17-1 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Part Six Managing International Operations Chapter Seventeen Global Manufacturing and Supply Chain Management

17-2 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Chapter Objectives To describe different dimensions of global manufacturing strategy To examine the elements of global supply chain management To show how quality affects the global supply chain To illustrate how supplier networks function To explain how inventory management is a key dimension of the global supply chain To present different alternatives for transporting products along the supply chain from suppliers to customers

17-3 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Supply Chain Management Supply chain - the coordination of materials, information, and funds from the initial raw material supplier to the ultimate customer.

17-4 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Logistics Logistics, or materials management, is that part of the supply chain process that plans, implements, and controls the efficient, 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

17-5 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Global Manufacturing Strategies The success of a global manufacturing strategy depends on four key factors:  compatibility  configuration  coordination  control

17-6 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Compatibility The degree of consistency between FDI decisions and a company’s competitive strategy. Some company strategies that managers must consider:  Efficiency/cost  Dependability  Quality  Innovation  Flexibility

17-7 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Manufacturing Configuration Three broad categories of manufacturing configuration are:  centralized facility  regional facilities  multidomestic facilities

17-8 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Coordination and Control Coordinating is the linking or integrating of activities into a unified system. Control can be the measuring of performance so companies can respond appropriately to changing conditions.

17-9 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Information Technology EDI (electronic data interchange) ERP (enterprise resource planning) MRP (material requirements planning) RFID (radio frequency ID) E-commerce Private technology exchange (PTX)

17-10 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Quality Quality is defined as meeting or exceeding the expectations of customers. Quality standards can be:  general (ISO 9000)  industry-specific  company-specific (AQL, zero defects, TQM, and Six Sigma)

17-11 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Total Quality Management Total quality management (TQM) is a process that stresses:  customer satisfaction  employee involvement  continuous improvements The goal of TQM is to eliminate all defects.

17-12 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Supplier Networks Sourcing: the process of a firm having inputs supplied to it from outside suppliers (both domestic and foreign) for the production process. Domestic sourcing allows the company to avoid problems related to:  language  culture  currency  tariffs, and so forth Foreign sourcing allows the company to reduce costs and improve quality, among other things

17-13 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Outsourcing Major outsourcing configurations:  Vertical integration.  Outsourcing through industrial clusters.  Other outsourcing.

17-14 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Make or Buy Decision Under the make or buy decision, companies have to decide if they will make their own parts or buy them from an independent company Companies go through different purchasing phases as they become more committed to global sourcing

17-15 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Supplier Relations When a company sources parts from suppliers around the world, distance, time, and the uncertainty of the international political and economic environment can make it difficult for managers to manage inventory flows accurately

17-16 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall The Purchasing Function Global progression in the purchasing function:  Domestic purchasing only.  Foreign buying based on need.  Foreign buying as part of a procurement strategy.  Integration of global procurement strategy.

17-17 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Major Sourcing Strategies Assign domestic buyers for foreign purchasing. Use foreign subsidiaries or business agents. Establish international purchasing offices. Assign the responsibility for global sourcing to a specific business unit or units. Integrate and coordinate worldwide sourcing.

17-18 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Lean Manufacturing and Just-in-Time Systems Lean manufacturing - a productive system whose focus is on optimizing processes through the philosophy of continual improvement. JIT - sourcing raw materials and parts just as they are needed in the manufacturing process.

17-19 Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Transportation Networks The transportation system links together suppliers, companies and customers Foreign trade zones (FTZs) - special locations for storing domestic and imported inventory in order to avoid paying duties until the inventory is used in production or sold.