Part Six Managing International Operations

Chapter Seventeen Global Manufacturing and Supply Chain Management
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Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall

Chapter Objectives
• To describe different dimensions of global manufacturing strategy • To examine the elements of global supply chain management • To show how quality affects the global supply chain • To illustrate how supplier networks function • To explain how inventory management is a key dimension of the global supply chain • To present different alternatives for transporting products along the supply chain from suppliers to customers

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Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall

Factors Influencing Supply Chain Management 17-3 Copyright © 2009 Pearson Education. Inc. publishing as Prentice Hall .

Supply Chain Management • Supply chain . and funds from the initial raw material supplier to the ultimate customer. Inc. information. publishing as Prentice Hall .the coordination of materials. 17-4 Copyright © 2009 Pearson Education.

publishing as Prentice Hall . Inc.The Global Supply Chain 17-5 Copyright © 2009 Pearson Education.

Logistics • Logistics. or materials management. services. implements. publishing as Prentice Hall . is that part of the supply chain process that plans. effective flow and storage of goods. Inc. and controls the efficient. and related information from the point of origin to the point of consumption in order to meet customers’ requirements 17-6 Copyright © 2009 Pearson Education.

publishing as Prentice Hall .Global Manufacturing Strategies • The success of a global manufacturing strategy depends on four key factors:     compatibility configuration coordination control 17-7 Copyright © 2009 Pearson Education. Inc.

Compatibility • The degree of consistency between FDI decisions and a company’s competitive strategy. Inc. • Some company strategies that managers must consider:      Efficiency/cost Dependability Quality Innovation Flexibility 17-8 Copyright © 2009 Pearson Education. publishing as Prentice Hall .

Manufacturing Configuration • Three broad categories of manufacturing configuration are:  centralized facility  regional facilities  multidomestic facilities 17-9 Copyright © 2009 Pearson Education. publishing as Prentice Hall . Inc.

Inc. publishing as Prentice Hall . • Control can be the measuring of performance so companies can respond appropriately to changing conditions.Coordination and Control • Coordinating is the linking or integrating of activities into a unified system. 17-10 Copyright © 2009 Pearson Education.

Inc.Information Technology • • • • • • EDI (electronic data interchange) ERP (enterprise resource planning) MRP (material requirements planning) RFID (radio frequency ID) E-commerce Private technology exchange (PTX) 17-11 Copyright © 2009 Pearson Education. publishing as Prentice Hall .

and Six Sigma) 17-12 Copyright © 2009 Pearson Education. TQM. zero defects. Inc. publishing as Prentice Hall . • Quality standards can be:  general (ISO 9000)  industry-specific  company-specific (AQL.Quality • Quality is defined as meeting or exceeding the expectations of customers.

Inc. publishing as Prentice Hall . 17-13 Copyright © 2009 Pearson Education.Total Quality Management • Total quality management (TQM) is a process that stresses:  customer satisfaction  employee involvement  continuous improvements • The goal of TQM is to eliminate all defects.

Inc.Global Sourcing and Production Strategy 17-14 Copyright © 2009 Pearson Education. publishing as Prentice Hall .

• Domestic sourcing allows the company to avoid problems related to:     language culture currency tariffs. publishing as Prentice Hall . Inc. and so forth • Foreign sourcing allows the company to reduce costs and improve quality.Supplier Networks • Sourcing: the process of a firm having inputs supplied to it from outside suppliers (both domestic and foreign) for the production process. among other things 17-15 Copyright © 2009 Pearson Education.

publishing as Prentice Hall .  Other outsourcing. 17-16 Copyright © 2009 Pearson Education.  Outsourcing through industrial clusters.Outsourcing • Major outsourcing configurations:  Vertical integration. Inc.

publishing as Prentice Hall .Make or Buy Decision • Under the make or buy decision. Inc. companies have to decide if they will make their own parts or buy them from an independent company • Companies go through different purchasing phases as they become more committed to global sourcing 17-17 Copyright © 2009 Pearson Education.

Supplier Relations • When a company sources parts from suppliers around the world. time. publishing as Prentice Hall . and the uncertainty of the international political and economic environment can make it difficult for managers to manage inventory flows accurately 17-18 Copyright © 2009 Pearson Education. distance. Inc.

publishing as Prentice Hall .The Purchasing Function • Global progression in the purchasing function:  Domestic purchasing only.  Foreign buying based on need. 17-19 Copyright © 2009 Pearson Education.  Foreign buying as part of a procurement strategy.  Integration of global procurement strategy. Inc.

Use foreign subsidiaries or business agents.Major Sourcing Strategies • • • • Assign domestic buyers for foreign purchasing. Inc. 17-20 Copyright © 2009 Pearson Education. • Integrate and coordinate worldwide sourcing. publishing as Prentice Hall . Establish international purchasing offices. Assign the responsibility for global sourcing to a specific business unit or units.

publishing as Prentice Hall . Inc.Steps In Global Sourcing Process 17-21 Copyright © 2009 Pearson Education.

publishing as Prentice Hall . Inc. • JIT .a productive system whose focus is on optimizing processes through the philosophy of continual improvement.Lean Manufacturing and Just-in-Time Systems • Lean manufacturing . 17-22 Copyright © 2009 Pearson Education.sourcing raw materials and parts just as they are needed in the manufacturing process.

companies and customers • Foreign trade zones (FTZs) .special locations for storing domestic and imported inventory in order to avoid paying duties until the inventory is used in production or sold. Inc.Transportation Networks • The transportation system links together suppliers. 17-23 Copyright © 2009 Pearson Education. publishing as Prentice Hall .

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