Chapter 15: Global Production and Supply Chain Management

production

activities involved in creating a product

larger minimum efficient scale

centralize production in single location

location production facilities strategies

centralized location-serving from there decentralizing to locations close to major markets

ISO 9000

certification process that requires certain quality standards must be met

domestic purchasing strategies level 1

companies engage in domestic purchasing activities only

make-or-buy decision

concerns whether to produce item in-house ("make") or purchase it from an outside supplier ("buy")

packaging: protect

contain product properly preserve product security for product to reach intended destination

packaging

container that holds product itself

make-or-buy decision factors

cost production capacity

factors to contemplate for international production

country factors technological factors production factors

global inventory management

decision-making process regarding raw materials, work-in-process, and finished goods inventory for multinational corporation

increasing inventory turnover

decrease working capital needed reduce storage costs

secondary packaging

designed to contain several primary packages

just-in-time inventory

designed to deliver parts to a production process as they are needed, not before

offshore factory

developed and set up mainly for producing component parts/finished goods at lower cost than producing them at home

global learning

flow of skills and product offerings from foreign subsidiary to home country and from foreign subsidiary to foreign subsidiary

flexible machine cells

grouping of various machine types, common materials handler, and centralized cell controller produce a family of products

packaging: perform

handle transportation storage ability of product

costs of foreign locations

high employee turnover shoddy workmanship poor product quality low productivity

primary packaging

holds product itself

how does improved quality control reduce cost

increasing productivity lowering rework and scrap costs reducing warranty costs

global purchasing strategies level 5

integrating activities across worldwide locations and functional groups

supply chain management

integration and coordination of logistics, purchasing, operations, and market channels activities from raw material to the end-costumer

global purchasing strategies level 4

integration and coordination of purchasing strategies across firm's locations worldwide

lead factory

intended to create new processes, products, and technologies that can be used throughout the global firm in all parts of the world

international purchasing strategies level 3

international purchases are part of firm's overall supply chain management strategy

international purchasing strategies level 2

international purchasing activities only as needed

technological factors

level of fixed costs minimum efficient scale flexibility of the technology

minimum efficient scale

level of output at which most plant-level scale economies are exhausted

server factory

linked into global supply chain for global firm to supply specific country/regional markets around the globe

packaging: inform

logical instructions for use product guarantee information about service for product

reasons to use production and SCM

lower cost of value creation add value by better serving customer needs

smaller minimum efficient scale

manufacture in several locations

flexible manufacturing technology (lean production)

manufacturing technology designed to improve job scheduling, reduce setup time, and improve quality control

elements favoring decision

minimal restriction on source materials firm lacks expertise to make product inventory planning

transportation

movement of inventory through supply chain

transit packaging

number of primary and secondary packages assembled on a unit load for transportation

inventory turnover

number of times a company's inventory is sold and replaced

foreign factories strategies

offshoring source factory server factory contributor factory outpost factory

purchasing

part of supply chain that includes worldwide buying of raw material, component parts, and products used in manufacturing of the company's product and services

logistics

part of supply chain that plans, implements, and controls the effective flows and inventory of raw material, component parts, and products used in manufacturing

intentions of packaging

perform protect inform

total quality management

philosophy focus: the need to improve quality of a company's products and services

global distribution center

positions and allows customization of products for delivery to worldwide wholesalers/retailers

externalities

presence of appropriately skilled labor pool and supporting industries

source factory

primary purpose to drive down costs in global supply chain

reverse logistics

process of moving inventory from point of consumption to point of origin in supply chains for purpose of recapturing value

mass customization

production of a variety of end products at a unit cost that could once be achieved only through mass production of a standardized output

elements favoring make decision

quality control proprietary technology control excess capacity limited suppliers assurance of continual supply industry drivers

contributor factory

serves specific country or world region

global supply chain coordination

shared decision-making opportunities and operational collaboration of key global supply chain activities

six sigma

statistically based methodology for improving product quality

upstream supply chain

suppliers resources that are involved in the portion of the supply chain from raw materials to the production facility

features that affect location decisions

value-to-weight ratio universal needs served

outpost factory

viewed as an intelligence-gathering unit

downstream supply chain

wholesaler/retailer that are involved in portion of supply chain from the production facility to the end-costumer