A global sourcing strategy for durable tooling

Competitive pressures in manufacturing industries have led to an increased utilization of strategic sourcing initiatives: among them is low cost sourcing. While low cost sourcing has been used extensively for direct materials, the penetration of low cost sourcing in indirect materials is small. This thesis develops a global sourcing strategy for durable tooling and a methodology to help firms determine the best sourcing alternative for indirect materials. A low cost sourcing study done at Carrier compares the landed cost and quality of sheet metal stamping dies sourced from both China and the U.S. The study estimates that there is an opportunity to save 25-50% from low cost sourcing without compromising quality. The sourcing strategy presents a framework for: 1) determining whether to source durable tooling locally, regionally or globally, and 2) for comparing the return (using total cost of ownership) and risk (country/regional) of sourcing alternatives. The primary deliverable of this research is a standard work process which integrates the durable tooling sourcing strategy into Carrier's current product development process. The product development process manages a product's lifecycle from concept to launch. The secondary deliverables, which are necessary to execute the durable tooling sourcing strategy, are: 1) sourcing decision matrix, 2) preferred tooling supplier database, 3) country selection framework, 4) lifecycle cost calculator, and 5) balanced tooling supplier scorecard. The research leading to the development of the described sourcing strategy was conducted jointly between the MIT Leaders for Manufacturing Program and Carrier Corporation, a division of United Technologies. Thesis Supervisor: Jonathan Byrnes Senior Lecturer, Center for Transportation and Logistics Thesis Reader: Donald B. Rosenfield Senior Lecturer, Sloan School of Management Thesis Supervisor: Duane S. Boning Professor and Associate Head of Electrical Engineering & Computer Science