Asked by Macey French on May 07, 2024
Verified
Explain how tailored sourcing can be used to improve profitability.
Tailored Sourcing
The practice of customizing the procurement process to fit the specific needs and requirements of a business.
Improve Profitability
Involves strategies and actions aimed at increasing the net income relative to revenue, effectively enhancing the financial performance of a business.
Profitability
A measure of the efficiency of a company in generating profits from its operations, calculated as the ratio of net income to revenue.
- Understand the intricacies involved in making supply chain decisions, taking into account the compromises between various strategies to enhance profitability.
Verified Answer
In volume-based tailored sourcing,the predictable part of a product's demand is produced at an efficient facility,whereas the uncertain portion is produced at a flexible facility.
In product-based tailored sourcing,low-volume products with uncertain demand are obtained from a flexible source,while high-volume products with less demand uncertainty are obtained from an efficient source.Product-based tailored sourcing may be implemented with a flexible facility focusing on new products,and efficient facilities focusing on the well-established products.
Learning Objectives
- Understand the intricacies involved in making supply chain decisions, taking into account the compromises between various strategies to enhance profitability.
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