Procurement Outsourcing Strategies Logistics Management Scenario Description: You are the supply manager for Wonderful Widgets. The company produces one product, widgets. The company can procure its widget parts from various suppliers or use its current equipment, facility, layout, and materials to produce the component in house. The problem: As the supply manager you see the operational costs increase each month. You need to reduce these costs and streamline processes before the end of the quarter. Corporate will see these costs on the quarterly reports. You need to be proactive. Additional Information: As the supply manager you are responsible for making all decisions pertaining to procurement. Wonderful Widgets can produce the parts needed to assemble the widgets OR they can outsource the parts to variety of suppliers. Remember, Wonderful Widgets can produce the components internally or buy them from their suppliers. Based on historical data and knowledge of customers, you know: 1. Value is not attached to the components 2. Clockspeed is slow 3. No competitive advantage exists Decision point: Do you look at procurement strategies (outsourcing)? YES! This would be the optimal decision based on the current information. Wonderful Widgets does not need to worry about competitive advantage, clockspeed, or value placed on this component. As such, outsourcing is a viable option at this time. Additional Information: As the supply manager, you decide to outsource or procure the component from one or multiple suppliers. Now you must think about supply risk and profit impact. You decide the following: 1. Supply risk is low 2. Profit impact is low Based on what you know, the component is considered to be a functional part/product versus an innovative product. Likewise, this fits with low supply risk and low profit impact. You also realize that using multiple suppliers is the best option. Decision point: As the supply manager, you decide to outsource or procure the component from multiple suppliers. Based on what you know at this time, which procurement strategy is the best option? MIIMIZING TOTAL LANDED COST This would be the most appropriate procurement strategy. The component is a functional product and the supply risk and profit impact are low. Therefore, this approach will assist Wonderful Widgets in reducing their overall operating costs. Correct answer: Wonderful Widgets would be best served if they outsourced and used a minimizing total landing cost strategy. They have the capability to produce the component internally but this adds to their operational costs due to fixed and variable costs associated with producing this particular component. Wonderful Widgets does not need to worry about competitive advantage, clockspeed, or value placed on this component. APUS Assignment Rubric Undergraduate Level 300-400 Level Focus/Thesis Total Points Beginning Exhibits a limited understanding of the assignment. Reader is unable to follow the logic used for the thesis and development of key themes. Introduction of thesis is not clearly evident, and reader must look deeper to discover the focus of the writer. Student's writing is weak in the inclusion of supporting facts or statements. 1 Developing Student exhibits a basic understanding of the intended assignment, but the thesis is not fully supported throughout the assignment. While thesis helps to guide the development of the assignment, the reader may have some difficulty in seeing linkages between thoughts. While student has included a few supporting facts and statements, this has limited the quality of the assignment. 2 Accomplished Establishes a good comprehension of topic and in the building of the thesis. Student demonstrates an effective presentation of thesis, with most support statements helping to support the key focus of assignment. 3 Exemplary Student exhibits a defined and clear understanding of the assignment. Thesis is clearly defined and well-constructed to help guide the reader throughout the assignment. Student builds upon the thesis of the assignment with well-documented and exceptional supporting facts, figures, and/or statements. 4 Level Content/Subject Knowledge Beginning Student tries to explain some concepts, but overlooks critical details. Assignment appears vague or incomplete in various segments. Student presents concepts in isolation, and does not perceive to have a logical sequencing of ideas. 1 Developing The assignment reveals that the student has a general, fundamental understanding of the course material. Whereas, there are areas of some concerning in the linkages provided between facts and supporting statements. Student generally explains concepts, but only meets the minimum requirements in this area. 2 Accomplished Student exhibits above average usage of subject matter in assignment. Student provides above average ability in relating course content in examples given. Details and facts presented provide an adequate presentation of student's current level of subject matter knowledge. 3 Exemplary Student demonstrates proficient command of the subject matter in the assignment. Assignment shows an impressive level of depth of student's ability to relate course content to practical examples and applications. Student provides comprehensive analysis of details, facts, and concepts in a logical sequence. 4 Level Critical Thinking Skills Beginning Student demonstrates beginning understanding of key concepts, but overlooks critical details. Learner is unable to apply information in a problem-solving fashion. Student presents confusing statements and facts in assignment. No evidence or little semblance of critical thinking skills. 1 Developing Student takes a common, conventional approach in guiding the reader through various linkages and connections presented in assignment. However, student presents a limited perspective on key concepts throughout assignment. Student appears to have problems 2 Total Points Total Points applying information in a problem-solving manner. Accomplished Student exhibits a good command of critical thinking skills in the presentation of material and supporting statements. Assignment demonstrates the student's above average use of relating concepts by using a variety of factors. Overall, student provides adequate conclusions, with 2 or fewer errors. 3 Exemplary Student demonstrates a higher-level of critical thinking necessary for 300-400 level work. Learner provides a strategic approach in presenting examples of problem solving or critical thinking, while drawing logical conclusions which are not immediately obvious. Student provides well-supported ideas and reflection with a variety of current and/or world views in the assignment. Student presents a genuine intellectual development of ideas throughout assignment. 4 Level Organization of Ideas/Format Beginning Assignment reveals formatting errors and a lack of organization. Student presents an incomplete attempt to provide linkages or explanation of key terms. The lack of appropriate references or source materials demonstrates the student's need for additional help or training in this area. Student needs to review and revise the assignment. 1 Developing Learner applies some points and concepts incorrectly. Student uses a variety of formatting styles, with some inconsistencies throughout the paper. Assignment does not have a continuous pattern of logical sequencing. Student uses less than 3 sources or references. 2 Accomplished Student explains the majority of points and concepts in the assignment. Learner demonstrates a good skill level in formatting and organizing material in assignment. Student presents an above average level of preparedness, with a few formatting errors. Assignment contains less than 5 resources. 3 Exemplary Student thoroughly understands and excels in explaining all major points. An original, unique, and/or imaginative approach to overall ideas, concepts, and findings is presented. Overall format of assignment includes an appropriate introduction (or abstract), welldeveloped paragraphs, and conclusion. Finished assignment demonstrates student's ability to plan and organize research in a logical sequence. Student uses at least of 5-7 references in assignment. 4 Level Writing Conventions (Grammar & Mechanics) Beginning Topics, concepts, and ideas are not coherently discussed or expressed in assignments. Student's writing style is weak and needs improvement, along with numerous proofreading errors. Assignment lacks clarity, consistency, and correctness. Student needs to review and revise assignment. 1 Developing Assignment reflects basic writing and grammar, but more than 5 errors. Key terms and concepts are somewhat vague and not completely explained by student. Student uses a basic vocabulary in assignment. Student's writing ability is average, but demonstrates a basic understanding of the subject matter. 2 Accomplished Student provides an effective display of good writing and grammar. Assignment reflects student's ability to select appropriate word usage and present an above average presentation of a given topic or issue. Assignment appears to be well written with no more than 3-5 errors. Student provides a final written product that covers the above-minimal requirements. 3 Student demonstrates an excellent command of grammar, as well as presents research in a clear and concise writing style. Presents a thorough, extensive understanding of word usage. Student excels in the selection and development of a well-planned research 4 Exemplary Total Points Total Points assignment. Assignment is error-free and reflects student's ability to prepare a high-quality academic assignment. Level Use of Computer Technology/Applications Total Points Beginning Student needs to develop better formatting skills. The student may need to take additional training or obtain help from the Educator Help Desk while preparing an assignment. Research and resources presented in the assignment are limited. Student needs to expand research scope. The number of formatting errors is not acceptable. 1 Developing Student demonstrates a basic knowledge of computer applications. Appearance of final assignment demonstrates the student's limited ability to format and present data. Resources used in assignment are limited. Student may need to obtain further help in the use of computer applications and Internet research. 2 Accomplished Assignment presents an above-average use of formatting skills, with less than 3 errors. Students has a good command of computer applications to format information and/or figures in an appropriate format. Student uses at least two types of computer applications to produce a quality assignment. 3 Exemplary Student provides a high-caliber, formatted assignment. Learner exhibits excellent use of computer technology in the development of assignment. Quality and appropriateness of stated references demonstrate the student's ability to use technology to conduct applicable research. Given assignment includes appropriate word processing, spreadsheet and/or other computer applications as part of the final product. 4