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

This paper describes a cost benefit analysis (CBA) 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 original equipment manufacturers (OEM), 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 benefit analysis explains how MOSS contributes to reduce transit-times and transit time variability, and what benefits could be derived from it. The costs analysis considers one-time investments as well as recurring costs of deploying MOSS conforming software as ‘Software as a Service'. The results of the CBA indicate an economically feasible investment with a payback period of 3 months and give support for managers’ preparation of a possible investment decision. Difficulties for MOSS deployment are discussed, with emphasis on collaboration problems within a supply chain.