Continuing with the information from Assignment #1, develop a balanced scorecard and create a total cost of ownership (TCO) model for the five commodities/materials you need to purchase for your new business. Feel free to make assumptions about the actual performance of each of the suppliers in terms of delivery, price changes, quality issues, etc.

QUESTION

Continuing with the information from Assignment #1, develop a balanced scorecard and create a total cost of ownership (TCO) model for the five commodities/materials you need to purchase for your new business. Feel free to make assumptions about the actual performance of each of the suppliers in terms of delivery, price changes, quality issues, etc. For example, you could indicate that your corn leaf supplier delivered on time or slightly early for the first sixth months but has been habitually late for the last six months. Make sure to clearly identify the assumptions you use. Also, rely on the assigned resources as much as possible but you can add other resources that you find helpful. Feel free to include diagrams to illustrate your scorecard or model. These diagrams do not count toward to your page length requirement. Your paper should be two to three pages, double-spaced, 12-point font, one-inch margins.

• The TCO should be double spaced, 12-point font, and two to three pages in length excluding the title page and reference page.
• Third person writing is required. Third person means that there are no words such as “I, me, my, we, or us” (first person writing), nor is there use of “you or your” (second person writing). If uncertain how to write in the third person, view this link: http://www.quickanddirtytips.com/education/grammar/first-second-and-third-person.
• Contractions are not used in business writing, so you are expected NOT to use contractions in writing this assignment.
• Title page
• Use headings to help organize the paper
• Use APA formatting for in-text citations and reference page. You are expected to paraphrase and not use quotes. Deductions will be taken when quotes are used and found to be unnecessary.
• The expectation is that you provide a robust use of the course readings. No other books besides the course eBook can be used. When using a source document, the expectation is that the information is cited and referenced with a page or paragraph number.

• ANSWER

• Balanced Scorecard and Total Cost of Ownership (TCO) Model for Purchasing Commodities/Materials

  Introduction

  In order to effectively manage the procurement process for a new business, it is crucial to develop a balanced scorecard and a total cost of ownership (TCO) model. These tools will help evaluate suppliers’ performance and make informed decisions based on factors such as delivery, price changes, and quality issues. This paper aims to present a balanced scorecard and TCO model for five commodities/materials required for the new business, incorporating assumptions about supplier performance.

  Don't use plagiarized sources. Get Your Custom Essay on

  Continuing with the information from Assignment #1, develop a balanced scorecard and create a total cost of ownership (TCO) model for the five commodities/materials you need to purchase for your new business. Feel free to make assumptions about the actual performance of each of the suppliers in terms of delivery, price changes, quality issues, etc.

  Just from $13/Page

  Order Essay

  Balanced Scorecard

  A balanced scorecard provides a comprehensive view of supplier performance by considering multiple dimensions. For the purpose of this analysis, the following four perspectives will be used: financial, customer, internal processes, and learning and growth. Each perspective will be evaluated based on key performance indicators (KPIs) relevant to the procurement process.

  Financial Perspective

  The financial perspective assesses the impact of supplier performance on the bottom line. KPIs in this perspective include:

  Price Stability: Measures the consistency of prices over time.

   Total Cost: Evaluates the overall cost incurred, including purchasing price, transportation, and storage costs.

  Cost of Quality: Quantifies the expenses associated with quality issues and returns.

  Customer Perspective

  The customer perspective focuses on meeting customer requirements and satisfaction. KPIs in this perspective include:

  Delivery Reliability: Measures the supplier’s ability to deliver commodities/materials on time.

   Quality Compliance: Assesses the level of conformity to specified quality standards.

  Responsiveness: Evaluates the supplier’s flexibility and willingness to accommodate changing customer demands.

  Internal Processes Perspective

  The internal processes perspective examines the efficiency and effectiveness of the procurement process. KPIs in this perspective include:

   Lead Time: Measures the time required from placing an order to receiving the commodities/materials (Easterby-Smith et al., 2008).

  Order Accuracy: Assesses the supplier’s accuracy in fulfilling order specifications.

  Supplier Relationship Management: Evaluates the strength of the relationship between the business and its suppliers.

   Learning and Growth Perspective

  The learning and growth perspective focuses on the capacity for continuous improvement and innovation. KPIs in this perspective include:

  Supplier Collaboration: Assesses the level of collaboration and knowledge sharing between the business and suppliers (O’Meara, n.d.).

  Supplier Development: Evaluates the supplier’s efforts to improve their capabilities and processes.

  Sustainable Practices: Measures the supplier’s commitment to environmentally sustainable practices.

  Total Cost of Ownership (TCO) Model

  The TCO model accounts for both the direct and indirect costs associated with procuring commodities/materials. It helps in evaluating the overall cost impact of selecting a particular supplier. The TCO model consists of the following cost components:

  Purchase Price: The initial cost of procuring the commodities/materials (Ferrin & Plank, 2002).

  Transportation Costs: Includes shipping, handling, and logistics expenses.

   Inventory Carrying Costs: Accounts for storage, warehousing, and holding costs.

  Quality Costs: Includes costs associated with defective or non-conforming materials.

  Ordering Costs: Incorporates expenses related to placing and processing orders.

  Supplier Management Costs: Covers the cost of managing and maintaining relationships with suppliers.

  Risk Costs: Accounts for the potential risks associated with supplier performance, such as late deliveries or quality issues.

  Assumptions

  Suppliers’ performance will be evaluated over a one-year period.

  KPIs will be rated on a scale of 1 to 5, with 5 representing the highest performance.

  Financial data and TCO calculations will be based on actual costs incurred.

  Supplier performance data will be collected and analyzed on a quarterly basis.

  Conclusion

  Developing a balanced scorecard and a TCO model enables effective evaluation and decision-making in the procurement process. By considering various perspectives and cost components, businesses can assess supplier performance comprehensively and identify areas for improvement. It is important to regularly review and update the scorecard and TCO model to adapt to changing business needs and supplier performance.

  References

  Easterby-Smith, M., Graça, M. a. S., Antonacopoulou, E. P., & Ferdinand, J. (2008). Absorptive Capacity: A Process Perspective. Management Learning, 39(5), 483–501. https://doi.org/10.1177/1350507608096037 

  Ferrin, B. G., & Plank, R. E. (2002). Total Cost of Ownership Models: An Exploratory Study. Total Cost of Ownership Models: An Exploratory Study, 38(3), 18–29. https://doi.org/10.1111/j.1745-493x.2002.tb00132.x 

  O’Meara, K. (n.d.). Faculty Careers and Work Lives: A Professional Growth Perspective. https://eric.ed.gov/?id=EJ822663