Sourcing Strategy: Principles, Policy and Designs

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Springer Science & Business Media, Dec 5, 2005 - Business & Economics - 320 pages
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Sourcing Strategy is about sourcing as a long term strategic activity. Myopic purchasing management stops short with describing functional procedures and procedural innovations such as online order processing.

The goal of this book is not merely to document sourcing strategy, but to provide the tools to determine it. Therefore, rather than merely describe common sourcing processes, the book takes a normative approach to sourcing strategy. It argues for a rational, complete and integrated process view. It supports its recommendations with logical arguments from an interdisciplinary and analytical approach grounded in microeconomics, law and business strategy.

Part 1 of the book explains the economic and business principles that underlie sourcing strategies. It derives policies that guide viable strategies to meet sourcing goals. Part 2 applies these to creative designs for standard sourcing scenarios.

 

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Contents

List of Exhibits
8
Percent outsourced merchandise and manufactured
20
Strategic sourcing governance architecture
33
Dynamics of Markets Contracts and Relationships
40
Proxsys Academic Version Contents
46
Sourcing Goals and Objectives
51
Tradeoffs in component economic quantities in
60
The Government Sourcing Environment
65
Ordering of Bids and Bidding Strategy
183
Sourcing Design Elements
187
Risks and Rewards of Multiple Sourcing
193
The sourcing decision process
196
Exercise 1 1 on Fixed Price Contracts
208
Reserve pricecapacity curves and award types
215
Exercise 2 1 on Capacity Constrained Contracts
226
Capacity Constraints and Pricing in Sourcing Markets 21
229

Sourcing awards and capacity utilization
69
Costs and Performance Risks 77
76
Types of accounting costs
86
Contracts and Incentives
93
Disclaimer Sources of Risk
96
A comparison of common contract designs
103
Source Selection I I I
110
Marginal expense and optimal reverse auctions
134
Supplier Strategies I 39
139
Sourcing Reports and Data
155
Design
168
Summary features of standard sourcing designs
173
Discriminatory second price totem pole award
237
Risks and Resource Sharing
243
Exercise 4 1 on Equity Sharing Contracts
253
Selection and Incentives for Innovation LIC 255
254
Risk averse vendors insurance rents
262
Incentive Fee Contracts Linear Incentives
268
Selection and Incentives for Innovation Yardstick Contracts
269
Exercise 5 1 on Incentive Fee Contracts
282
Notes
287
References
297
Subject Index 315
314
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