Question: An elevator is designed for a specific building, considering such factors as the height of the building, the number of users on each floor and
An elevator is designed for a specific building, considering such factors as the height of the building, the number of users on each floor and the expected usage periods. The number of components varies with the number of stories and the complexity of the design of the elevator. Customers provide functional requirements such as speed and capacity, desired style options, and the dimensions of the building. An appropriate set of elevator components is specified and ordered from the component suppliers. This is a high-variety, low-volume market in which competition is very high. As the cost of in-house manufacturing of components is much higher than the cost of outsourcing, manufacturers of elevators focus on design, assembly, marketing and sales, and most in-house component manufacturing has ceased.
Let's consider the case of two different electric elevator manufacturers:
- Company A is a Small Medium Enterprise (SME) that employs 73 employees and, in 2019, recorded $ 12 million in revenues. They offer 20 elevator variants using a make-to-order approach.
- Company B is a bigger company that employs over 300 employees and, in 2019, recorded over $ 100 million in revenues. They offer over 100 elevator variants using a make-to-order approach.
The following figure compares the Kraljic matrix for the two companies. In both cases, the Kraljic matrix was designed using the same approach.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
Study Help