2010 Orthoworld Presentation
06/17/2010
OMTEC Charts
The True Cost of Offshoring!
g
John W
W. Henke
Henke, Jr
Jr., Ph
Ph.D.
D
.
henke@ppi1.com
Professor of Marketing
School of Business Administration
Oakland University
Rochester, MI USA
President
Planning Perspectives, Inc.
Birmingham, MI USA
+1 248 644 7690
Copyright© 2010 Planning Perspectives, Inc. All Rights Reserved.
These materials may not be used or copied for any commercial or academic purpose outside of your firm without written permission of PPI.
OMTEC 2010
Chicago
1
A Partial Solution
Risk Assessed Buying
Copyright© 2010 Planning Perspectives, Inc. All Rights Reserved.
These materials may not be used or copied for any commercial or academic purpose outside of your firm without written permission of PPI.
OMTEC 2010
Chicago
2
Planning Perspectives, Inc.
CONFIDENTIAL
Page 1
Copyright 2010 Planning Perspectives, Inc., all rights reserved.
These materials may not be copied for any commercial or academic purpose outside of your firm without written permission of PPI.
2010 Orthoworld Presentation
06/17/2010
OMTEC Charts
Unknown
Risk Assessmen
R
nt
Comprehensive
Risk Assessed Buying
Unknown
Cost Savings Sustainability
Copyright© 2010 Planning Perspectives, Inc. All Rights Reserved.
These materials may not be used or copied for any commercial or academic purpose outside of your firm without written permission of PPI.
Predictable
OMTEC 2010
Chicago
3
Unknown
Risk Assessmen
R
nt
Comprehensive
Evolution of Risk Assessed Buying
Lowest Total
Delivered Cost
Lowest Piece
Price
•“Three bids and
a cloud of dust”
Unknown
Cost Savings Sustainability
Copyright© 2010 Planning Perspectives, Inc. All Rights Reserved.
These materials may not be used or copied for any commercial or academic purpose outside of your firm without written permission of PPI.
Predictable
OMTEC 2010
Chicago
4
Planning Perspectives, Inc.
CONFIDENTIAL
Page 2
Copyright 2010 Planning Perspectives, Inc., all rights reserved.
These materials may not be copied for any commercial or academic purpose outside of your firm without written permission of PPI.
2010 Orthoworld Presentation
06/17/2010
OMTEC Charts
Comprehensive
Evolution of Risk Assessed Buying
Lowest Total
Delivered Cost
Risk Assessmen
R
nt
Lowest p
piece price
p
plus:
p
•Transportation Costs
▪ Freight
▪ Duty
▪ Packaging
•Inventory Costs
▪ Inventory carrying costs
▪ Inventory obsolescence
Unknown
•Supplier Support Costs
▪ Regional offices
▪ New supplier development
▪ HDQ personnel travel costs
Unknown
Cost Savings Sustainability
Copyright© 2010 Planning Perspectives, Inc. All Rights Reserved.
These materials may not be used or copied for any commercial or academic purpose outside of your firm without written permission of PPI.
Predictable
OMTEC 2010
Chicago
5
Unknown
Risk Assessmen
R
nt
Comprehensive
Evolution of Risk Assessed Buying
Lowest
Sustainable Cost
Lowest Total
Delivered Cost
Lowest Piece
Price
•“Three bids and
a cloud of dust”
Unknown
Lowest piece price plus:
•Transportation Costs
• Inventory Costs
• Supplier Support Costs
Cost Savings Sustainability
Copyright© 2010 Planning Perspectives, Inc. All Rights Reserved.
These materials may not be used or copied for any commercial or academic purpose outside of your firm without written permission of PPI.
Predictable
OMTEC 2010
Chicago
6
Planning Perspectives, Inc.
CONFIDENTIAL
Page 3
Copyright 2010 Planning Perspectives, Inc., all rights reserved.
These materials may not be copied for any commercial or academic purpose outside of your firm without written permission of PPI.
2010 Orthoworld Presentation
06/17/2010
OMTEC Charts
Comprehensive
Evolution of Risk Assessed Buying
Risk Assessmen
R
nt
Lowest
Sustainable Cost
Lowest Total
Delivered Cost plus:
Unknown
•Piece Price Cost Elements
▪ Raw material costs
▪ Purchased parts costs
▪ Depreciation
▪ Direct labor
▪ Overhead
▫ Indirect labor
▫ Dedicated tooling costs
▫ Operating expenses
Unknown
Predictable
Cost Savings Sustainability
Copyright© 2010 Planning Perspectives, Inc. All Rights Reserved.
These materials may not be used or copied for any commercial or academic purpose outside of your firm without written permission of PPI.
OMTEC 2010
Chicago
7
Comprehensive
Evolution of Risk Assessed Buying
Unknown
Risk Assessmen
R
nt
Lowest Risk
Assessed Cost
Lowest
Sustainable Cost
Lowest Total
Delivered Cost
Lowest Piece
Price
•“Three bids and
a cloud of dust”
Unknown
Lowest Total
Delivered Cost plus:
• Piece Price Cost Elements
Lowest piece price plus:
•Transportation Costs
• Inventory Costs
• Supplier Support Costs
Cost Savings Sustainability
Copyright© 2010 Planning Perspectives, Inc. All Rights Reserved.
These materials may not be used or copied for any commercial or academic purpose outside of your firm without written permission of PPI.
Predictable
OMTEC 2010
Chicago
8
Planning Perspectives, Inc.
CONFIDENTIAL
Page 4
Copyright 2010 Planning Perspectives, Inc., all rights reserved.
These materials may not be copied for any commercial or academic purpose outside of your firm without written permission of PPI.
2010 Orthoworld Presentation
06/17/2010
OMTEC Charts
Evolution of Risk Assessed Buying
Comprehensive
Lowest Risk
Assessed Cost
Unknown
Risk Assessmen
R
nt
Lowest Sustainable
Cost plus:
• End-Customer Perceived Risk
▪ Personal safety concerns
▪ Corporate social responsibility concerns
• Parts Related Risks
▪ Travelability
▪ Intellectual property risks
▪ New product development cycle time
• Country / Region Risks
▪ Political risks
▪ Economic risks
▪ Labor risks
▪ Infrastructure conditions
• Supply Chain Management Risks
▪ Raw material availability
▪ Supply chain knowledge/history
▪ Relationship enhancement costs
• Home country Losses
▪ Industry base dismantling
▪ Potential customer loss
Unknown
Predictable
Cost Savings Sustainability
Copyright© 2010 Planning Perspectives, Inc. All Rights Reserved.
These materials may not be used or copied for any commercial or academic purpose outside of your firm without written permission of PPI.
OMTEC 2010
Chicago
9
Comprehensive
A Partial Solution
Lowest Risk
Assessed Cost
Unknown
Risk Assessmen
R
nt
Lowest Sustainable
Cost plus:
• End-Customer
Perceived Risk
• Parts-Related Risks
• Country / Region Risks
• Supply Chain
Management Risks
• Home Country Losses
Lowest
Sustainable Cost
Lowest Total
Delivered Cost
Lowest Piece
Price
•“Three bids and
a cloud of dust”
Unknown
Lowest Total
Delivered Cost plus:
• Piece Price Cost Elements
Lowest piece price plus:
•Transportation Costs
• Supplier Support Costs
• Inventory Costs
Cost Savings Sustainability
Copyright© 2010 Planning Perspectives, Inc. All Rights Reserved.
These materials may not be used or copied for any commercial or academic purpose outside of your firm without written permission of PPI.
Predictable
OMTEC 2010
Chicago
10
Planning Perspectives, Inc.
CONFIDENTIAL
Page 5
Copyright 2010 Planning Perspectives, Inc., all rights reserved.
These materials may not be copied for any commercial or academic purpose outside of your firm without written permission of PPI.
2010 Orthoworld Presentation
06/17/2010
OMTEC Charts
The True Cost of Offshoring!
g
John W
W. Henke
Henke, Jr
Jr., Ph
Ph.D.
D
.
henke@ppi1.com
Professor of Marketing
School of Business Administration
Oakland University
Rochester, MI USA
President
Planning Perspectives, Inc.
Birmingham, MI USA
+1 248 644 7690
Copyright© 2010 Planning Perspectives, Inc. All Rights Reserved.
These materials may not be used or copied for any commercial or academic purpose outside of your firm without written permission of PPI.
Planning Perspectives, Inc.
CONFIDENTIAL
OMTEC 2010
Chicago
11
Page 6
Copyright 2010 Planning Perspectives, Inc., all rights reserved.
These materials may not be copied for any commercial or academic purpose outside of your firm without written permission of PPI.