BUS 370 Chapter Notes - Chapter 10-12: Insourcing, Break Bulk Cargo, Cash Flow
20 Jul 2020
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Chapter 10 & 11 - sourcing decisions, purchasing. To compete globally, you need to purchase globally. Global purchasing efforts are supported by advances in information systems. Financial impact on average, cost of materials consumes over half of a manufacturer"s revenue. Every dollar saved in purchasing increases pretax profit by one dollar. Every dollar saved in purchasing inventory lowers total assets by one dollar. Product costs + failure costs + backup inventory = total costs. Failure costs = % bad x number of goods x cost of failed good. Sourcing decisions are high-level, often strategic decisions that address: Insourcing the use of resources within the firm to provide products or services. Loss of access to superior products and services offered by. Outsourcing the use of supply chain partners to provide products or potential suppliers services. Loss of control over the process and core technologies. Factors affecting the decision to insource or outsource. Examples: financial risks, market risks, product & tech risks.
