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Global Manufacturing and Supply Chain Management
International Business (MB 40)
Outline
Dimensions of Global ManufacturingElements of Global Supply Chain ManagementRole of Information SystemsIssues of Quality and Global Supply ChainInventory Management and Global Supply ChainTransportation Networks
Why Manufacture Globally?
CostAccess to raw-materialNew MarketsMulti-Point Communication
Overall goal, improvement in cash flows of the parent firm to maximize shareholder wealth
Global Manufacturing Strategies
ManufacturingSetting up a subsidiary versus Virtual ManufacturingDepends on manufacturing compatibility
What is manufacturing compatibility?Compatibility depends on:
EfficiencyDependabilityQualityFlexibilityInnovation
Global Manufacturing Strategies
Manufacturing ConfigurationShould manufacturing be centralized in one country or should we have manufacturing facilities in specific zones to service those zones or should we go multidomestic with a facility in each countryWhen should we have a centralized location? When should we go for multidomestic location?
Coordination and ControlLinking or integrating activities into a unified system is called COORDINATIONDefining organizational structure and reporting systems to ensure timely implementation of policies is termed as CONTROL
Global Manufacturing StrategiesPlant Location Strategies
Transportation costs, duties, proximity to customers and suppliers, foreign exchange rate risk, economies of scale in the production process, government incentives, climate, technological requirements of the manufacturing process.
Plant Layout Planning Strategiesphysical arrangement of economic activity centers within a manufacturing facilityEvery manufacturing facility cannot have the same type layout—local conditions such as cost of labor, cost of land, local culture must be considered in deciding about the plant layout
Global Supply Chain Management
Meaning of Supply Chain ManagementDescribes managers’ effort to oversee the flows of raw materials, components, information, and finance through their network of suppliers, assemblers, and distributors, and customers located around the world.
Elements of Supply Chain ManagementSupply Chain Management and Enterprise Resource Planning (ERP)E-Commerce
Internet, intranet, and extranet
Role of Information Systems and Technology
Key to successful global supply chain management
Supply Chain Management
LINKAGE OF ACTIVITIESBUYINGMAKINGMOVING
INTEGRATESSUPPLIERDISTRIBUTORLOGISTICS REQUIREMENTS
MAJOR ENTITIES
Supplier Manufacturer DistributorRetail Outlets
Customer
Capacity, inventory levels, delivery schedule, payment terms
Orders, return requests, repair and service requests, payments
What Does Supply Chain Involve?NETWORK OF FACILITIES
MATERIALSRAW MATERIALS – PRODUCTSFINISHED PRODUCTS
LINKSPROCUREMENTLOGISTICS
ELIMINATEREDUNDANCYDELAYSRESOURCES
What Does Supply Chain Involve?
RIGHT AMOUNT OF PRODUCTSOURCECONSUMPTION POINTLEAST
• TIME• COST
ROLE OF INFORMATION SYSTEMS
coordinate, schedule, and control procurement, production, inventory management, and delivery of products and services
ROLE OF INFORMATION SYSTEMS
Integrate demand planning, production forecasting, materials requisition, order processing, inventory allocation, order fulfillment,
ROLE OF INFORMATION SYSTEMS
transportation services, receiving, invoicing, and payment.
Supply chain management systems
IntranetsExtranetsSupply chain management software
EXAMPLE
Enterprise System
Sales Representative (Brussels) Factory (Hong Kong)
Warehouse Customer ServiceRepresentative
Accounting
Balance Sheets Accounts Receivables/ Payables
Payroll Available Cash Cost Centers
Customer Order
Shipment DateStock of Parts
Track
Productiononlinereplenishes
Corporate Headquarter(London)
Quality and Supply Chain
Meaning of QualityMeeting or exceeding the expectations of a customerTotal Quality Management (TQM) versus Acceptable Quality Level (AQL)Zero defects and TQM
Challenges in Supply Chain Management
Operational ThreatsDifferent languagesDifferences in CurrenciesDifferences in Measurement Systems (metric versus decimal)Strategic ChallengesNational CulturesTechnological capabilitiesTax PoliciesNational CultureWestern culture typically foster adversarial positions in which buyers and sellers share as little information as possible.Toyota requires a broad understanding of a potential supplier’s manufacturing capabilities and financial position
Supplier NetworksMeaning of outsourcingThe process of a firm having inputs supplied to it from outside suppliers for the production process.Domestic outsourcing versus global outsourcingWhy go for domestic sourcing?Why go for global sourcing?Why pursue global outsourcing?Reduce costsimprove qualityexposure to global technologyimprove delivery of suppliesaccess to materials non-available otherwiseestablish presence in a foreign marketto compete in the global market
Outsourcing Configurations
Vertical IntegrationArm’s-length purchases from outside suppliersJapanese keiretsu relationships with suppliers
Make or buy Decisions
Supplier Relations
How much should be the degree of involvement with your suppliers?
Inventory Management
Outsourcing from around the world and its impact on inventory managementissues of distance, time, and uncertainty in foreign environmentJust-In-Time Systems