Mary Conn
SCM 301
Case Study 3-1 pg 106
Prof Eberle
An advantage to Red Fish, Blue Fish of having China (Lui-Sheng Trading Company) as its sole source of supply would be the cost of products and labor. Since products and labor overseas are a lot cheaper than they are in the United States. This would be the most logical decision to make of having them as a partner. This decision could save Red Fish, Blue Fish, LLP a lot of money in the long run.
A potential disadvantage of having China (Lui-Sheng Trading Company) as its sole source of supply would be that if anything would happen with Lui-Sheng Trading Company to where they have to close or stop production, it could damage the sales flow of Red Fish, Blue Fish, LLP. They would have to hold up the production of products causing the sales to go down drastically. This could cause major destruction to the company, possibly to the point of closure.
In my opinion I would add China (Lui-Sheng Trading Company) as a supplier to Red Fish, Blue Fish, LLP, but not as the sole source of supply. I would also have a source of supply up in running in any of the other locations of the United States, Canada, Western Europe, or in the South American countries since those are where the internet sales have been growing geometrically. By having a plant close by lowers the cost of shipping for both the customer and supplier. That way if anything would happen in the China location we would have a backup plan and can keep production moving forward and sales would continue to rise.
A supply challenge Red Fish, Blue Fish, LLP face in expanding into South America would be trying to attract new customers and keeping them for future business. Moving your business into a new location of new prospects is always hard for any company.
I would not recommend expanding aggressively into South America right from the start. I would just open one