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Don Rosenfield and Daniel Whitney. Franken, Joseph P., II (Joseph Philip) Leaders for Global Operations Program. Leaders for Global Operations Program at MIT Massachusetts Institute of Technology. Department of Mechanical Engineering Sloan School of Management 2012-09-27T15:30:21Z 2012-09-27T15:30:21Z 2012 2012 http://hdl.handle.net/1721.1/73411 810335823 Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; and, (S.M.)--Massachusetts Institute of Technology, Dept. of Mechanical Engineering; in conjunction with the Leaders for Global Operations Program at MIT, 2012. Cataloged from PDF version of thesis. Includes bibliographical references (p. 74-75). For many manufacturing and automotive companies, traditional sourcing decisions rely on total landed cost models to determine the cheapest supplier. Total landed cost models calculate the cost to purchase a part plus all logistics costs to transport the part from the supplier to the plant. Although these models can provide a base comparison for suppliers, they do not contain the complete information necessary to make a supplier decision. There are several other factors that must be considered in the sourcing decision process to make a proper decision that considers the risks associated with supplier selection. The primary focus of the thesis is to improve the sourcing decision methodology for choosing between suppliers by identifying and developing models for the key elements in the decision process. A secondary focus of the project is to identify an inventory policy that reduces the supply chain cost of foreign suppliers. Four different aspects of the sourcing decisions process are discussed. The first section is the risk of air freight. Air freight risk is important in the context of the global versus local supplier discussion because it creates a major discrepancy when comparing the potential cost of each supplier. The thesis develops a model that provides an expected cost of air freight to measure air freight risk through the use of historical data. The second aspect discussed is the development of a more comprehensive cash flow model to determine the NPV of cash flows of each supplier that includes the impact of inventory policy and payment terms on net working capital. A more comprehensive model provides the true cash cost, not the accounting cost, of a supplier decision. The model is primarily used to compare local and foreign suppliers. The third part discussed is the impact of foreign exchange rates on the supplier decision and how certain assumptions can impact or alter the supplier decision. A means of testing how the supplier decision is impacted by foreign exchange assumptions and volatility is discussed. Finally, a dual mode sourcing model that ships parts by both air and ocean freight is developed to reduce overall logistics costs for parts procured from foreign suppliers. by Joseph P. Franken, II. S.M. M.B.A. 75 p. eng Massachusetts Institute of Technology M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. http://dspace.mit.edu/handle/1721.1/7582 Sloan School of Management. Mechanical Engineering. Leaders for Global Operations Program. Improved supplier selection and cost management for globalized automotive production Thesis application/pdf false Publication unknown unknown <Publication xmlns="https://www.openaire.eu/cerif-profile/1.1/" id="756941d5-e747-4a0c-b953-adedd3bfea45"> <Type xmlns="https://www.openaire.eu/cerif-profile/vocab/COAR_Publication_Types">http://purl.org/coar/resource_type/c_1843</Type> <Language>eng</Language> <Title>Improved supplier selection and cost management for globalized automotive production</Title> <PublishedIn> <Publication> </Publication> </PublishedIn> <PublicationDate>2012</PublicationDate> <Authors> <Author> <DisplayName>Franken, Joseph P., II (Joseph Philip)</DisplayName> <Affiliation> <OrgUnit> </OrgUnit> </Affiliation> </Author> </Authors> <Editors> </Editors> <Publishers> <Publisher> <DisplayName>Massachusetts Institute of Technology</DisplayName> <OrgUnit /> </Publisher> </Publishers> <License>http://dspace.mit.edu/handle/1721.1/7582</License> <Keyword>Sloan School of Management.</Keyword> <Keyword>Mechanical Engineering.</Keyword> <Keyword>Leaders for Global Operations Program.</Keyword> <Abstract>For many manufacturing and automotive companies, traditional sourcing decisions rely on total landed cost models to determine the cheapest supplier. Total landed cost models calculate the cost to purchase a part plus all logistics costs to transport the part from the supplier to the plant. Although these models can provide a base comparison for suppliers, they do not contain the complete information necessary to make a supplier decision. There are several other factors that must be considered in the sourcing decision process to make a proper decision that considers the risks associated with supplier selection. The primary focus of the thesis is to improve the sourcing decision methodology for choosing between suppliers by identifying and developing models for the key elements in the decision process. A secondary focus of the project is to identify an inventory policy that reduces the supply chain cost of foreign suppliers. Four different aspects of the sourcing decisions process are discussed. The first section is the risk of air freight. Air freight risk is important in the context of the global versus local supplier discussion because it creates a major discrepancy when comparing the potential cost of each supplier. The thesis develops a model that provides an expected cost of air freight to measure air freight risk through the use of historical data. The second aspect discussed is the development of a more comprehensive cash flow model to determine the NPV of cash flows of each supplier that includes the impact of inventory policy and payment terms on net working capital. A more comprehensive model provides the true cash cost, not the accounting cost, of a supplier decision. The model is primarily used to compare local and foreign suppliers. The third part discussed is the impact of foreign exchange rates on the supplier decision and how certain assumptions can impact or alter the supplier decision. A means of testing how the supplier decision is impacted by foreign exchange assumptions and volatility is discussed. Finally, a dual mode sourcing model that ships parts by both air and ocean freight is developed to reduce overall logistics costs for parts procured from foreign suppliers.</Abstract> <Access xmlns="http://purl.org/coar/access_right" > </Access> </Publication>