Esorb Inc. is a company that started in 1908 and has become an international successful company with about 26,000employees at 62 locations in 23 countries. It started as a trading company for automobile accessories and eventually expanded into the production of automobile components in Germany. In the 1950s Esorb manufactured handles, hatches, hinges, latches, sun visors, defrostable windows and canisters. They were the first company to produce power windows starting in the 1960s. They eventually started producing seat recliners and adjustable back rests for automobiles. By the 1970s they were the first to produce power seat adjusters and electronic control-units for power window regulators in the 1980s. At the end of the nineties ESORB had production sites in Germany, England, Spain, America, Mexico, Japan and France. By 2005 ESORB had 8900 employees in 37 locations and in 19 different countries. Throughout the years ESORB continued to strive for lightweight design to optimize fuel efficiency and CO2 emissions. In 2008 ESORB added electric drives for window regulators, sunroofs and seatbelt retractors to its product range. In 2009 it formed joint ventures in China and Thailand to start production in those locations. In 2011 ESORB entered a joint venture in South Korea. In 2014 they built new facilities in South Africa. Now in 2022 the core competence of Esorb Inc. is the production of technology for doors and liftgates, adjustment systems for front and rear seats and electric motors and drives.

Esorb Inc. strives to play active roles in shaping the social environment. They use environmentally friendly technology and are involved in the communities they are in. They are involved with food drives, habitat for humanity and mental health charities. They are committed to protecting the health and safety of their employees. The principles of ESORB Inc are: putting the company's interest ahead of their own, to be innovative to secure leading market position and best price-performance ratio, acting fairly towards employees on all levels and in all locations, delivering top performance to their customers, all stakeholders act as one team with trust, making fast decisions and assuming responsibility for their actions.

In 2005 ESORB Inc started two plants in London, Ontario, Canada. There are currently over 400 employees who work in production, skilled trades, administration and management in London, Ontario. In 2005 ESORB mainly produced seat adjusters, seat components and doors systems. Now they focus on the production of seat systems.ESORB in London, Ontario's main customers are Volkswagon, Ford, and Chrylser. The London, Ontario plant has received the London Chamber of Commerce Excellence in Human Resources Award, Ivey Academy Manufacturer of the Year, ASQ Quality Award of Excellence, London Economic Leadership Award, the FCA supplier of the Year Award, Volkswagon "A: Rating and Ford Q1 Certification.

As ESORB is a global company, they manage the procurement of production materials, services and capital equipment through a global sourcing network. They impose challenging standards on suppliers.In return they offer stable relationship with growth prospects with their suppliers.

Christine Jackson, a buyer at ESORB in London, Ontario, has sent out requests for quotations for a wiring harness they use in their doors for a new automobile model.Marketing estimates that the demand for harness is 5,000 units a month in year one with a 20% growth expected for year two. The chosen supplier will incur some costs to retool for this particular harness. The harness will be prepackaged in 24 x 12 x 6 inch cartons. Each packaged unit weighs approximately 10 pounds.

As with most automotive component companies, adequate supplier capacity is a critical issue. Taking a lesson from the demands placed on it by its current customers, Esorb Inc. will seek some assurance from its suppliers that they can increase the supply of components by 25% within four week's notice of changing market conditions. Supplier responsiveness and ability to satisfy Esorb Inc.'s volume requirements will be critical.

Wire Harness Market Information

Esorb Inc. recognizes that demand is growing rapidly, although actual numbers are difficult to obtain. One of the challenges ESORB faces, and perhaps a major reason why ESORB may want to quickly "lock in" supplier capacity, is that other products use similar wire harnesses as are used in the doors and liftgates and cars are having more and more components that are powered and require wire harnesses.

In sum, ESORB Inc must share their market with the growing power and automotive market, and assess their relative leverage in the market given other market demands for the wire harnesses.

ESORB Inc is targeting the price of this particular wire harness at $30.This is not unreasonable given current market pricing. However, the market for wire harnesses extends well beyond the automotive industry, and is not without its share of uncertainty and disruptions.

In the automotive industry, today's customers demand defect-free products.With intense price competition and narrow profit margins, a single product defect, particularly when the automobile is in the customers' hands, can "wipe out" any profit from the sale. Poor quality will also adversely affect market reputation and future sales.Although exact numbers are difficult to obtain, financial analysts at Esorb Inc. calculate, based on experience and assumptions, that each defect will result, on average, in $130 in non-conformance costs that Esorb Inc. must bear (including lost customer goodwill).

The company plans to introduce the new line of door technology to the market place in March 2023. It must have inventory by January 2019 to begin process proving and pilot production.The March date coincides with preparing for the new model year sales season. It is now early August 2022.

Esorb Inc. relies on cross-functional commodity teams to develop sourcing strategies for key purchased items. This team is led by buyer Christine Jackson. Executive management views the supplier selection decision as a critical part of the new door technology development. The commodity team has spent the last several weeks visiting four wire harness suppliers and is currently evaluating various supply options. The team expects to begin negotiation with one or more suppliers within the next several weeks. Information regarding the suppliers under consideration is presented in the following section.

THE SUPPLY ALTERNATIVES

The team developed a market analysis of wire harness suppliers, and narrowed their search to four specific suppliers. Requests for quotations for the wiring harness were sent to the four prospective suppliers. These four suppliers were selected as final contenders based on: a) cost competitiveness given ESORBs initial target cost, and/or b) location proximity to ESORB's London, Ontario assembly site. The team was somewhat divided, as some members felt that ESORB should globalize its sourcing initiatives, while others felt that local suppliers would be a better choice in terms of working arrangements. Engineering supported the commodity team's preliminary efforts by purchasing off-the-shelf wire harness's for testing. This helped determine if the suppliers had a product that initially satisfied ESORB's expectations. Relying on product samples, while providing preliminary insight into the capability and technology of each supplier, was not sufficient to support a final supplier selection decision. Hence, the need for direct visits by the commodity team became apparent.

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