Inbound Logistics

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Master Thesis Developing a Framework for Decision Making in Inbound Logistics Ownership Taking for LCCS – An Empirical Study

Maastricht University School of Business and Economics Academic Year 2008/2009 Zhang, Qin (Student ID: i579246) Master of Science of International Business Track: Supply Chain Management Thesis Supervisor: Dr. Lieven Quintens Maastricht, Nov 12th, 2009

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Acknowledgements My study of the master program at Maastricht University comes to an end with the completion of this thesis. Writing a master thesis is a challenging task, yet a worthwhile one. It provides me a learning opportunity to carry out a research and writing an academic report by myself. However, I am fully aware that I would not have been able to finish my thesis as it is without the help from many people who have supported me during the writing of this thesis. I would like to take this opportunity to express my gratitude to all of them. First of all, I would like to thank the people at Company D. Those I have interviewed in various business units and my colleagues in the sourcing department openly shared their knowledge and experience with me, provided me with valuable insights in the industrial world and greatly supported me in data collection. I would like to particularly thank my internship supervisor at Company D. She has not only given me constructive inputs, but also helped me in building up connections with the people that are most knowledgeable to support my research. Her efforts are critical for me to have this fruitful and pleasant working experience in the company. I am also deeply indebted to Dr. Lieven Quintens, my thesis supervisor, for his valuable comments and suggestions. He has walked me through all the stages of the writing of this thesis, and encouraged me to overcome the difficulties that I have encountered. Without his patient instructions and insightful criticism, this thesis could not have improved as it is. Also, Lieven always tried his best to arrange time to review my thesis drafts and give timely feedbacks, which greatly supported me to finish this thesis within the planned timeframe. Last my thanks would go to my beloved parents, who are always there when I need support and encouragement.

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Executive summary
Low-cost-country sourcing (LCCS) is a key strategy that companies use to reduce costs. However, LCCS brings not only opportunities but also challenges and risks for supply management. The complexity and uncertainties that embedded in the supply chain of global scale can lead to unexpected inbound logistics cost, which may offset the cost advantages achieved from LCCS and bring disturbances to the inbound process, hence impact the outbound logistics performance. Therefore it is critical for the companies to implement proactive control over their inbound logistics for LCCS and control the logistics efficiency so as to keep their LCCS strategy justifiable. However, inbound logistics in global sourcing context is not extensively studied as the outbound one. Many companies simply leave the ownership of international inbound logistics to the suppliers or traders without analyzing the cost impact by this decision making. The purpose of this research is to establish a framework to support knowledgeable decision making in inbound logistics ownership taking for LCCS. TCO approach is applied as an effective tool for evaluation of total cost impact by inbound logistics ownership taking, which serves as a major criterion in the decision support framework. By studying the inbound logistics process of four selected LCC sourced case materials in a multinational company in the chemical industrial field, the author builds up a TCO framework to assess the cost efficiency of inbound logistics for LCCS. Based on this framework, the decision support framework is established. The research findings indicate that buying company can achieve decent cost savings by proactively control their inbound logistics, though...
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