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International Business
Sixteenth Edition

Chapter 18
Global Operations
and Supply Chain
Management

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.

Learning Objectives (1 of 2)
18-1 Define what is meant by global supply-chain
management
18-2 Describe the different facets of global
operations strategies
18-3 Show how global sourcing is an important
aspect of global supply-chain and operations
management

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Learning Objectives (2 of 2)
18-4 Explain how information technology is used in
global operations and supply-chain
management
18-5 Summarize how quality management is
important in global operations

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved.

Global Supply Chain Strategy

Objective 18-1
Figure 18.1 An Integrated Global Supply Chain and Operations Strategy

Source: S. Thomas Foster, Scott Sampson, Cindy Wallin, and Scott Webb, Managing Supply Chain and Operations:
An Integrative Approach(Pearson Education, Inc., 2016): 2.

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What is Supply Chain Management?

Objective 18-1
• Supply Chain Management refers to activities in
the value chain that occur outside the company
• Operations Management (Logistics Management)
refers to internal activities

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Operations Management Strategy

Objective 18-2
• Compatibility: the degree of consistency between the
foreign investment decision and the company’s
competitive strategy.
• Configuration: how an MNE distributes value
activities around the world
• Coordination: linking or integrating of activities into a
unified system
• Control: a system to ensure that company strategies
are carried out
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Global Sourcing Visual

Objective 18-3
Figure 18.2 When a company wants to source raw materials, parts, or components
as a function of its global strategy, it’s faced with some key decisions. It may, for
example, decide to source components at home, assemble them abroad, and then
export the final product to the home market, to foreign markets, or to both.

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Global Sourcing
Objective 18-3
• Outsourcing: a situation in which one company
externalizes a process or function to another
company
• Why Global Sourcing?

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Global Sourcing
Objective 18-3
• Why Global Sourcing?
• To reduce costs through cheaper labor, laxer work rules, and lower
land and facilities costs.
• To improve quality.
• To increase exposure to worldwide technology.
• To improve the delivery-of-supplies process.
• To strengthen the reliability of supply by supplementing domestic
suppliers with foreign ones.
• To gain access to materials that are only available abroad, possibly
because of technical specifications or product capabilities.
• To establish a presence in a foreign market.
• To satisfy offset requirements.
• To react to competitors’ offshore sourcing practices.
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Major Sourcing Configurations

Objective 18-3
• Vertical Integration
• Industrial Clusters
• Make or Buy Decisions
• Supplier Relationships

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Technology in Global Operations

Objective 18-4
• EDI (Electronic Data Interchange)
• ERP (Enterprise Resource Planning)
• RFID (Radio Frequency ID)

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E-Commerce
Objective 18-4
• Extranet
• Intranet
• PTX (Private Technology Exchange)
• The Digital Divide

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What is Quality?
Objective 18-5
• Definition of Quality
– Zero Defects
– Acceptable Quality Level (AQL)

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Lean Manufacturing and TQM

Objective 18-5
• What is TQM?
• TQM and Foreign Sourcing
• Kanban System

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Quality Standards
Objective 18-5
• Six Sigma
• ISO Standards
• Industry Specific Standards
• Company Specific Standards

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Copyright

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