Presentation on theme: "International Operations Management"— Presentation transcript:
1 International Operations Management MGMT 6367Fall 2013Instructor: Yan Qin
2 Outline Course Overview Learning objectivesTopics to coverCourse assessmentContact informationIntroduction to International Operations/LogisticsWhat is Operations ManagementInternational Vs. DomesticGlobal Operations StrategySupplement: Goods Vs. Services
3 Learning ObjectivesAs a result of this course, students will be able toUnderstand the key strategic and operational aspects of international operations management to help in the design, planning, and execution of a firm's international operations;Comprehend how effective global operations can lower costs and improve responsiveness to customer requirements to provide a firm with competitive advantages;Apply theory and case examples on global supply chain management to help in the coordination of globally dispersed supply-chain activities;Apply theory and case examples on decision-making frameworks for global outsourcing and location of production facilities to help in the development of effective international operations strategies.
4 Topics to cover Global Operations Strategy Global Sourcing Make or BuyVendor SelectionSupply Chain CoordinationFacility LayoutTransportation ManagementDistribution network designFacility LocationRisk Management in the global contextInformation Systems
5 Grading scaleYour letter grade is determined using the grade distribution that follows. You can calculate your percentage grade at any time in the semester by dividing the points you have accrued by the total points available up to that point. This percentage is then matched to a letter grade.A 90% or higherB 80 to 89%C 70 to 79%D 60 to 69%F Less than 60%
6 Course Assessment Grade breakdown Class Participation 20% Individual Case Analysis %Individual Assignments %Two Exams %* Please refer to the tentative class schedule for all the post and due dates of the four individual assignments.
7 Individual Case Analysis The purpose of this assignment is to identify and apply IOM (International Operations Management) concepts/tools to solve problems in managing international operations. To this purpose, you should find an interesting IOM problem from the real business world and think about how you can apply the IOM concepts/tools that you learned in this course to solve the problem.Detailed instructions can be found in the document titled “Individual project instructions”.
8 Assignments & Exams Individual Assignments Two Exams There will be four individual assignments in total. Each assignment may consist of problem-solving questions, case-related discussion questions, or essay questions about specific issues in managing international operations. Each assignment accounts for 5% of the final grade.Two ExamsThere will be two non-cumulative exams in total. Both will be counted in the final grade. Each accounts for 20% of the final grade. The exams will be individual, timed, and open-book/notes. Only multiple-choice questions will be given on the exams.
10 Operations Management Production is the creation of goods and services.Operations include all the activities that relate to the creation of good and services through the transformation of inputs to outputs.Operations Management (OM) refers to the management of Operations activities to ensure the efficient utilization of all kinds of resources in meeting customer expectations.
11 Example: Operations activities in a Commercial Bank Teller schedulingCheck ClearingCollectionTransaction ProcessingFacility Layout/designVault OperationsMaintenanceSecurityFinance:InvestmentSecuritiesReal estateMarketing:LoansCommercialIndustrialFinancialPersonalMortgageAccountingAuditingTrust DepartmentSource: “Operations Management” by Heizer and Rander.
12 Example: Operation activities in a manufacturing organization Operations:FacilitiesConstruction; MaintenanceProduction and Inventory ControlQuality assurance and controlSupply Chain ManagementProduct DesignIndustrial EngineeringEfficient use of machine, spaceProcess analysisFinance:Disbursements/creditsAccounts receivableAccounts payableFunds ManagementCapital requirementsStock issueBond issue and recallMarketing:Sales promotionAdvertisingSalesMarket researchSource: “Operations Management” by Heizer and Rander.
13 OM’s Transformation Role Source: Raid and Sanders 2005
14 The 10 major OM decisions Ten Decision Areas Sample Issues Design of goods and servicesWhat good or service should we offer?Managing qualityHow do we define the quality?Process and capacityWhat process and what capacity will these products require?Location strategyWhere should we put the facilities?Layout strategyHow should we arrange the facilities?Human resources and job designHow do we provide a reasonable work environment?Supply chain managementShould we make or buy this component?Inventory, material requirements planning, and JITHow much inventory of item should we have? When do we reorder?Intermediate and short-term schedulingAre we better off keeping people on the payroll during slowdowns?MaintenanceWho is responsible for maintenance?
15 Operations StrategyMission: the purpose or rationale for an organization’s existence.Ford Motor: “We are a global family with a proud heritage passionately committed to providing personal mobility for people around the world.”Operations Strategy is a long-term plan of actions designed to achieve a firm’s operational objectives, which are consistent with the mission.The mission statement usually includes a description of the products, the markets, geographical coverage of its activities, and an interpretation of its competitive advantages.
16 Four competitive Priorities CostLow cost strategy--- Low cost does not mean low value or quality. Wal-Mart provides low cost through its efficient management of transportation, inventory, and warehousing.Quality (2 dimensions)Design Quality--- The features, styling, and other product attributes that enhance fitness for use.Conformance Quality--- Product conformance to set production standards.
17 Four competitive Priorities Service (2 dimensions)Delivery Speed--- Ability to produce and deliver the product quickly.Delivery Reliability--- Ability to produce and deliver according to contractually specified time intervals.Flexibility (3 categories)New-Product Flexibility--- Ability to introduce new products quickly and effectively.
18 Four competitive Priorities Flexibility (Cont.)Product Mix Flexibility--- Ability to efficiently and effectively adjust the production mix in response to market demand.Production Ramp-up/down Flexibility--- Ability to rapidly expand/shrink the production process to accommodate changes in demand.It is very difficult for a company to excel in all aspects simultaneously due to limited resources. Each company must carefully identify the areas that may provide competitive advantages.
19 Questions: Competitive priorities What are the competitive priorities of the following companies based on the descriptions?(1) HP demonstrates great flexibility in both design and volume changes in the business of personal computers.(2) Safeskin Corporation is number one in latex exam gloves because it has differentiated itself and its products. It did so by providing gloves that were designed to prevent allergic reactions. When other companies caught up, it developed hypoallergenic gloves. Then it added texture. Then it developed a synthetic disposable glove for those allergic to latex.
20 Qualifying and Winning Criteria Qualifying criteriaThe basic criteria that permit the firm’s products to be considered as candidates for purchase by customers.Winning criteriaThe criteria that differentiate the products or services of one firm from another.
21 New trends in OM Global focus Decline in communication and transportation costs has made markets global;Resources such as personnel and capital are available globally;Operations managers are responding with innovations that generate and move ideas, production, and finished good rapidly.
22 New trends in OM Just-In-Time performance Supply Chain partnering How to free assets from inventory and improve responsivenessSupply Chain partneringOperations managers are outsourcing and building long-term relationship with its suppliers all over the world.Rapid product developmentRequires rapid responses in operations especially in high-tech industriesNew challenges appear when dealing with their foreign suppliers and managing the lengthened Supply Chain.
23 New trends in OM Mass Customization Mass customization aims at supplying customized products and services to each customer in a responsive and cost effective way.Broadening product variety gives a company a distinctive competitive advantage in quickly responding to ever- changing market environments and customer tastes.Challenges in cost control and responsiveness.However, product proliferation also leads in increases in the number of setup times and the costs associated with material handling, inventory holding, and the logistics of managing variety.
24 New trends in OM Empowered employees Operations managers are moving more decision making to the individual worker as more competence is now required at workplace.Environmentally sensitive productionConcerned with designing products and processes that are environmentally friendly.EthicsContinuing challenge to enhance ethical behavior
25 Operations: Global Vs. Domestic Riskier and more complexMore risk factors to considerTransportation becomes more complex and costly.Product proliferation due to localization and mass customization.
26 Sources of Risk in the global environment Risk FactorsNatural disastersShortage of skilled personnelGeopolitical uncertaintyTerrorist infiltration of cargoVolatility of fuel pricesCurrency fluctuationPort operations/custom delaysCustomer/consumer preference shiftsPerformance of business partnersLogistics capacity/complexityForecasting/planning accuracySupplier planning/communication issues
27 Operations: Global Vs. Domestic Attention paid to cultural, political, and economic factorsMore difficult interpersonal management task:International business partnersOfficials in central and local governmentsInventory cost gets higher.Longer and slower pipeline leads to more pipeline inventoryUncertainty in politics and production leads to more safety stock.
28 International Operations Management Now what is International Operations Management (IOM)?IOM is just Operations Management in the global context.Why do we need to study Operations Management in the global context?Similarities and differences in the economic, cultural, legal, and political aspects in different countries bring about both opportunities and risks in the business world. IOM, as compared to OM, focuses on the use of operational strategies to take advantage of the unique opportunities that appear during the globalization process without being exposed to an unacceptable level of risk.Multinational firms and other international agencies invest overseas by initiating start-ups, entering into joint ventures, or acquiring existing organizations. Most of these transactions involve operations and logistics activities.
29 Supplement: Goods Vs. Service Attributes of GoodsAttributes of ServicesTangible productIntangible productProduct can be resold.Reselling a service is unusual.Product can be inventoried.Many services cannot be inventoried.Some aspects of quality are measurable.Many aspects of quality are difficult to measure.Selling is distinct from production.Selling is often a part of the service.Product is transportable.Provider, not product, is often transportable.Site of facility is important for cost.Site of facility is important for customer contact.Often easy to automate.Service is often difficult to automate.Services are often produced and consumed simultaneously. There is no stored inventory. For instance, the beauty salon produces a haircut that is “consumed” simultaneously, or the doctor produces an operation that is “consumed” as it is produced.Services are unique. Services have high customer interaction. Often difficult to standardize, automate, and make as efficient as we would like because customer interaction demands uniqueness. In many cases, uniqueness is what customers paying for.Services are often knowledge based, as in the case of educational, medical and legal services, and therefore hard to automate.
30 The output from most operations is a mixture of goods and services
31 Similarities between service providers and manufacturers Both use technologyBoth have quality, productivity, & response issuesBoth must forecast demandEach will have capacity, layout, and location issuesBoth have customers and suppliersBoth have scheduling and staffing issues
32 The Week after Labor Day Global SourcingConcepts in SourcingKey decisions in OutsourcingWhat should be outsourced?Which vendors/providers are most suitable partners?What forms of relationship with partners should be used?