MGT 4230 Chapter 15 - Global Production and Supply Chain Management

outpost factory

a factory that can be viewed as an intelligence-gathering unit

Global purchasing core activities

1. Strategy development 2. Selecting the type of purchasing strategy

Technological factors

• Fixed Costs • Minimum Efficient Scale • Flexible Manufacturing and Mass Customization

product features that affect location decisions

- the product's value-to-weight ratio - whether the product serves universal needs

Two basic strategies for locating production facilities

1 - concentrating them in a centralized location and serving the world market from there 2 - decentralizing them in various locations that are close to major markets

Global logistics core activities

1. Global distribution center 2. Inventory management 3. Packaging and materials handling 4. Transportation 5. Reverse logistics

Efficient supply chain management can have a substantial impact on a firm's profitability. Four important areas:

1. Just-in-time inventory 2. Information technology 3. Coordination 4. Interorganizational relationships

server factory

A factory linked into the global supply chain for a global firm to supply specific country or regional markets around the globe.

offshore factory

A factory that is developed and set up mainly for producing component parts or finished goods at a lower cost than producing them at home or in any other market.

lead factory

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

source factory

A factory whose primary purpose is also to drive down costs in the global supply chain.

fixed costs

Costs that do not vary with the quantity of output produced.

global learning

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

mass customization

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

contributor factory

a factory that serves a specific country or world region

TQM (Total Quality Management)

a philosophy that takes as its central focus the need to improve the quality of a company's products and services.

Six Sigma

a rigorous statistical analysis process that reduces defects, eliminates waste, boosts productivity, and cuts costs in manufacturing and service-related processes

Production

activities involved in creating a product or service

Main factors in the decision of whether to buy or make a product are

cost and production capacity.

flexible manufacturing (lean production)

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

Purchasing

represents the part of the supply chain that involves worldwide buying of raw material, component parts, and products used in the manufacturing process.

minimum efficient scale

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

Logistics is

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

supply chain management

the procurement and physical transmission of material through the supply chain, from suppliers to customers through purchasing and logistics

Country factors

• Location economies and externalities • Formal and informal trade barriers • Transportation costs • Regulations affecting FDI • Expected future movements in exchange rates

Other factors that influence the make or buy decision

• Product success • Specialized knowledge • Strategic fit • Cost and production capacity • Supplier competencies • Inventory planning