Selection, Report By: Emdadul Huq, Roll # 007, Batch # 7, PGDSCM, ISCEA

4. 1. IMPORTANT FACTS OF THE CASE
A. STRANGTH OF FTC
Fastraq Technology Corporation is a medium sized (growing) high
technology company
FTC produces component parts & subsystems for PC &
Engineering workstation.
The company recognized as well-established component &
subsystem manufacturer.
FTC has good reputation for high quality product & on time
delivery
Supplier Evaluation & Selection, Report By: Emdadul # 7, PGDSCM, ISCEA 7, PGDSCM, ISCEA
EMDADUL HUQ, ROLL # 007, BATCH Huq, Roll # 007, Batch #

5. 1. IMPORTANT FACTS OF THE CASE
B. PRODUCT EXPANSION PLAN
FTC has decided to expend its product line to include fully
assembled personal computer (PC).
FTC has pursued an aggressive strategy of selling high quality
computer at affordable price.
The new line of computers, called 9000x series
FTC plan direct ship to customer as orders are received (maketo-order)
FTC will assembles the computers in its own facilities
Supplier Evaluation & Selection, Report By: Emdadul Huq, Roll # 007, Batch # 7, PGDSCM, ISCEA

6. 1. IMPORTANT FACTS OF THE CASE
C. PRICING PLAN
FTC is targeting the price of its PC line from $1100-$1700 depending
on model & configuration.
Targeted DVD price within the range of $115-135.
Recent trends indicate that this level of pricing over extended
period would be difficult.
FTC call for redefining value in an economy where the cost of raw
technology is plummeting toward zero
Supplier Evaluation & Selection, Report By: Emdadul Huq, Roll # 007, Batch # 7, PGDSCM, ISCEA

7. 1. IMPORTANT FACTS OF THE CASE
D. QUALITY OF PRODUCTS
Customers demand is defect free computers
Poor quality of products adversely affects market reputation &
future sales.
FTC committed to supply high quality product by offering to
take defects products/service back/redressing of complain etc.
FTC financial & quality analyst calculate on average
nonconforming cost is 375 per unit of pc (including lost goodwill)
Supplier Evaluation & Selection, Report By: Emdadul Huq, Roll # 007, Batch # 7, PGDSCM, ISCEA

8. 2. KEY ISSUES OF THE CASE
A. OUTSOURCING & STRATEGIC PLAN
FTC intent to outsource some component and subassemblies, i.e.
DVD Drive
Because DVD production capacities beyond the FTC current
expertise.
FTC plans in early January to another new line of computers
directly to marketplace in August 2004
It must have inventory by June to begin providing & pilot
production.
FTC relies cross functional commodity team to develop sourcing
strategy for key purchase items
Executive management’s views DVD supplier selection decision is
critical part of 9000x series development.
Supplier Evaluation & Selection, Report By: Emdadul Huq, Roll # 007, Batch # 7, PGDSCM, ISCEA

9. Material Requirement Planning based on Lead Time
3. ALTERNATIVE COURSES OF ACTION
A. OPTIONS TO OUTSOURCING
FTC ask to supplier “ Request for Proposal.
Six suppliers respond to the commodity team’s Request for
Proposal.
The commodity team spent the last several weeks visiting 4
DVD suppliers and evaluation various supply options
A review of these proposal revealed the four supplier out of
six where cost competitive given FTC initial target cost.
Among four suppliers two suppliers is United States & Two are
Asia region (Korea & Japan)
Name of the suppliers
Advance Technologies
Drivetech Company
D-Drive Systems
Parksoo Technologies
Supplier Evaluation & Selection, Report By: Emdadul Huq, Roll # 007, Batch # 7, PGDSCM, ISCEA

10. 3. ALTERNATIVE COURSES OF ACTION
B. PRICE COMPARISON OF FOUR SUPPLIERS
Name of Suppliers
Parameters
Advance Tech
Drivetech
D-Drive
Parksoo
Quoted Price
128
141
137
130
8 Week
3 Week
2 Week
8-10 Week
95%
97%
99%
99%
9300 ppmd
9950 ppmd
7200 ppmd
3000 ppmd
17.50
6.10
14
20
98%
93%
95%
93%
9
0
0
9.5
2.5
1.5
3
3.5
Freq of Shipment
Monthly
Weekly
Every day
Monthly
Tooling Cost
2.25/mill
2.75/mill
2.25/mill
2.20/mill
Ordering Cost
4.75
4
3.25
2.25
Ramp-up Time
4 months
5 months
3 months
4 months
Yen
Dollar
Dollar
Dollar
Lead Time
On time delivery record
Quality
Transport Cost
Capacity
Duties & customs
Insurance
Currency
Supplier Evaluation & Selection, Report By: Emdadul Huq, Roll # 007, Batch # 7, PGDSCM, ISCEA

11. 4. EVALUATE EACH COURSES OF ACTION
A. FINANCIAL RISK ANALYSIS
Current Ratio Analysis:
Suppliers
Current Assts
Current Liabilities
Current Ratio
Advanced
2165.10
1780.60
1.216
DriveTech
164.00
122.50
1.339
D-Drive
735.00
545.00
1.349
Parksoo
391.90
347.00
1.129
Quick (Acid Test) Ratio Analysis:
Suppliers
(Cash+ Marketable Securities+
Receivables)
Current Liabilities
Quick (Acid
Test)
Advanced
1107.40
1780.60
0.622
DriveTech
89.00
122.50
0.727
D-Drive
570.00
545.00
1.046
Parksoo
256.50
347.00
0.739
In ratio analysis D-Drive shows lowest financial risk
Supplier Evaluation & Selection, Report By: Emdadul # 7, PGDSCM, ISCEA 7, PGDSCM, ISCEA
EMDADUL HUQ, ROLL # 007, BATCH Huq, Roll # 007, Batch #

12. 4. EVALUATE EACH COURSES OF ACTION
B. TOTAL COST ANALYSIS
Yearly Demand= 500000 Unit, Avg Weekly Demand: 500000/52 week= 10,000 Unit (Round up)
Lead
Time
(Week
)
Re-Order
Level
(LXD)
Unit
Price
Holding
Cost/Uni
t (25%)
Ordering
Cost/Uni
t (Fixed)
Annual
Holding
Cost
Annual
Ordering
Cost
Total Annual
Cost
Advance
Te
8
80,000.00
128
32.0
34
1,280,000
211
65,280,211
Drivetec
h
3
30,000.00
141
35.3
12
528,750
193
71,028,943
D-Drive
2
20,000.00
137
34.3
20
342,500
506
68,843,006
Parksoo
9
90,000.00
130
32.5
35
1,462,500
196
66,462,696
Suppliers
Name
Supplier Evaluation & Selection, Report By: Emdadul Huq, Roll # 007, Batch # 7, PGDSCM, ISCEA

13. 4. EVALUATE EACH COURSES OF ACTION
C. SUPPLIER EVALUATION & SELECTION ANALYSIS
Suppliers Name
Total Annual
Cost
Analysis & Findings
Advance Tech
65,280,211
Although Lowest Annual Cost but financial
condition is not so good and they are not
interested to sign less then 100 million
Drivetech
71,028,943
Annual Cost is High, Low Capacity; Ramp-up
time is high, although financial risk is
sustainable.
D-Drive
68,843,006
Annual cost is high but Convenient location
from FTC, lowest ramp-up time & Financial
condition is so good.
66,462,696
Although annual cost is 2nd lowest but Low
capacity, no experience to business with North
America
Parksoo
Supplier Evaluation & Selection, Report By: Emdadul # 7, PGDSCM, ISCEA 7, PGDSCM, ISCEA
EMDADUL HUQ, ROLL # 007, BATCH Huq, Roll # 007, Batch #

14. 5. RECOMMANDATION
In the above total cost analysis The Advance Tech Company
annual cost is lowest but financial condition is not so good
and they are not interested to sign contract less then 100
million and FTC target is 75 million per year so best choice
would be D-Drive Systems.
Because of the following factors 1. Although annual cost is high but FTC can get corporatenegotiated rate discounts by supporting it inbound logistics.
2. Quality Concern: lowest defect parts per millions
3. Lead Time is lowest
4. On time delivery record is highest
5. Capacity is second highest
Continued…
Supplier Evaluation & Selection, Report By: Emdadul Huq, Roll # 007, Batch # 7, PGDSCM, ISCEA

15. 5. RECOMMANDATION
6.Ram-up Time is lowest
7.Frequency of Shipment is every other day
8.Financial Risk is lowest.
9.D-Drive System 10 miles from FTC assembly facility
10.FTC not need to manage inventory and safety stock.
So Fastraq Technology Corporation can sign agreement with the
D-Drive Systems for outsource DVD Drive to catch the back to
school market without any risk .
Supplier Evaluation & Selection, Report By: Emdadul Huq, Roll # 007, Batch # 7, PGDSCM, ISCEA

16. THANK YOU
Supplier Evaluation & Selection, Report By: Emdadul Huq, Roll # 007, Batch # 7, PGDSCM, ISCEA