International Business Environments Operations 15 e Daniels

Chapter 18 Global Manufacturing and Supply-Chain Management Copyright © 2015 Pearson Education, Inc. 18

Learning Objectives p p p Describe the different dimensions of a global manufacturing strategy Examine the critical factors in successful global supply-chain management Show supplier networks function Explain how quality affects global supply and effective inventory management Discuss how to establish successful transportation networks as part of the global supply chain Copyright © 2015 Pearson Education, Inc. 18 -3

The Global Component Network for Ford’s European Manufacturing of the Escort 4

What is Supply-Chain Management? p p p The supply chain: the network that links together the different aspects of the value chain, coordinating materials, information, and funds from the initial raw material supplier to the ultimate customer Supply chain management aka operations and supplychain management (OSM): the design, operation, and improvement of systems that create and deliver the firm’s primary products and services Logistics (aka materials management): that part of the supply chain process that plans, implements, and controls the efficient and effective flow and storage of goods, services and related information from the point of origin to the point of consumption in order to meet customers’ requirements Copyright © 2015 Pearson Education, Inc. 18 -5

An integrated supply chain and operations model Copyright © 2015 Pearson Education, Inc. 18

Global Supply Chain Strategies p The success of a global manufacturing strategy depends upon good strategies in three specific areas: n n n Compatibility Manufacturing Configuration Coordination and Control 7

Compatibility-in the context of manufacturing strategy, the degree of consistency between a firm’s foreign direct investment decisions and its competitive strategy Copyright © 2015 Pearson Education, Inc. 18 -8

Manufacturing Configuration The three basic configurations that MNEs consider en route to developing their global manufacturing strategies are: n centralized manufacturing in a single country n regionalized manufacturing in specific regions served n local manufacturing in each country market served p Multidomestic manufacturing or marketing is common among multinationals p 9

Coordination and Control Coordination: the linking and integrating of participants and activities throughout the (global) supply chain into a unified system p Control: embraces systems such as organizational structure and performance measurement that are designed to help ensure that strategies are implemented, monitored, and revised, as appropriate p 10

Global Sourcing p Sourcing: is the process of obtaining a supply of inputs (raw materials and parts) for production. Firms pursue global sourcing strategies in order…. n n n n n To reduce costs through cheaper labor, laxer work rules, and low land facilities costs To improve quality To increase exposure to worldwide technology To improve the delivery-of-supplies process To strengthen reliability of supply–supplementing domestic suppliers with foreign ones To gain access to materials that are only available abroad To establish presence in a foreign market To satisfy offset requirements To react to competitors’ offshore sourcing practices 11

Global Sourcing Copyright © 2015 Pearson Education, Inc. 18 -12

Global Sourcing-A Few Terms p p p Outsourcing is when a company externalizes a function or process to another business. Contract Manufacturing is when the entire manufacturing process is being handled by another firm. Vertical Integration is when a company owns the entire supplier network, or at least a significant part of it. Industrial Clusters occur when buyers and suppliers locate close to each other to facilitate doing business. n Dell Computer in Malaysia Keiretsu – Japanese group of independent companies that work together to manage the flow of goods Copyright © 2015 Pearson Education, Inc. 18 -13

Total Quality Management TQM is a process that stresses customer satisfaction, employee involvement, and continuous improvement of quality Quality: conformance to specifications, value enhancement, fitness for use, after-sales support, and psychological impressions (image) Six Sigma: aims to eliminate defects, slash product cycle times, and cut costs across the board. An idea perfected by Japanese manufacturers who refuse to tolerate defects (zero-defects) of any kind Kaizen: the Japanese process of continuous improvement, which requires identifying problems and enlisting employees at all levels of the organization to help eliminate them 14

Quality Standards p Levels of quality standards n n n General p ISO 9000

Inventory Management p p p Inventory management: the planning and control of the levels, flows, and storage of inputs, unfinished, and finished goods Just-in time manufacturing (JIT): focuses on reducing inefficiency and unproductive time in the production process to improve continuously the process and the quality of the product or service. The system reduces inventory costs by having inputs delivered just as they are needed in the production process Foreign trade zones (FTZs): governmentdesignated areas in which goods can be stored, inspected, and/or manufactured without being subject to formal customs procedures until they actually enter a country 16

Information Technology and Global Supply-Chain Management p Electronic Data Interchange n p Enterprise Resource Planning/Material Requirements Planning n p links information flows from different parts of a business and from different geographic areas Radio Frequency ID (RFID) n p links suppliers, manufacturers, customers, and intermediaries labels products with an electronic tag, which stores and transmits information regarding the product’s origin, destination, and quantity E-Commerce n joins together suppliers with companies and companies with customers Copyright © 2015 Pearson Education, Inc. 18 -17

Chapter 18: Discussion Questions 1. 2. 3. 4. 5. Define and explain the role of “supply chain management” in firm strategy. Explain how the success of a global supply chain strategy depends upon compatibility, manufacturing configuration, and coordination and control. Define Total Quality Management and explain its importance in global supply chain management. Define global sourcing and explain the role it plays in global supply chain management. Explain Inventory Management in global supply chain. 18

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