1. International Operations Management
MGMT 6367
Fall 2013
Instructor: Yan Qin

2. Outline Course Overview
Learning objectives
Topics to cover
Course assessment
Contact information
Introduction to International Operations/Logistics
What is Operations Management
International Vs. Domestic
Global Operations Strategy
Supplement: Goods Vs. Services

3. Learning Objectives
As a result of this course, students will be able to
Understand 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 Buy
Vendor Selection
Supply Chain Coordination
Facility Layout
Transportation Management
Distribution network design
Facility Location
Risk Management in the global context
Information Systems

5. Grading scale
Your 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 higher
B 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 Exams
There 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.

9. Contact information
Course Website:
Class meeting time: Monday, 7 pm – 9:45 pm, except holiday
Office: Room 338, Brazos Hall, UHSSL
Office Hours: Every Monday, 6 pm – 7 pm, Or by appointment
Contact number:

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 scheduling
Check Clearing
Collection
Transaction Processing
Facility Layout/design
Vault Operations
Maintenance
Security
Finance:
Investment
Securities
Real estate
Marketing:
Loans
Commercial
Industrial
Financial
Personal
Mortgage
Accounting
Auditing
Trust Department
Source: “Operations Management” by Heizer and Rander.

12. Example: Operation activities in a manufacturing organization
Operations:
Facilities
Construction; Maintenance
Production and Inventory Control
Quality assurance and control
Supply Chain Management
Product Design
Industrial Engineering
Efficient use of machine, space
Process analysis
Finance:
Disbursements/credits
Accounts receivable
Accounts payable
Funds Management
Capital requirements
Stock issue
Bond issue and recall
Marketing:
Sales promotion
Advertising
Sales
Market research
Source: “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 services
What good or service should we offer?
Managing quality
How do we define the quality?
Process and capacity
What process and what capacity will these products require?
Location strategy
Where should we put the facilities?
Layout strategy
How should we arrange the facilities?
Human resources and job design
How do we provide a reasonable work environment?
Supply chain management
Should we make or buy this component?
Inventory, material requirements planning, and JIT
How much inventory of item should we have? When do we reorder?
Intermediate and short-term scheduling
Are we better off keeping people on the payroll during slowdowns?
Maintenance
Who is responsible for maintenance?

15. Operations Strategy
Mission: 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
Cost
Low 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 criteria
The basic criteria that permit the firm’s products to be considered as candidates for purchase by customers.
Winning criteria
The 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 responsiveness
Supply Chain partnering
Operations managers are outsourcing and building long-term relationship with its suppliers all over the world.
Rapid product development
Requires rapid responses in operations especially in high-tech industries
New 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 production
Concerned with designing products and processes that are environmentally friendly.
Ethics
Continuing challenge to enhance ethical behavior

25. Operations: Global Vs. Domestic
Riskier and more complex
More risk factors to consider
Transportation becomes more complex and costly.
Product proliferation due to localization and mass customization.

26. Sources of Risk in the global environment
Risk Factors
Natural disasters
Shortage of skilled personnel
Geopolitical uncertainty
Terrorist infiltration of cargo
Volatility of fuel prices
Currency fluctuation
Port operations/custom delays
Customer/consumer preference shifts
Performance of business partners
Logistics capacity/complexity
Forecasting/planning accuracy
Supplier planning/communication issues

27. Operations: Global Vs. Domestic
Attention paid to cultural, political, and economic factors
More difficult interpersonal management task:
International business partners
Officials in central and local governments
Inventory cost gets higher.
Longer and slower pipeline leads to more pipeline inventory
Uncertainty 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 Goods
Attributes of Services
Tangible product
Intangible product
Product 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 technology
Both have quality, productivity, & response issues
Both must forecast demand
Each will have capacity, layout, and location issues
Both have customers and suppliers
Both have scheduling and staffing issues

32. The Week after Labor Day
Global Sourcing
Concepts in Sourcing
Key decisions in Outsourcing
What should be outsourced?
Which vendors/providers are most suitable partners?
What forms of relationship with partners should be used?