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Teaching sourcing decisions--cases
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May 8 2007, 2:00 PM EDT by
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Thread started: May 8 2007, 2:00 PM EDT
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We believe there is a need for cases of international sourcing decisions that are amenable to both a thorough "total cost of ownership" analysis AND that highlights the strategic risks of sourcing decisions that are hard to quantify. Please post suggested cases.
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Sourcing from: a training course
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May 8 2007, 1:55 PM EDT by
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Thread started: May 8 2007, 1:55 PM EDT
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The laundry list of key topics:
- negotiation
- writing specs
- IP protection best practices
- Cultural issues
- Global geopolitical current events
- Contingency and scenario planning for risks
Methods to use
- a multi-disciplinary approach
- a case-based approach, to show the idiosyncratic variation
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Sourcing from: Global sourcing strategy
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May 8 2007, 1:50 PM EDT by
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Thread started: May 8 2007, 1:50 PM EDT
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Manufacturing strategies may have a half-life similar to product life-cycles. The underlying risks, comparative costs, and changing competitive environment may cause overall strategic reassessment on a more frequent basis. China today is not what it was several years ago, causing shifts in strategies.
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Negotiation/Relationships
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May 8 2007, 1:48 PM EDT by
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Thread started: May 8 2007, 1:48 PM EDT
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It seems that negotiations are fundamentally different when sourcing from emerging markets. Besides the cultural differences, the development of long-term relationships seems more important in emerging markets. We wonder if the existing frameworks for negotiation need to be fundamentally revisited. Thoughts?
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Sourcing from: The competitive advantage(?) from emerging markets
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May 8 2007, 1:44 PM EDT by
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Thread started: May 8 2007, 1:44 PM EDT
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The mantra of chasing low costs has received significant press coverage.
- Desiring a global footprint: Many speakers talked to the desire to source from a country because they wanted to sell to that country at some point in time. This can also mean sourcing in developed countries to support a market there.
- The total landed cost needs to include the cost of complexity. Motorola noted a labor cost differential of $10/unit for moving manufacturing from Mexico to China. However, if their forecasts are wrong, and product needs to be air shipped, the savings are more than wiped out by transportation costs.
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tomlinbrian |
Importance of understanding organizational challenges
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May 8 2007, 1:42 PM EDT by
tomlinbrian |
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Thread started: May 8 2007, 1:42 PM EDT
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When moving procurement and other activities to distant locations, there are many basic (but fundamental) organizational-design issues that are easily overlooked but that are critical for success.
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Total cost of ownership
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May 8 2007, 1:36 PM EDT by
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Thread started: May 8 2007, 10:48 AM EDT
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There are many issues that are introduced with offshoring, including: decreased delivery reliability (leading to additional inventory requirements, among other things), loss of flexibility (to meet changing demand), extended time to market, additional auditing requirements (quality, environmental, etc), transportation and management costs associated with expediting shipments, etc. Several of the panelists talked about total cost of ownership, but my burning question is how accurately are companies capturing the costs associated with all of these activities? I believe that companies are NOT capturing all these costs and might not be "right-sourcing." Thoughts?
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Last Reply:
RE: Total cost of ownership
By: ,
May 8 2007, 1:36 PM EDT
One issue that was identified in our breakout session was the challenge of correctly estimating and accounting for one-time/rare events when measuring the total cost of ownership.
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markferguson |
Sourcing From: Gaps between research and practice
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May 8 2007, 1:31 PM EDT by
markferguson |
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Thread started: May 8 2007, 1:31 PM EDT
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Getting a handle on supplier risk
A method to quantifying risk could be useful. Supplier risk has a unique profile for each firm and supplier, as firms have different objectives from different suppliers. Both a general framework and a certification tool - similar to CMM or other company certification systems - would help.
An ideal tool is envisioned as at least a checklist of relevent items, with appropriate risk ratings.
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Pedagogical Issue
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May 8 2007, 1:24 PM EDT by
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Thread started: May 8 2007, 1:24 PM EDT
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Can we identify the common/general challenges/solutions versus the idiosyncratic country/industry challenges/solutions? This is very important for distilling knowledge to impart to students.
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inbound logistics
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May 8 2007, 10:08 AM EDT by
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Thread started: May 2 2007, 7:03 PM EDT
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Two sources, Booz-Allen consultant George Stalk (think HBR "time-based competition") and mid-level Dept of Commerce people have related to me the same story: Inbound logistics for the U.S. has hit a bottleneck. U.S. port capacity is maxed out, and in a few years we will simply not be able to import more goods via ship. This leaves many emerging economies out of the picture.
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Last Reply:
RE: inbound logistics
By: ,
May 8 2007, 10:08 AM EDT
A recent article titled "Infrastructure - Beneath the Supply Base," authored by J. Cavinato, in the January 2007 issue of INSIDE SUPPLY MANAGEMENT (R), 18(1): 20+, speaks directly to the issue of U.S. infrastructure.
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Nixon in China
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May 8 2007, 9:13 AM EDT by
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Thread started: May 8 2007, 9:13 AM EDT
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Marshall Fisher linked the beginning of the outsourcing movement to Nixon’s trip to China in 1972. See:
http://www.gmu.edu/library/specialcollections/nixon_in_china.html
At that time, Liz (apparel) couldn’t imagine going to China . Now apparel is almost all outsourced to emerging markets. At Dell we saw much of the real manufacturing (components) have moved off-shore. Challenge now? Coordination.
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Dell Trip
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May 8 2007, 8:34 AM EDT by
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Thread started: May 8 2007, 8:34 AM EDT
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Ray was focused on aligning long leadtimes with short promises to customers. Information helps, but lots of logistics
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