Lecture Notes 17 PDF

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Summary

These lecture notes were written for the MGTU 315 Course taught by Professor Castillo-Shiffer....

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Reasons to Outsource and the Resulting Benefits Improvement-Driven Reasons •

Improve quality and productivity.

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Shorten cycle time.

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Obtain expertise, skills, and technologies that are not otherwise available.

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Improve risk management.

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Improve credibility and image by associating with superior providers.

Organizationally Driven Reasons •

Improve effectiveness by focusing on what the firm does best.

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Increase flexibility to meet changing demand for products and services.

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Increase product and service value by improving response to customer needs.

Logistics Outsourcing •

Logistics: the management functions that support the complete cycle of material flow –

Purchase and internal control of materials

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Planning and control of WIP

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Purchasing, shipping, and distribution of finished product

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Emphasis on lean inventory means there is less room for delivery errors

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Logistics companies have complex computer tracking technology that reduces the risk in transportation and allows the logistics company to add more value to the firm

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Third-party logistics providers track freight to tell customers exactly where its drivers are and when deliveries will be made

Green Sourcing •

Being environmentally responsible has become a business imperative

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Many firms are looking to their supply chains to deliver “green” results

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Financial results can often be improved through going green

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A comprehensive green sourcing effort should assess how a company uses items that are purchased internally

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It is also important to reduce waste

Green Sourcing Process 1. Assess the opportunity –

Evaluate and prioritize costs

2. Engage sourcing agents –

Cross-functional ownership of the process

3. Assess the supply base –

Engage vendors in the process

4. Develop the sourcing strategy –

Develop quantitative criteria

5. Implement sourcing strategy –

Select vendors and products based on criteria

6. Institutionalize the sourcing strategy –

Metrics and audits to monitor performance

Total Cost of Ownership •

Total cost of ownership (TCO): an estimate of the cost of an item

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Includes all the costs related to the procurement and use of an item, including any related costs in disposing of the item

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Can be applied to internal costs or more broadly to costs throughout the supply chain

Measuring Sourcing Performance •

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Inventory turnover: how often inventory is replaced during the year –

Cost of goods sold: the annual cost for a company to produce the goods or services provided to customers

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Average aggregate inventory value: the total value of all items held in inventory

Weekly of supply: how many weeks’ worth of inventory is in the system at a particular point in time...