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Title: Improving Sourcing Decision Using Total Cost of Ownership and Risk Analysis: The Cast Study of Imported Product
Authors: Khumloa, Sopee 
Baramichai, Manisra 
Adsavakulchai, Suwannee 
Issue Date: 2010
Publisher: University of the Thai Chamber of Commerce
University of the Thai Chamber of Commerce
Source: Sopee Khumloa, Manisra Baramichai, Suwannee Adsavakulchai (2010) Improving Sourcing Decision Using Total Cost of Ownership and Risk Analysis: The Cast Study of Imported Product. UTCC Engineering Research Papers.
Journal: UTCC Engineering Research Papers
Abstract: Total cost of ownership is a methodology and philosophy that looks beyond the price of a purchase to include many other purchase related costs in making the purchasing decision. However the numbers of papers that aim to illustrate the application of this methodology in practice are still very limited. In this paper, we illustrate how the total cost of ownership (TCO) can affect the sourcing decisions for the major consumer product. Currently, based on the DDP price, the product is purchased and imported from suppliers in Philippines to be sold in Thailand. However, under DDP price the other cost such as inventory management cost, warehouse management cost and risk cost are not considered. Therefore, the company tends to obtain the product with a cheaper price but a higher risk and a higher logistics cost. To look for the best choice for the business, four sourcing alternatives were proposed and evaluated based on the total cost of ownership and the risk cost. The four alternatives include purchasing the product from international suppliers in Philippines, Indonesia, Australia, and one local supplier in Thailand. The result from the study indicate the potential savings by changing the sourcing policy from relying only on supplier in Philippine to relying on both Philippine and Thailand suppliers.
ISSN: 1906-1625
Rights: This work is protected by copyright. Reproduction or distribution of the work in any format is prohibited without written permission of the copyright owner.
Appears in Collections:EN: Journal Articles

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