Determining sourcing strategies: a decision model based on activity and cost driver information View Full Text


Ontology type: schema:ScholarlyArticle      Open Access: True


Article Info

DATE

1998-08

AUTHORS

Z Degraeve, F Roodhooft

ABSTRACT

Determining sourcing strategies for different material groups provides a major challenge to most companies. There has been little research on the choice of the optimal number of different suppliers for a given product group and the determination of their market shares. In this paper we propose a mathematical programming model using activity based costing information to determine optimal order splitting among suppliers on the basis of the different costs associated with the purchasing decision. We argue that sourcing strategies should be based on the minimisation of the total cost of ownership resulting from external purchases. We demonstrate the model by a real life case regarding the procurement of ball bearings at Cockerill Sambre S.A., a Belgian multinational steel producer. This decision support system is currently used by the company. This case resulted in the decision by management to develop comprehensive, company wide purchasing software using our mathematical program based on the total cost of ownership concept. More... »

PAGES

781-789

Journal

Author Affiliations

Identifiers

URI

http://scigraph.springernature.com/pub.10.1057/palgrave.jors.2600589

DOI

http://dx.doi.org/10.1057/palgrave.jors.2600589

DIMENSIONS

https://app.dimensions.ai/details/publication/pub.1026095188


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