Vendor Analysis Project: A Car
A car is a four-wheeled automobile powered by the engine’s internal combustion, and it can carry a small group of individuals. Steel and glass are two significant materials contained in a car. They are recognized as direct materials since they are traceable matter that is applied in car manufacture. Glass is useful in making windshields, whereas steel is used in making body panels, roofs, and door beams. Items of factory overhead include insurance, utilities, and indirect labor. These are the costs incurred within the manufacturing process, and they do not involve direct labor and direct materials costs. All three items are indirectly associated with the product, and companies can take significant measures towards reducing them.
The three major steel suppliers are Nucor cooperation, Hyundai steel, and JSW steel, whereas the significant suppliers of Glass Are Saint Gobain, Xinyi Glass, and the Guardian Glass (Freestone & Degryse,2018). The Nucor cooperation is the low-cost vendor of steel since it produces from recycling waste steel products. As a result, it generates higher revenues from about 21.95 million tons a year. This is opposed to the Hyundai steel, which has an output of 18.63 million tones yearly with an income of 17.65 billion dollars and the JBW steel, which has an annual production of 14.91 million tonnes annually revenue of 10.18 billion dollars (Hudson & Sadler,2017). On the other hand, saint Gobain is the cheapest glass producer hence making yearly revenues of about 47.7 billion dollars a year, followed by the Xinyi glass that creates 1.9 billion dollars then the Guardian glass whose annual income cannot be estimated (Freestone & Degryse,2018). The cheaper the vendors are, the more clients they get; hence the higher the annual revenue rates. Therefore, when the company uses steel from Nucor cooperation and glass from Saint Gobain, the finished units should cost about thirty percent of the total production cost for the elements of direct materials.
References
Freestone, I. C., Degryse, P., Lankton, J., Gratuze, B., & Schneider, J. (2018). HIMT, glass composition, and commodity branding in the primary glass industry.
Hudson, R., & Sadler, D. (2017). The international steel industry: restructuring, state policies, and localities. Routledge.