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Identifying the Best-Cost Countries for sourcing SKF's direct materials

Thi Tuyet Mai Vu ; Piyush Ratnakar More
Göteborg : Chalmers tekniska högskola, 2017. 89 s. Master thesis. E - Department of Technology Management and Economics, Chalmers University of Technology, Göteborg, Sweden; E2017:119, 2017.
[Examensarbete på avancerad nivå]

Purpose - The purpose of this thesis is to identify best-cost countries for SKF to source Rings, an important group of direct materials used in bearing. This exploration would give the major distinction between two sourcing approaches, best-cost country sourcing and low-cost country sourcing. While low-cost country sourcing focuses on low purchasing price, low labor cost and low material cost, best-cost country sourcing builds the foundation on total cost of ownership and country risk analysis. Methodology - In order to identify best-cost countries, the combination of qualitative and quantitative methods are used. Data was collected from literature, interviews with SKF’s global category managers, SKF internal data as well as external sources of information. Potential countries were recommended by SKF’s global category managers during the interviews. Statistical data of different parameters were collected for these countries. To make the data comparable, all data was converted into one standard scale. This was made by using mean standard deviation and scoring scheme risk analysis. After that a development funnel method was applied to analyze and conclude the best-cost countries. Finding - In this project, the requirements for a country to be chosen as a best-cost country for SKF to source Rings are: (1) country should have low total cost of ownership; (2) the risks connected to sourcing from a country should be low and if they exist, they should be manageable; (3) country should have available materials including steel bars, steel tubes, as well as available forging operation and casting operation to produce Rings, and (4) SKF’s local and regional sourcing strategy should be met. To meet these conditions, the list of different parameters which impact on the selection and evaluation of best-cost countries are provided. Contribution - This thesis contributes to the academic knowledge by providing a framework, a list of requirements and parameters which are important for the selection and evaluation of best-cost country. From the business perspective, this thesis’ finding at country level enables the company to go further into supplier level, to search for and work with potential suppliers in determined best-cost countries. Besides that, methodologies, insights and sources of information provide the baseline and reference from which, the company may expand the project to identify best-cost countries for other categories. Moreover, the know-how given how to select and analyze best-cost country would be helpful within different companies and industries.

Nyckelord: Best-cost country sourcing, low-cost country sourcing, total cost of ownership, country risk analysis.

Publikationen registrerades 2017-12-28. Den ändrades senast 2017-12-28

CPL ID: 254136

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