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1 Brief description of the paper/report Argument AN EVALUATION OF CURRENT PRACTICE FOR CONTRACT COSTING IN OUTSOURCING ENTERPRISES Original reference Liston, P., Heavey, C., Byrne, P.J. and Brown, L., AN EVALUATION OF CURRENT PRACTICE FOR CONTRACT COSTING IN OUTSOURCING ENTERPRISES. Proceedings of the 21 ST International Manufacturing Conference. Identification The first time translate the Keywords at your own native language Please check the relevant Keywords. Keywords issues Products Sector English software & application Information & description method Objects & systems automotive Plastics chemistry Food & beverage Pharmaceutical aerospace Financial Services advertisement & media nature & environment architecture biology electronic & computer National language (Greek) Λογισμικό & Εφαρμογές Πληροφόρηση & Περιγραφή Μεθοδολογία Αντικείμενα και Συστήματα Αυτοκινητοβιομηχανία Πλαστικά Χημικές βιομηχανία Ποτά και Τρόφιμα Φαρμακευτικά Αεροδιαστημική Χρηματοοικονομικά Υπηρεσίες Διαφήμιση και Μέσα Ενημέρωσης Περιβάλλον Αρχιτεκτονική Biologia Ηλεκτρονικά & ΥπολογιστέςComputer

2 Terms of process Operation Structure (OS) Organization Arrangement (OA) education & science Εκπαίδευση & Επιστήμη authorities & federations Δημόσιες αρχές & ενώσεις engineering Μηχανολογικός manufacturing X Συναρμολόγηση-Κατασκευή Research & development Έρευνα και Ανάπτυξη service Υπηρεσίες marketing Διαφήμιση production X Παραγωγική διαδικασία design Σχεδιασμός controlling Έλεγχος cooperation Συνεργασία communication Επικοινωνίες coordination Συντονισμός distribution of production operations & volumes employment of different skills optimizing of logistic transport capacities over internal links communication of management responsibilities and information negotiation of internal agreements/ control mechanisms, or agreements with external bodies selecting of assure best efficiency/ effectiveness of organization chart or coordination strategy X X Κατανομή αναγκαίων ποσοτήτων παραγωγής και λειτουργίας Ανάθεση διαφορετικών δεξιοτήτων Βελτιστοποίηση της μεταφορικής ικανότητας μέσα από τις εσωτερικές διασυνδέσεις Επικοινωνία της Διοίκησης, υπευθυνότητες και πληροφόρηση Διαπραγμάτευση εσωτερικών συμφωνιών, Μηχανισμών ελέγχου ή συμφωνιών με εξωτερικούς συνεργάτες Οργανωτική δομή ή στρατηγική συντονισμού που να εξασφαλίζεται η καλύτερη απόδοση και επίδοση Interactions with Socio-Economic Environment (ISEE) Abstract negotiation of commercial agreements with client/supplier for max profit for the network deciding of a network innovation program by the partners and negotiated with financiers forecasting of dynamic evolution of a network Although not a new concept, outsourcing has received a great deal of attention in the last fifteen years, with many companies adopting it as a managerial strategy and the vast majority of companies utilising it to some degree. Discussions with outsourcing companies have highlighted a number of issues in relation to contract costing such as the importance of the requirements gathering Διαπραγμάτευση εμπορικών συμφωνιών με πελάτες/προμηθευτές για τη μεγιστοποίηση του κέρδους του δικτύουi Σχεδιασμός δικτυακού καινοτόμου προγράμματος από τους συνεργάτες και διαπραγμάτευση με τους χρηματοδότες Πρόβλεψη της δυναικής εξέλιξης του δικτύου

3 phase. Often when outsourcing a business task, a company will only specify the services required thus leaving the operational details to be determined by the outsourcing company. Calculating operating costs can be extremely difficult in such situations. Other issues included the decision regarding levels of flexibility within a contract, and an understanding of the resulting implications on both production capability and cost. This paper presents information from both current literature and also field study work conducted in a number of relevant companies. These companies cover a range of outsourcing enterprises and also include a number of original equipment manufacturers. A case study is presented which explored the use of simulation to aid in contract costing in an outsourcing situation. The research conducted has identified a requirement from both sides of the outsourcing contract for a tool that would aid in information gathering and provide better analysis tools with sophisticated experimentation capabilities. Discrete event simulation has been recognised as a possible means of fulfilling these experimentation requirements. Description

4 English National language Description of the problem approached Results Evaluating current practices for contract costing in outsourcing enterprises. Identifying the difficulties associated with current practices. The need for more sophisticated information collection tools, combined with better analysis tools offering experimentation capabilities to provide more insight into the true costs of outsourcing. Also the cost implications of agreeing to flexibility constraints in contracts. From the preliminary study, simulation has shown to have the potential to provide the desired experimentation capabilities. By modelling various scenarios using alternative suppliers, an OEM can configure an optimal supply chain network. The necessity of such a tool is further emphasised by the continual increase in outsourcing, which is creating increasingly more complex networks. Information for the End Users and Links What s new? The possibility of using simulation for contract costing in outsourcing enterprises.

5 What s useful? Improved information gathering, better analysis of costing complexities combined with experimentation capabilities. More insight into the true costs of contract costing and the cost effects of agreeing to flexibility constraints. Tools (technologies) for the implementation of results. Links to the Main CODESNET Issues Additional Remarks The model was built using em-plant, an object-oriented discrete event simulation package developed by Tecnomatix ( To be compiled by the CODESNET partners Suggestions by the author(s) are welcome (please look at the Library input page for the list of 9 issues) Empty space to add your notes Max number of lines = 2 Conceptual scheme of the paper contents: