1. Sourcing Decisions in a Supply Chain 【本著作除另有註明外，採取創用 CC 「姓名標示 －非商業性－相同方式分享」台灣 3.0 版授權釋出】創用 CC 「姓名標示 －非商業性－相同方式分享」台灣 3.0 版 第十一單元 ： Sourcing Decisions in a Supply Chain 1 蔣明晃教授

2. Outline ►The Role of Sourcing in a Supply Chain ►Supplier Scoring and Assessment ►Supplier Selection and Contracts ►Design Collaboration ►The Procurement Process ►Sourcing Planning and Analysis ►Making Sourcing Decisions in Practice 2

3. The Role of Sourcing in a Supply Chain ►Sourcing is the set of business processes required to purchase goods and services ►Sourcing processes include: –Supplier scoring and assessment –Supplier selection and contract negotiation –Design collaboration –Procurement –Sourcing planning and analysis 3

4. Benefits of Effective Sourcing Decisions ►Better economies of scale can be achieved if orders are aggregated ►More efficient procurement transactions can significantly reduce the overall cost of purchasing ►Design collaboration can result in products that are easier to manufacture and distribute, resulting in lower overall costs ►Good procurement processes can facilitate coordination with suppliers ►Appropriate supplier contracts can allow for the sharing of risk ►Firms can achieve a lower purchase price by increasing competition through the use of auctions 4

5. Supplier Scoring and Assessment ►Supplier performance should be compared on the basis of the supplier’s impact on total cost ►There are several other factors besides purchase price that influence total cost 5

6. Supplier Assessment Factors ►R►Replenishment Lead Time ►O►On-Time Performance ►S►Supply Flexibility ►D►Delivery Frequency / Minimum Lot Size ►S►Supply Quality ►I►Inbound Transportation Cost ►P►Pricing Terms ►I►Information Coordination Capability ►D►Design Collaboration Capability ►E►Exchange Rates, Taxes, Duties ►S►Supplier Viability 6

7. Supplier Performance Factors and Their Impact on Total Cost XXSupplier viability XExchange rates & taxes XXXXXDesign collaboration XXInformation coordination XXPricing terms XInbound transportation XXSupply quality XXXDelivery frequency XSupply flexibility XOn-time performance XReplenishment LT SafetyCycle Production Introduction Time Transporta- tion Cost Inventory Purchase Price of Component 7

8. Example Green Thumb has historically purchased a thousand bearings per week from a local supplier who charges $1.00 per bearing. Which supplier should the manager go with? The purchasing manager has identified another potential source willing to supply the bearing at $0.97 per bearing, and wants to evaluate two suppliers. The local supplier has an average LT = 2 weeks, SD = 1 week and delivers in batches of 2000. The new source has an average LT = 6 weeks, SD = 4 week, and requires a minimum batch size of 8000. Assume 25% holding cost and a continuous review policy is used. Also aim for 95% service level. Standard deviation=300 8

9. ►Use current local supplier: –Annual material cost = 1000  52  1 = $52,000 –Average cycle inventory = 2,000 / 2 = 1,000 –Annual cost of holding cycle inventory = 1,000  1  0.25 = $250 –Standard deviation of demand during lead time = –Safety inventory = NORMSINV(0.95)  1086.28 = 1,786.77 –Annual cost of holding safety inventory = 1,786.77  1  0.25 = $446.69 –Annual cost of using current supplier = 52000 + 250 + 446.69= $52,696.69 Analysis 9

10. ►Use new supplier: –Annual material cost = 1000  52  0.97 = $50,440 –Average cycle inventory = 8,000 / 2 = 4,000 –Annual cost of holding cycle inventory = 4,000  0.97  0.25 = $970 –Standard deviation of demand during lead time = –Safety inventory = NORMSINV(0.95)  4,066.94 = 6,689.52 –Annual cost of holding safety inventory = 6,689.52  0.97  0.25 = $ 1,622.21 –Annual cost of using new supplier = 50440 + 970 + 1,622.21 = $53,032.21 Analysis 10

11. Supplier Selection ►S►Several mechanism: competitive bids, reverse auctions, direct negotiation ►S►Single vs. multiple sourcing: –S–Single sourcing: guarantee the supplier sufficient business when supplier needs to make buyer-specific investment; easily coordinate –M–Multiple sourcing: back-up 11

12. Design Collaboration ►50-70 percent of spending at a manufacturer is through procurement ►80 percent of the cost of a purchased part is fixed in the design phase ►Design collaboration with suppliers can result in reduced cost, improved quality, mass customization and decreased time to market ►Allow manufacturer to be a system integrator ►Enabler for common parts: a good database of existing parts and design 本作品轉載自 Microsoft Office 2007 多媒體藝廊，依據 Microsoft 服務合約及著作權法第 46 、 50 、 52 、 65 條合理使用。 Microsoft 服務合約 本作品轉載自 Microsoft Office 2007 多媒體藝廊，依據 Microsoft 服務合約及著作權法 第 46 、 50 、 52 、 65 條合理使用。 Microsoft 服務合約 12

13. Design Collaboration ►Important to employ design for logistics: –Reduce transportation, handling cost: packaging –Reduce inventory costs: postponement and mass customization ►Important to employ design for manufacturability: ease to manufacture –Part commonality, systematic parts, combining parts, using catalog parts ►Manufacturers must become effective design coordinators throughout the supply chain 本作品轉載自 Microsoft Office 2007 多媒體藝廊，依據 Microsoft 服務合約及著作權法 第 46 、 50 、 52 、 65 條合理使用。 Microsoft 服務合約 13

14. The Procurement Process ►The process in which the supplier sends product in response to orders placed by the buyer ►Goal is to enable orders to be placed and delivered on schedule at the lowest possible overall cost ►Two main categories of purchased goods: –Direct materials: components used to make finished goods –Indirect materials: goods used to support the operations of a firm 14

15. Differences between Direct and Indirect Materials HighLowNumber of transactions HighLowProcessing cost relative to value of transaction Less direct impactAny delay will delay production Impact on production SG & ACost of goods soldAccounting MROProductionUse Indirect MaterialsDirect Materials Maintain, Repair, Operation, 15

16. The Procurement Process ►Focus for direct materials should be on improving coordination and visibility with supplier (production plans, inventory levels, capacity), even have built in alert ►Focus for indirect materials should be on decreasing the transaction cost for each order by using e-procurement process ►Procurement for both should consolidate orders where possible to take advantage of economies of scale and quantity discounts 16

17. Product Categorization by Value and Criticality Low High Value/Cost Criticality General Items Bulk Purchase Items Critical ItemsStrategic Items 17

18. Sourcing Planning and Analysis ►A firm should periodically analyze its procurement spending and supplier performance and use this analysis as an input for future sourcing decisions ►Procurement spending should be analyzed by part and supplier to ensure appropriate economies of scale ►Supplier performance analysis should be used to build a portfolio of suppliers with complementary strengths –Cheaper but lower performing suppliers should be used to supply base demand –Higher performing but more expensive suppliers should be used to buffer against variation in demand and supply from the other source 18

19. Making Sourcing Decisions in Practice ►Use multifunction teams ►Ensure appropriate coordination across regions and business units ►Always evaluate the total cost of ownership ►Build long-term relationships with key suppliers 19

20. 版權聲明 頁碼作品授權條件作者 / 來源 12 本作品轉載自 Microsoft Office 2007 多媒體藝廊，依據 Microsoft 服務合 約及著作權法第 46 、 50 、 52 、 65 條合理使用。 Microsoft 服務合 約 12 Russian Coca-cola ，作者： Cody Hough ， Cody Hough 本作品轉載自 Wikimedia Commons ， ( http://commons.wikimedia.org/wiki/File:Russian_Coca-cola_.JPG) ， http://commons.wikimedia.org/wiki/File:Russian_Coca-cola_.JPG 瀏覽日期： 2012/07/03 。 13 本作品轉載自 Microsoft Office 2007 多媒體藝廊，依據 Microsoft 服務合 約及著作權法第 46 、 50 、 52 、 65 條合理使用。 Microsoft 服務合 約 20