1) What are the advantages and disadvantages of the particular sub-contracting system in this case? Tombow uses in its supply chain management both in-house production and subcontractors. The exact share of in-house production and outsourced production is not known exactly. This ratio varies across product lines. As an example, Tombow’s supply chain set up used for Object EO can be analyzed. To produce it, Tombow coordinates six vendors. Two of them - Kantoh and Nagano - are the main suppliers. Kantoh produces components and Nagano, besides production of components, is also responsible for the assembly work. In practice, Nagano outsources assembly work to residents near Nagano´s factory. There are currently challenges with supply
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Not specifically a disadvantage in subcontracting, but specific of Tombow is their inability to manage production and distribution channels that was done by independent trucking companies. In addition to the challenges caused by utilization of external subcontractors there is clearly one additional point to be mentioned. All Tombow production is done in Japan which a high cost country. In the 1990s, Japan already could be considered as high cost country and it should be studied if part of production should be transferred to “so called” low cost countries in other parts of Asia.
Figure 2- Tombow’s production system evaluation of selected disadvantages As market trend in recent years has been towards increased customization, coordination between Tombow and key suppliers has become decisive. Without very good coordination, there is clear risk that inventories continue to increase as a consequence of high products variety. On the other hand, lead-time for delivery continues to be too long for market standards and quality control lacks standardization. Increases in variety of products most likely reinforce production and distribution bottlenecks. The question of common interest with supply chain partners goes partly