System and method for automated analysis of sourcing agreements and performance

A system for analysis of relative benefits of sourcing agreements and utilization policies for sourcing agreements when future sourcing-related business conditions are uncertain over a time period of analysis, the system comprising:

• means for selecting two or more material requirements scenarios over the time period of analysis, such that each of the selected material requirements scenarios has a specified probability of occurrence;
• means for identifying terms of one or more existing or prospective sourcing agreements, such that the identified terms specify price, quantity, and delivery terms for material under each of the one or more sourcing agreements;
• means for identifying a set of sourcing agreement utilization policies for the one or more sourcing agreements, which specify, for each of the selected material requirements scenarios, the material to be purchased and actions to be taken under each of the sourcing agreements under that scenario;
• and
• means for computing future sourcing performance measures for each of the selected scenarios by applying the selected sourcing agreement utilization policy for the selected scenario to the material requirements over the time period of analysis under that scenario, subject to the terms of the sourcing agreements, such that the measures indicate relative benefits over the selected scenarios of the sourcing agreements given the sourcing agreement utilization policies, including future materials costs, shortage and inventory levels, and shortage and inventory-related costs for of the selected scenarios.

A method for analyzing relative benefits of sourcing agreements and utilization policies for sourcing agreements when future sourcing-related business conditions are uncertain over a time period of analysis, the method comprising the steps of

• selecting a plurality of material requirements scenarios over the time period of analysis, such that each of the selected material requirements scenarios has a specified probability of occurrence;
• identifying terms of one or more existing or prospective sourcing agreements, such that the identified terms specify price, quantity, and delivery terms for material under each of the one or more sourcing agreements;
• identifying a set of sourcing agreement utilization policies for the one or more sourcing agreements, which specify, for each of the selected material requirements scenarios, the material to be purchased and actions to be taken under each of the sourcing agreements under that scenario;
• and
• computing, by a computer in a computer system, future sourcing performance measures for each of the selected scenarios by applying the selected sourcing agreement utilization policy for the selected scenario to the material requirements over the time period of analysis under that scenario, subject to the terms of the sourcing agreements, such that the measures indicate relative benefits over the selected scenarios of the sourcing agreements given the sourcing agreement utilization policies, including future materials costs, shortage and inventory levels, and shortage and inventory-related costs for each of the selected scenarios.