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POM - J. GalvánPOM - J. Galván 11
PRODUCTION AND PRODUCTION AND OPERATIONS OPERATIONS
MANAGEMENTMANAGEMENT
Ch. 3: Operations in a Global Ch. 3: Operations in a Global EnvironmentEnvironment
POM - J. GalvánPOM - J. Galván 22
Learning ObjectivesLearning Objectives
What is the difference in terms of What is the difference in terms of operations management when the operations management when the company is global?company is global?
POM - J. GalvánPOM - J. Galván 33
Logistics Management
Location Decisions
Supply Chain Management
Management Issues in Global Management Issues in Global OperationsOperations
Global Strategic ContextGlobal Strategic Context• DifferentiationDifferentiation• Cost leadershipCost leadership• ResponseResponse
POM - J. GalvánPOM - J. Galván 44
Possible strategiesPossible strategies
POM - J. GalvánPOM - J. Galván 55
Important issues to considerImportant issues to consider
How to organize the flow of goods - How to organize the flow of goods - Supply chain managementSupply chain management
Where to deploy resources- Where to deploy resources- Facility Facility location decisions location decisions • Types of facilitiesTypes of facilities• LocationsLocations
How are you going to move supplies How are you going to move supplies and products - and products - Materials Materials managementmanagement
POM - J. GalvánPOM - J. Galván 66
Supply-Chain ManagementSupply-Chain Management
SourcingSourcing Vertical integrationVertical integration Make-or-buy decisionsMake-or-buy decisions PartneringPartnering
POM - J. GalvánPOM - J. Galván 77
Location DecisionsLocation Decisions
Country-related issuesCountry-related issues Product-related issuesProduct-related issues Government policy/political riskGovernment policy/political risk Organizational issuesOrganizational issues
POM - J. GalvánPOM - J. Galván 88
Materials ManagementMaterials Management
Flow of materialsFlow of materials Transportation options and speedTransportation options and speed Inventory levelsInventory levels PackagingPackaging StorageStorage
POM - J. GalvánPOM - J. Galván 99
Reasons to Globalize Reasons to Globalize OperationsOperations
Reduce costs (labor, taxes, tariffs, Reduce costs (labor, taxes, tariffs, etc.)etc.)
Reduce risks (foreign exchange, etc.)Reduce risks (foreign exchange, etc.) Improve supply chainImprove supply chain Provide better goods and servicesProvide better goods and services Attract new marketsAttract new markets Learn to improve operationsLearn to improve operations Attract and retain global talentAttract and retain global talent
Tangible
Intangible
POM - J. GalvánPOM - J. Galván 1010
Trade and TariffTrade and Tariff
Maquiladoras - Mexican factories located Maquiladoras - Mexican factories located along the U.S.-Mexico border that receive along the U.S.-Mexico border that receive preferential tariff treatmentpreferential tariff treatment
GATT - an international treaty that helps GATT - an international treaty that helps promote world trade by lowering barriers promote world trade by lowering barriers to the free flow of goods across bordersto the free flow of goods across borders
NAFTA - a free trade agreement between NAFTA - a free trade agreement between Canada, Mexico, and the United StatesCanada, Mexico, and the United States
POM - J. GalvánPOM - J. Galván 1111
Free trade may take us into the era Free trade may take us into the era of the floating factory - a six person of the floating factory - a six person crew will take a factory from port to crew will take a factory from port to port in order to obtain the best port in order to obtain the best market, material, labor and tax market, material, labor and tax advantagesadvantages
THOUGHTTHOUGHT
POM - J. GalvánPOM - J. Galván 1212
Achieving Global OperationsAchieving Global OperationsFour ConsiderationsFour Considerations
Global product designGlobal product design Global process design and Global process design and
technologytechnology Global factory location analysisGlobal factory location analysis Impact of Culture and EthicsImpact of Culture and Ethics
POM - J. GalvánPOM - J. Galván 1313
GlobalGlobal Product Design Product Design
Remember social and cultural Remember social and cultural differencesdifferences• packaging and marketing can help make packaging and marketing can help make
product seem “domestic” but -product seem “domestic” but -““liter” versus “quart”liter” versus “quart”““sweetness” and “taste”sweetness” and “taste”
POM - J. GalvánPOM - J. Galván 1414
GlobalGlobal Process Design and Technology Process Design and Technology
Information technology enables Information technology enables management of integrated, globally management of integrated, globally dispersed operationdispersed operation
Texas Instruments: 50 plants in 19 Texas Instruments: 50 plants in 19 countriescountries
Hewlett-Packard - product Hewlett-Packard - product development teams in U.S., Japan, development teams in U.S., Japan, Great Britain, and GermanyGreat Britain, and Germany
Reduces time-to-marketReduces time-to-market
POM - J. GalvánPOM - J. Galván 1515
Select CSFs based on parent Select CSFs based on parent organization’s strategic or organization’s strategic or operations objectivesoperations objectives
Obtain country-specific information Obtain country-specific information on the CSFson the CSFs
Evaluate each country’s CSFs using Evaluate each country’s CSFs using a 1 (bad) to 5 (good) rating scalea 1 (bad) to 5 (good) rating scale
Sum the ratingsSum the ratings
GlobalGlobal Facility Location Analysis Facility Location Analysis
Using CSFs (Country specific factors) for Country Selection
POM - J. GalvánPOM - J. Galván 1616
national literacy ratenational literacy rate rate of innovationrate of innovation rate of technology rate of technology
changechange number of skilled number of skilled
workersworkers stability of governmentstability of government product liability lawsproduct liability laws export restrictionsexport restrictions similarity in languagesimilarity in language
You May Wish To ConsiderYou May Wish To Consider
¨ work ethicwork ethic¨ tax ratestax rates¨ inflationinflation¨ availability of raw availability of raw
materialsmaterials¨ interest ratesinterest rates¨ populationpopulation¨ number of miles of number of miles of
highwayhighway
POM - J. GalvánPOM - J. Galván 1717
GlobalGlobalImpact of Culture and EthicsImpact of Culture and Ethics
Cultures differ! Some accept/expect:Cultures differ! Some accept/expect:• variations in punctualityvariations in punctuality• long lunch hourslong lunch hours• expectation of thieveryexpectation of thievery• briberybribery• little protection of intellectual propertylittle protection of intellectual property• Extended working timeExtended working time• Smaller salariesSmaller salaries• No social benefits….No social benefits….
POM - J. GalvánPOM - J. Galván 1818
To Establish Global ServicesTo Establish Global Services
Determine if sufficient people or Determine if sufficient people or facilities exist to support the servicefacilities exist to support the service
Identify foreign markets that are Identify foreign markets that are open - not controlled by governmentsopen - not controlled by governments
Determine what services are of most Determine what services are of most interest to foreign customersinterest to foreign customers
Determine how to reach global Determine how to reach global customerscustomers