Understanding the Four A's of Total Cost Data in Worldwide Sourcing

This article discusses the four A's of total cost data in worldwide sourcing - actual, approximations, assumptions, and absent. It explains their impact on the cost budget and provides insights on how to consider them while doing business with domestic or foreign suppliers. The article also includes direct questions and responses related to the topic.

Running head: CORNELL NOTES- WORLDWIDE SOURCING
Week 6- Worldwide Sourcing
Name of the Student
Name of the University
Author Note

1CORNELL NOTES- WORLDWIDE SOURCING
The four A of the total cost data are- actual, approximations, assumptions and absent.
Actual price actual price comprised of unit price of the object, overseas shipment insurance and
tariffs1. This cost is required when international suppliers are included. Moreover, in
approximations price, it is difficult to estimate the actual1. The reason is initially the cost
involved due to late shipments or rework in shipments is not carried out. Assumptions cost refers
to the cost that buyers issue on a material to the supplier and the organization does not have
anything to do with the cost. However, this cost sum up with the cost and increase the budget
that was initially formulated. Lastly, the absent cost deals with the cost that is involved in
product or service quality1.
Direct questions:
Q1. What do you think is the most crucial “A” category out of four that is not included
initially in finalizing the cost budget?
Response 1: The most important “A” category of total cost data is the cost involved in shipments
and tariffs especially when dealing with international dealers. This is because, not all countries
has same tariffs amount and thus handling different documents for all these suppliers is
cumbersome.
Response 2: The second ‘A’ category that is approximations price is the most crucial part while
dealing an international business. It is tough to identify the cost involved at the initial time if any
customer returned the shipments and reorder the same.
Q2. How will you consider this factor while doing business with domestic or foreign supplier?
1 Trent, Robert J., and Llewellyn R. Roberts. Managing global supply and risk: Best practices, concepts, and
strategies. J. Ross Publishing, 2009.

2CORNELL NOTES- WORLDWIDE SOURCING
Response 1: Establishing prior communication with host governing bodies to know about tariffs
amount for identifying the exact cost.
Response 2: Setting an average amount of re-shipments cost per order in order to maintain the
gap of a price paid and a total cost realized.

3CORNELL NOTES- WORLDWIDE SOURCING
Reference List and Bibliography
Kim, Minkyun, and Sangmi Chai. "The impact of supplier innovativeness, information sharing
and strategic sourcing on improving supply chain agility: Global supply chain
perspective." International Journal of Production Economics187 (2017): 42-52.
Serel, Doğan A. "Production and pricing policies in dual sourcing supply
chains." Transportation Research Part E: Logistics and Transportation Review 76 (2015): 1-12.
Trent, Robert J., and Llewellyn R. Roberts. Managing global supply and risk: Best practices,
concepts, and strategies. J. Ross Publishing, 2009.
Yeniyurt, Sengun, John W. Henke Jr, and Erin Cavusgil. "Integrating global and local
procurement for superior supplier working relations." International Business Review 22.2
(2013): 351-362.