Outsourcing problem

Anonymous A asked on Jun 27, 2019

Hi I was just found out a case where it was asking how to decide if outsourcing some parts of a train to china would be a good idea or not, being the client a major US train manufacturer.

I've came up with this framework or solution but not sure about it as it seems rather different to the usual ones:

1st watch out if the price will be lowered.

In order to see that I would look at the cost of manufacturing, fixed costs in order to develop the new supplier, transport cost, tariffs, quality checking cost and both interest rates and exchange rate.

2nd try to figure it out if it meets que quality standards

In order to do it having a rigurous analysis of the suppliers expertise, having quality controls and maybe watching for "prototypes" or any other tangible stuff that could prove their expertise.

3rd trying to understand the predictability of the supply chain

Here it would be a due dilligence about which problems may occur, the expected outcome, having an analysis of the process and lead times. Then analysing possible political issues (China vs US...) and finally deciding how much inventory should be increased (and its cost)

4th analysing other possible risks

In this case I was thinking about public image that could be damaged or maybe intellectual property being stolen (not sure if this would be seen as rude or a good point to check)

5th looking for better alternatives

Maybe looking for new local suppliers, acquiring a manufacturing company or starting a new one in a labour low cost country or renegotiating contracts.

What do you think about this approach, do you think it could be used or is it way too unconventional and those "questions" that I designed before what I am actually looking for may be seem as a waste of time or not structured enough?

Related BootCamp article(s)

Case Studies

The case study is the most important element of the case interview, which you'll have to nail in order to get into strategic consulting. Here you can learn the specific skills and concepts necessary to solve them.

Focusing on The Core: Mock Interviews

It is to practice as many cases as possible - both as interviewee and as interviewee. Here are a couple of guidelines to help you get started