The specific risks of each supplier option that Butler is considering: (This is just my analysis for your reference. You do not have to inlcude this to the report)
Supplier 1 – Kuala Lumpur, Malaysia
Risks – The highest risk is that the supplier is currently manufacturing counterfeit U.S. products (Callaway Big Bertha clubs). It is not hard to imagine them knocking off Tiger Golf’s new ground-breaking technology. It is very difficult to resolve counterfeiting issues on the international trade scene. Piracy is a big concern in the Malacca Strait, as is ship congestion, and weather-related delays. All of this adds to the cost of insurance and other shipping costs.
Supplier 2 – Wulumuqi, China
Risks – Americans have forgotten that China is still very much a communist nation. This means that the government owns almost everything. What they do not own, they can take whenever they want to. In the case of the factory producing the golf clubs, it is a former military hardware manufacturer. If China has a need, they will convert this facility back to military hardware without regard to what is currently being produced there. Another large risk is the distance the product must travel to get any of the port cities. Given that the main mode of transportation is by truck, there is a high probability of delays and possible damage to the product before getting to the port. Because the product is FOB the factory, Tiger Golf will own the product once it leaves the dock. This will lead to higher insurance rates or the possibility of unrecoverable financial losses should the product be damaged.
Supplier 3 – Edinburgh, Scotland
Risks – The U.S. and Scotland have very strict and enforceable laws concerning counterfeiting so the risk factor is very low. The supply chain is extremely well developed which reduces the risks to trade. The risk of damage and insurance is much lower for the trans-Atlantic crossing.
Question: Which supplier would you recommend that Butler choose to best balance company goals with transportation and supply chain risks?