Beyond Total Cost of Ownership
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Strategic Sourcing for Value
There are many types of strategic sourcing decisions, including make vs. buy, offshore vs. onshore, and selecting between suppliers or vendors in various locations. In most of these cases, the decisions involve multiple relevant dimensions and are made under both uncertainty and risk.
Some performance dimensions, like per-unit cost and shipping, are relatively easy to measure. Harder-to-evaluate factors such as future innovation capability and responsiveness, are often more important than cost.
In this half-day workshop, Professors Gray and Helper will take participants through the following topics:
- Evolution of the sophistication of decision making in procurement, from per-unit price, to total landed cost, to total cost of ownership (TCO)
- Challenges of implementing TCO-based decision making in practice
- Tools to incorporate measurable risk in decision making, including an introduction to Monte Carlo simulation
- Tools to incorporate uncertainty, or non-measurable dimensions, including a discussion of heuristic decision making
- A new approach to sourcing decision-making that addresses many of the challenges inherent in TCO
Who should attend
This will be an interactive half-day session, targeted toward sourcing, procurement, purchasing, and supply chain managers. General managers will also benefit from the insights.