COMMERCE 4BE3 Lecture Notes - Lecture 11: E-Procurement, Outsourcing, Serval
29 Oct 2017
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Limited production facilities: cost considerations (less expensive to buy the part, small-volume requirements, supplie(cid:396)s(cid:859) (cid:396)esearch and specialized know-how, desire to maintain a stable work force (in periods of rising sales, desire to maintain a multiple-source policy. Indirect managerial control considerations: procurement and inventory considerations, what to include into cost consideration, to make: Incremental inventory carrying costs: delivered purchased material costs, direct labor costs, any follow-on costs stemming from quality and related problems. Incremental costs of capital: to buy, purchase price of the part, transportation costs, receiving and inspection costs. Incremental purchasing costs: returns costs, setting up new procurement costs (eprocurement, supplier management costs (selecting, auditing, etc. , any follow-on costs related to quality or service. The time factor: cost can be figured on short or long-term basis. In short term: focus on direct measurable costs, understate tooling costs, overlook indirect material costs incurred in storage, purchasing, inspection, fails to consider likely future changes in the relative costs of labour, materials, transportation.
