Supply Chain Management Chapter 10

What are the six Global Facility Types?

1. Offshore Factory 2. Source Factory 3. Server Factory 4. Contributor Factory 5. Outpost Factory 6. Lead Factory

Facility Type: Offshore Factory

A factory set up for manufacturing or assembly in a country where labor and/or raw materials are less expensive, for eventual import back into the manufacturer's home country. --Manufactures products at low cost with minimal technical and managerial resources --Take advantage of low labor costs --Import or acquire parts locally, then export to the manufacturer or directly to customers --Local management serves in a supervisory roll not in making management decisions. Example: Clothing produced in Bangladesh, Indonesia

Facility Types: Server Factory

A factory set up to take advantage of government incentives, and/or reduced tax/tariff barriers, to meet regional or local market needs --Firm uses government incentives --Low exchange risk and tariff barriers to reduce taxes and logistics costs. --Makes minor improvements to product and processes --Set up to serve the local market Example: Coca-Cola bottling. Mix the final ingredients to take advantage of exchange rates, tariff, & taxes.

Facility Types: Outpost Factory

Factory set up in an area with an abundance of advance suppliers, competitors, research facilities, etc. Setup in a location within proximity to: --Advance suppliers. --Competitors. --Research facilities & universities for materials, components and products. Example: Raleigh, Durham, Chapel Hill NC. Research Triangle Center. UNC, Duke, IBM , Cisco, etc. Silicon Valley, Calif.

Facility Types: Contributor Factory

Focused on product development and engineering for products that they manufacture Basically, a Server Factory which also includes: --Product development. --Production planning. --Procurement decisions. --Supplier development. Example: 1973 Sony built a Server factory in Wales and then 15 years later got involved in development, planning, etc. and now is a Contributor factory

Facility Types: Source Factory

Manufactures products at low cost but with skilled workers and significant managerial resources Basically, an offshore factory that includes: --Plant management involvement in supplier selection --Plant management involvement in production planning --More developed local infrastructure --Access to skilled workforce --Low production costs Example: Hewlett-Packard Singapore factory produced calculators and keyboards

Facility Types: Lead Factory

Source of product and process innovation and competitive advantage across the entire organization (world-class) Competitive advantage of the organization. Source of innovation. Example: Intel factory in Penang, Malaysia opened in mid 1970's, now is a lead factory. This is your "Go-To" factory