Hypothesis

 

 

 

 

Components of Sourcing Decisions:

 

·         In-house or outsource

·         Supplier Selection

·         Procurement

Sourcing Related Metrics:

 

·         Days payable outstanding measures the number of days between when a supplier performed a supply chain task and when it was paid.

·         Average purchase price measures the average purchase price at which a good or service was purchased during the year. The average price should be weighted by the quantity purchased at each price.

·         Range of purchase price measures the fluctuation in purchase price during a specified period. The goal is to identify if the quantity purchased correlated with the price.

·         Average purchase quantity measures the average amount purchased per order. The goal is to identify whether a sufficient level of aggregation is occurring across locations when placing an order.

·         Fraction of on-time deliveries measures the fraction of deliveries that were on time.

·         Supply quality measures the quality of product supplied.

·         Supply lead time measures the average time between when an order is placed and the product arrives.

Supplier reliability measures the variability of the supplier’s lead time as well as the delivered quantity relative to plan.