STRYKER CORPORATION: IN-SOURCING PCBs Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

STRYKER CORPORATION: IN-SOURCING PCBs Case Solution

Problem Statement

The issue identified by analyzing the case is that the company, in order to meet the demands of its customers and to operate the most significant revenue generating segment that is Stryker Instrument Segment, strongly requires a key component, PCB, which is majorly used in each product. In order to do that, the company tried for that the company to outsource it from the various contract suppliers however,due to unsatisfactory results with regards to the quality and timings, the company is considering a proposal to in-source PCBs by starting an in-house production which requires budgeting analysis in order to obtain funding for the project.

Qualitative Analysis of the Situation

The case presents the three alternative options in order to effectively resolve the underlying issues faced by the company that requires the detailed analysis which is summarized below:

Option: 1

Maintain the Status-Quo and rely on the current sourcing strategy but with the modification of acquiring PCBs in sufficient quantity prior on time that could help resolve the issue of timely meeting the customers’ demand without any delay.

Merits

Availability of key product in sufficient quantity for production.
Meet the demands of the customers on time.
Will not require additional funding as in the case of option # 03.
The overall operations of the company will not be disturbed because for each finished goods, PCBs are the key raw material of the company.

Demerits

It will not provide permanent solution for the company.
The forecasting of the future requirement is difficult to anticipate.
By ordering less quantity of PCBs, the supply of the finished goods would be restricted.
By ordering more quantity of PCBs, the profitability as well as liquidity position of the company would be affected.
The company, by relying heavily on its current outsourcing strategy,would not be able to achieve the quality products for its customers.

Therefore, by looking at the above detailed explanation of option # 01 for the company, it can be seen that the demerits associated with this alternative significantly outweigh its associated merits. This strongly concludes the fact that this option is not feasible for the company as it does not help resolve the existing issue faced by the company.

Option: 2

Establishing a strong partnership relationship with the single supplier which could increase reliability.

Merits

The company could meet the demand of customers on time.
Wouldbe able to supply PCBs to its various manufacturing units solely.
With the help of partnership, the company could improve its future prospects.
The highquality goods could be ensured.

Demerits

Reliance on only one supplier could be highly dangerous and risky in the market where bankruptcy is not very uncommon.
Due to Monopoly Power, the supplier could charge high price for the products.
The single supplier would not be loyal to Stryker Corporation.

It can be seen from the above analysis that although the option is very feasible due to the quality, the quantity as well as the time period could be ensured and the customers could be easily satisfied in this option. However, due to the significant issue of strong reliability on just a single supplier that could be very risky and costly in the future, it could be said that this option is also not the feasible option for the company.

Option: 3

Shift from out-sourcing of PCBs to in-sourcing by starting an in-house production which would require capital spending in the beginning to earn required return. The in-house production could be started near the headquarters which is located in Kalamazoo, Michigan....................... This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.