Lecture 3 (3) Flashcards
Coordination characteristics (Do not outsource)
Coordingation and interfaces are not well defined
The information and coordination is specific to each job
Technology is immature and tehre is a need for expert knowledge obtained by experience
Coordination characteristics (do outsource)
Standardized interfaces, required information is highly codified and standardized (prices, quantities, delivery schedules etc.)
Investment in strategic assets characteristics (do not outsource)
Significant investments in highly specialized assets are needed. The investments cannot be easily recovered if the relationship terminates
Long term investments in specialized R&D and lengthy learning curves
Investment in strategic asset characteristics (do outsource)
Assets are commonly available from large number of potential suppliers
Intellectual property characteristics (do not outsource)
Weak intellectual property protection.
Easy-to-imitate technology when access is given
Intellectual property characteristics (do outsource)
Strong intellectual property protection
Difficult to imitate technology
Green sourcing
Being environmentally responsible has become a business imperative
Many firms are looking to their supply chains to deliver green results
Financial results can often be improved through cost reductions
A comprehensive green sourcing effort should assess how a company uses items that are purchased internally
Important to reduce waste (water, electric or fuel)
Working with suppliers can open new avenues for revenue creation
Can help establish new lines of business to serve environmentally conscious customers
Rainforest alliance certified farms
Are those that have met the comprehensive environmental, social, and economic criteria associated with the sustainable agriculture standard of rainforest alliance
Green sourcing six step process
- Assess the opportunity (evaluated and prioritize costs)
- Engage sourcing agents (encourage cross-functional ownership of the process)
- Assess the supply base (engage vendors in the process)
- Develop the sourcing strategy (develop quantitative criteria
- Implement sourcing strategy (select vendors and products based on criteria
- Institutionalize the sourcing strategy (implement metrics and audits to monitor performance)
Total cost ownership (TCO)
An estimate of the cost of an item that inclludes all the costs related to the procurement and use of an item, including any related costs in disposing of the item
Can be applied to internal costs or more broadly to costs throughout the supply chain
Total cost of ownership 3 parts
Acquisition costs
Ownership costs
Post-owernship costs
Acquisition costs
Purchase planning costs
quality costs
> Taxes
Purchase price
Financing costs
Ownership costs
Energy costs
Maintenance and repair
Financing
Supply chain/network cost
Post-owernship costs
Disposal
Environment cost
Warranty cost
Product liability cost
Customer dissatisfaction cost
Inventory turnover
How often inventory is replaced during the year
