ABSTRACT
The numbers of suppliers, the structure of the supply base, and the range of material commodities to be purchased are all determined by the product bill of materials (BOM). Consequently, the construction of the network container requires knowledge of its likely product contents. This chapter begins with a brief description of a practical part numbering scheme, then explains the workings of the product BOM. The chapter explains how to organize purchasing around commodity management. The chapter describes how to perform supplier selection to meet a direct material budget. Last, since inbound logistics is an important cost factor in material sourcing, the chapter discusses inbound logistics cost drivers and import regulatory considerations.
