Академический Документы
Профессиональный Документы
Культура Документы
Pro Con
• Cost reductions • Transportation costs
• Proximity to local or new markets • Lead times
• Domestic labor market constraints • Risks
Offshore • Operational hedge • Quality, including health,
• Foreign trade barriers environmental and CSR
• Currency, IP, political,
competitive
• Domestic trade barriers
• Global operations’ complexity and
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social implications
Strategic Sourcing
A strategic framework
1. Is outsourcing feasible?
No
Is a stable supply base with necessary capabilities available?
Is outsourcing politically viable?
Yes
Yes 2. Is outsourcing necessary?
Are internal financial and operational capabilities insufficient?
No
3. Is outsourcing in line with strategic priorities and risks? No
Is this activity “non-core”?
Is the risk of outsourcing it tolerable?
Yes
4. Is outsourcing desirable given our value proposition? No
Can external suppliers do it better? (TCO & NPV)
Yes
5. Do we have the ability to manage suppliers and ongoing risk?
Can we contract on detailed requirements?
Can we coordinate incentives and operational flows?
Distinguish:
• Strategic buyers: lead cross-functional sourcing teams that
develop sourcing strategy
– CPO, global commodity managers, commodity business plan
• Tactical buyers: execute transactional purchase order
processes
Sourcing Strategy
Why it is important ?
• Purchasing, sourcing, procurement is the biggest single cost for most firms
– Accounts for 60% of the average company’s total cost
• Great potential for bottom-line improvement.
– E.g., 20% profit margin and purchasing is 85% of COGS.
• Price = $100, COGS = $80, Purchasing = .85*$80 = $68
• Say purchasing improves 10%
• Then margin becomes $20+$6.8, which is a 34% increase
• And even greater leverage on net income!
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Structured Contracts:
Sourcing & business unit Manufacturing & financial
executives executives
Structured contracts
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Structured Contracts
define a supply service agreement
AVAILABILITY AND RESPONSIVENESS PRICE
1 How many can I buy? Quantities guaranteed available w/i 3 month LT $400 per unit
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Q1’06 1000 units per month 3
Q2’06 1000 units per month
2 When can I get them?
Q3’061 2000 units per month
Q4’06 3000 units per month
3 At what price?
Add’l quantities guaranteed available w/i 1 month $425 per unit
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Q1’06 400 units per month 3
Q2’06 400 units per month
Q3’061 800 units per month
Q4’06 1000 units per month
NON-PERFORMANCE
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