A Cost Benefit Analysis of an Automotive Industry Solution to Intercontinental Supply Chain Operations

Published

March 17, 2010

Author(s)

Susanne Muller

Abstract

This paper describes a cost benefit analysis of the Materials Off-shore Sourcing (MOSS) project. The project focused on improving the operation of US inbound intercontinental supply chains of automotive parts. The MOSS project sought to reduce transit time, transit time variability and inventory by providing a collaborative environment engaging OEMs, suppliers, ocean carriers, logistics service providers, freight forwarders and customs brokers. MOSS developed an innovative approach to resolving the significant problems of visibility, data quality, and customs compliance. The benefits analysis considers one-time benefits of reduced inventory, and quantified and qualitative on-going benefits realized by the various stakeholders in the supply chain. The costs analysis considers one-time investments as well as recurring costs of deploying MOSS conforming software as Software as a Service'. The financial analysis shows an internal rate of return of 400% and a payback period of less than 3 months, and gives support for managers preparation of a possible investment decision. Shortcomings of the analysis are discussed.

Citation

NIST Interagency/Internal Report (NISTIR) - 7654

Report Number

7654

NIST Pub Series

NIST Interagency/Internal Report (NISTIR)

Pub Type

NIST Pubs

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Keywords

financial/economic analysis, global operations, inventory management, case study, lead time, logistics/distribution, automotive

Citation

Muller, S. (2010), A Cost Benefit Analysis of an Automotive Industry Solution to Intercontinental Supply Chain Operations, NIST Interagency/Internal Report (NISTIR), National Institute of Standards and Technology, Gaithersburg, MD, [online], https://tsapps.nist.gov/publication/get_pdf.cfm?pub_id=904501 (Accessed April 18, 2024)