1. International Business Environments & Operations
Daniels ● Radebaugh ● Sullivan
International Business Environments and Operations 15e by Daniels, Radebaugh, and Sullivan
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2. Global Manufacturing and Supply-Chain Management
Chapter 18
Global Manufacturing and Supply-Chain Management
Chapter 18: Global Manufacturing and Supply-Chain Management
Copyright © 2015 Pearson Education, Inc.

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Learning Objectives
Describe the different dimensions of a global manufacturing strategy
Examine the critical factors in successful global supply-chain management
Show how supplier networks function
Explain how quality affects global supply and effective inventory management
Discuss how to establish successful transportation networks as part of the global supply chain
The Learning Objectives for this chapter are:
To describe the different dimensions of a global manufacturing strategy
To examine the elements of global supply-chain management
To show how supplier networks function
To describe how information technology is critical to an effective global supply-chain strategy
To explain how quality affects global supply and effective inventory management
To discuss how to establish successful transportation networks as part of the global supply chain
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4. The Global Component Network for Ford’s European Manufacturing of the Escort

5. What is Supply-Chain Management?
The supply chain: the network that links together the different aspects of the value chain, coordinating materials, information, and funds from the initial raw material supplier to the ultimate customer
Supply chain management aka operations and supply-chain management (OSM): the design, operation, and improvement of systems that create and deliver the firm’s primary products and services
Logistics (aka materials management): that part of the supply chain process that plans, implements, and controls the efficient and effective flow and storage of goods, services and related information from the point of origin to the point of consumption in order to meet customers’ requirements
Supply chain management refers to everything from creating supplier relationships to getting the product to the final consumer.
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6. An integrated supply chain and operations model
This illustration shows a generic industry supply chain of a firm
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7. Global Supply Chain Strategies
The success of a global manufacturing strategy depends upon good strategies in three specific areas:
Compatibility
Manufacturing Configuration
Coordination and Control

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Compatibility
Compatibility-in the context of manufacturing strategy, the degree of consistency between a firm’s foreign direct investment decisions and its competitive strategy
Four key factors influence the success of a company’s global manufacturing strategy.
The first, compatibility, refers to the degree of consistency between the foreign investment decision and the company’s competitive strategy.
The second, manufacturing configuration, requires the company to consider whether to centralize manufacturing in one country, establish regional operations, or set up multidomestic production.
Third, coordination involves integrating activities into a unified system.
Finally, control involves measuring performance so the company can respond appropriately to changing conditions.
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9. Manufacturing Configuration
The three basic configurations that MNEs consider en route to developing their global manufacturing strategies are:
centralized manufacturing in a single country
regionalized manufacturing in specific regions served
local manufacturing in each country market served
Multidomestic manufacturing or marketing is common among multinationals

10. Coordination and Control
Coordination: the linking and integrating of participants and activities throughout the (global) supply chain into a unified system
Control: embraces systems such as organizational structure and performance measurement that are designed to help ensure that strategies are implemented, monitored, and revised, as appropriate

11. Global Sourcing
Sourcing: is the process of obtaining a supply of inputs (raw materials and parts) for production. Firms pursue global sourcing strategies in order….
To reduce costs through cheaper labor, laxer work rules, and low land and facilities costs
To improve quality
To increase exposure to worldwide technology
To improve the delivery-of-supplies process
To strengthen reliability of supply–supplementing domestic suppliers with foreign ones
To gain access to materials that are only available abroad
To establish presence in a foreign market
To satisfy offset requirements
To react to competitors’ offshore sourcing practices

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Global Sourcing
This illustration shows how sourcing is important in different aspects of business
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13. Global Sourcing-A Few Terms
Outsourcing is when a company externalizes a function or process to another business.
Contract Manufacturing is when the entire manufacturing process is being handled by another firm.
Vertical Integration is when a company owns the entire supplier network, or at least a significant part of it.
Industrial Clusters occur when buyers and suppliers locate close to each other to facilitate doing business.
Dell Computer in Malaysia
Keiretsu – Japanese group of independent companies that work together to manage the flow of goods
Vertical Integration is when a company owns the entire supplier network, or at least a significant part of it.
Industrial Clusters occur when buyers and suppliers locate close to each other to facilitate doing business, for example Dell Computer in Malaysia.
A Keiretsu is a Japanese group of independent companies that work together to manage the flow of goods
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14. Total Quality Management
TQM is a process that stresses customer satisfaction, employee involvement, and continuous improvement of quality
Quality: conformance to specifications, value enhancement, fitness for use, after-sales support, and psychological impressions (image)
Six Sigma: aims to eliminate defects, slash product cycle times, and cut costs across the board. An idea perfected by Japanese manufacturers who refuse to tolerate defects (zero-defects) of any kind
Kaizen: the Japanese process of continuous improvement, which requires identifying problems and enlisting employees at all levels of the organization to help eliminate them

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Quality Standards
Levels of quality standards
General
ISO 9000
Malcom Baldridge National Quality Award
Industry specific
Company specific
Companies that meet general levels of quality assurance focus on the International Organization for Standardization (ISO) standards including ISO 9000 which is a global set of quality standards designed to promote quality at every level of an organization.
The ISO 4000 standards focus on environmental management.
Meeting ISO standards can be essential to business. Non-European companies operating in Europe, for example, must be ISO certified.
In addition to these general standards, most companies also strive to meet industry level and company specific standards of quality.
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16. Inventory Management
Inventory management: the planning and control of the levels, flows, and storage of inputs, unfinished, and finished goods
Just-in time manufacturing (JIT): focuses on reducing inefficiency and unproductive time in the production process to improve continuously the process and the quality of the product or service. The system reduces inventory costs by having inputs delivered just as they are needed in the production process
Foreign trade zones (FTZs): government-designated areas in which goods can be stored, inspected, and/or manufactured without being subject to formal customs procedures until they actually enter a country

17. Information Technology and Global Supply-Chain Management
Electronic Data Interchange
links suppliers, manufacturers, customers, and intermediaries
Enterprise Resource Planning/Material Requirements Planning
links information flows from different parts of a business and from different geographic areas
Radio Frequency ID (RFID)
labels products with an electronic tag, which stores and transmits information regarding the product’s origin, destination, and quantity
E-Commerce
joins together suppliers with companies and companies with customers
The key to making a global information system work is getting the relevant information in a timely manner. Information technology is essential to this process. There are several technologies that can facilitate information flows and business including electronic data interchange, enterprise resource planning/material requirements planning, radio frequency ID, and e-commerce.
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18. Chapter 18: Discussion Questions
Define and explain the role of “supply chain management” in firm strategy.
Explain how the success of a global supply chain strategy depends upon compatibility, manufacturing configuration, and coordination and control.
Define Total Quality Management and explain its importance in global supply chain management.
Define global sourcing and explain the role it plays in global supply chain management.
Explain Inventory Management in global supply chain.

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
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