Renar said:
To make the outsource production as flexiable as you'd would like ('you make your contracts scalable and extensible. Also, production capacity does not have to stick around forever. You just write options into the contract.') is going to cost Nintendo up front. Nintendo has to find Chinese manufacturers that have high quality, does minimal prirating (ie the 'Viis'), low cost, good assess to getting parts deliveried them. To ask all of Nintendo's parts and assembler manufacturers to give maximum quantity flexiablity as well can be done, but at what cost? From mid-July to mid-October, Wii sales in Japan fell over 80%. And back up 450% to now. Since it is possible for demand to vary this much, that would have to be written into the contracts. The way to get the cheapest unit cost is to guarantee the manufacture a set amount. Such as the 1.8 million a month. No way will a manufacture give you the same cost per unit if you tell them, this month we want .36 million, but in a few months later, we want 10 times that much. |
Extensible = leave the option open to contract with other facilities should your initial contractor reach maximum capacity.
Absoloute cheapest unit cost doesn't mean much when you are missing out on hundreds of millions of dollars in revenue. Penny wise and pound foolish.