1 Kristin Vincent Kristin Vincent Thesis Advisor: Thesis Advisor: Charles H. Fine Charles H. Fine Costs, Risks and Variables Costs, Risks and Variables to Consider in Sourcing to Consider in Sourcing Decision Models for Decision Models for Globally Dispersed Globally Dispersed Manufacturers Manufacturers Sourcing Strategy Determination Sourcing Strategy Determination Engineering & Program Management Engineering & Program Management BOM Defined BOM Defined Purchasing Program Management (PPM), Materials Planning & Logistics Purchasing Program Management (PPM), Materials Planning & Logistics Sourcing Strategy Determined Sourcing Strategy Determined Commodity Purchasing, PPM, Capacity Planning Commodity Purchasing, PPM, Capacity Planning Suppliers Chosen Suppliers Chosen
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Kristin VincentKristin VincentThesis Advisor: Thesis Advisor: Charles H. FineCharles H. Fine
Costs, Risks and Variables Costs, Risks and Variables to Consider in Sourcing to Consider in Sourcing
Decision Models for Decision Models for Globally Dispersed Globally Dispersed
Information Risks and CostsInformation Risks and Costs
Loss of Availability•Lost revenues •Transactions unavailable
Loss of Availability•Lost revenues •Transactions unavailable
Loss of Information Integrity•Regulatory penalties•Loss in confidence•Labor cost for restoring information integrity
Loss of Information Integrity•Regulatory penalties•Loss in confidence•Labor cost for restoring information integrity
Loss of Information Confidentiality•Market share loss
Loss of Information Confidentiality•Market share loss
IIIIII High Vulnerability
High Vulnerability
II IIII
Prob
abili
ty o
f Dis
rupt
ion
ConsequencesSheffi, Yossi. (2005)
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VariablesVariables
The Good News?The Good News?
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ClockspeedClockspeed
““ClockspeedsClockspeeds are to business genetics what lifecycles are to are to business genetics what lifecycles are to human genetics.” Charles H. Finehuman genetics.” Charles H. Fine
Step Step 1•Benchmark fruit flies•Fast clockspeed industries or processes
•Exploit and execute•Competency development dynamics•Make/buy•Tools for development and engineering of products or systems
ClockspeedClockspeed
Private Equity as Private Equity as ClockspeedClockspeed Equivalent of Equivalent of FruitflyFruitfly for for Strategic Sourcing Models Strategic Sourcing Models
5 5.2 5.4 5.6 5.8 6 6.2 6.4
Production
Value added
Non-PE
PE
The sample consisted of 8,596 country-industry-year observations between 1991 and 2007. Growth rates are annual percentages. (Bernstein, Lerner, Sørensen, & Strömberg, 2008)
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My Model of Cost, Risk and My Model of Cost, Risk and Variable Impact to Total CostVariable Impact to Total Cost