Professional Documents
Culture Documents
Dung H. Nguyen
Faculty of International Economic Relations
University of Economics and Law
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Vrije Universiteit Amsterdam
ROLE OF SOURCING IN A SUPPLY CHAIN
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Vrije Universiteit Amsterdam
PROCUREMENT CYCLE
1. identify need
process
process
process
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Vrije Universiteit Amsterdam
SUPPLIER SELECTION
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Vrije Universiteit Amsterdam
NUMBER OF SUPPLIERS
Single supplier:
• Good relationship
• Lower cost
• Create competition
Cost/price
Quality
Delivery
Responsiveness and flexibility
Environment
Technology
Business metrics
Total cost of ownership
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Vrije Universiteit Amsterdam
SUPPLIER DEVELOPMENT
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OUTSOURCING
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Vrije Universiteit Amsterdam
ECONOMIES OF SCALE FROM OUTSOURCING
Capacity aggregation
Inventory aggregation
Transportation aggregation by transportation intermediaries
Transportation aggregation by storage intermediaries
Warehousing aggregation
Procurement aggregation
Information aggregation
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Vrije Universiteit Amsterdam
FACTORS REDUCING BENEFITS OF OUTSOURCING TO 3RD PARTY
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Vrije Universiteit Amsterdam
RISKS OF USING A 3RD PARTY
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GLOBAL SOURCING
All supply chain costs of sourcing a good or services from a particular supplier
Acquisition costs: all costs associated with the purchase of material from a
supplier to a buyer, ready for use
> E.g.: supplier price, taxes and duties, delivery costs,...
Ownership costs: all costs part from the acquisition costs
> E.g.: inventory costs, warehousing costs, manufacturing costs,...
Post-ownership costs: all costs after the finished product reaches the end
customer
> E.g.: warranty costs, environmental costs, reputation costs,...
Other costs (for global sourcing): exchange rates, local inflation, labor
costs,...
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TOTAL COST OF OWNERSHIP
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Vrije Universiteit Amsterdam
DESIGNING A SOURCING PORTFOLIO
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Vrije Universiteit Amsterdam
CHAPTER 4 – SOURCING DECISIONS IN A SUPPLY CHAIN
THANK YOU!