Sourcing

Value Chain

The entire sequence of activities performed to bring a product to market

What makes up a Value Chain

Procurement -> Inbound Logistics -> Manufacturing -> Assembly -> Outboard Logistics -> Warehousing -> Retail Operations

Modularity

the degree to which a product can be divided into distinct subsystems with well-defined boundaries

Tradability

If a good can be sold in a location that is different from where it is produced

Demand variability

degree to which demand fluctuates in a given time

Economies of Scale

decreases in per-unit cost that result from expanding the columns produced or processed.

Vertical Integration

The ownership or control of multiple points on the production path

Sourcing

A strategic function responsible for determining an organization’s value chain.

Complementary Goods

Enhance the usability of a good

Coordination Costs

overhead costs associated with the need to monitor and coordinate with suppliers

Foreign Market but Within the Company

Captive offshoring

Foreign Market and Outside Supplier

Offshore Outsourcing

Domestic Market and within the company

Internal sourcing

Domestic market and outside supplier

outsourcing

Inventory pipeline

Inventory holding cost

Lead times

Lead time variability

Work-in process

Safety stock

ABC Fragmentation

The concept that your suppliers have suppliers and some issues are invisible to you

Offshoring

Subcontracting of a business function to an organization in another country. This subcontractor may be part of the same firm (captive) or an outside provider (offshore outsourcing)

High Impact and High Complexity

Critical/Strategic: Cooperation

High Impact and Low Complexity

Leverage: Best Deal

Low Impact and High Complexity

Bottleneck: Supply Continuity

Low Impact and Low Complexity

Non-Critical: Efficiency