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   PQI: Management of suppliers Global Sourcing and Supply Chain Management Group N °  6: Pranav Goyal Patricia Guht Michaela Novotna Margarida Tenente  Case overview The memory industry Power Quontient International Co. Ldt (PQI):  Taiwan-based electronics company, specialized in memory manufacturing  Established in 1997  2008: PQI was ranked the 10th largest supplier in DRAM modules, flash cards and USB flash drives in the world  Manufacturing plants in Taiwan and Suzhou in China  Subsidiaries in the US, Netherlands, Japan, Korea, Hong Kong and China  –  more than 900 employees around the world  PQI’s purchasing department is divided into general purchasers (70 people) and strategic purchasers (20 people)  Suppliers are classified within “Tier 1”, “Tier 2” and “Tier 3” groups   .  Classification of suppliers Transaction costs and risk Transaction costs Risk Tier 1 Suppliers - Global - Strategic partners ↑ search and information cost ↓  bargaining cost (economies of scale) ↓   policing and enforcement cost ã  Higher risk →  suppliers are strategically important → need for close relationships Tier 2 Suppliers -Regional -Standard products ↓   search and information cost ↓   bargaining cost ↑ policing and enforcement cost ã  Lower risk Tier 3 Suppliers -Local -Low-end/structural components ↑ search and information cost ↓   bargaining cost ↑ policing and enforcement cost Highest transaction cost ã  Responsiveness - Suppliers who can work fast will become long-term strategic partners ã  Protection of IP  Analysis of the biannual score sheets  Multiple „ tier 3 “  suppliers who were strong in technical and commercial performance received average scores  PQI had not reviewed its supplier evaluation process . The evaluation TODAY:  The analysis is the sum of points for each criteria  Same criteria for all suppliers  Possible trade off between being fast and responsive vs. cost effective (lower prices) .
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