1. Global Production , Outsourcing , and Logistic
Sandy Wibisono

2. Introduction
Where in the world should production activity be located ?
What should be the long-term strategic role of foreign production sites ?
Should the firm own foreign production activities, or is it better to outsource those activities to independent vendors ?
How should a globally dispersed supply chain be managed , and what is the role of internet – based information technology in the management of global logistic ?
Should the firm manage global logistics itself, or should it outsource the management to enterprises that specialize in this activity ?

3. Strategy , Production , and Logistics
Production as “the activities involved in creating product”.
Logistic is “the activity that control the transmission of physical material through value chain , from procurement through production and into distribution.

4. Strategy , Production , and Logistics
Strategic Objective
Lower cost.
Increasing Quality.
Production and logistic function must be able to accommodate demands for local responsiveness.
Production and logistic must be able to respond quickly to shifts in customer demands.

5. Strategy , Production , and Logistics
Increase Productivity
Lowers Manufacturing Cost
Increases Profit
Improves Performance Reliability
Lowers Rework and Scraps Cost
Lower Services Cost
Lower warranty Cost
The Relationship between Quality and Cost

6. Where to Produce
Country Factor
Technological Factor
Product Factor

7. Informal Trade Barrier
Country Factor
Political
Economy
Culture
Relative Factor Cost
Externalities
Formal Trade Barrier
Informal Trade Barrier
Exchange Rates

8. Minimum Efficient Scale
Technological Factor
Technological Factor
Fixed Cost
Minimum Efficient Scale
Flexible Manufacturing and Mass Customization

9. Value – to – weight ratio
Product Factors
Value – to – weight ratio
Serve universal needs

10. Concentrated Production Favored Decentralized Production Favored
Country Factor
Differences in political economy
Substantial
few
Differences in culture
Differences in factor cost
Trade Barriers
Location externalities
Important in industry
Not important in industry
Exchange rates
stable
volatile
Technological Factor
Fixed Costs
High
Low
Minimum efficient scale
Flexible manufacturing technology
Available
Not available
Product Factor
Value – to – weight ratio
Serve universal needs
Yes no

11. The Strategic Role of Foreign Factories
Pressure from the center to improve a factory’s cost structure and/or customize a product to the demands of consumers in a particular nation can start a chain of events that ultimately leads to development of additional capabilities at the factory

12. The Strategic Role of Foreign Factories
Improvement in the capabilities of a foreign factory can be the increasing abundance of advanced factor of production in the nation in which the factory is located

13. Outsourcing Production
Make
Buy

14. Facilitating Specialized Investments
The Advantage of Make
Lowering Cost
Facilitating Specialized Investments
Protecting Proprietary Product Technology
Improving Scheduling

15. Strategic Flexibility
The Advantage of Buy
Strategic Flexibility
Lower Costs
Offsets

16. Strategic Alliances With Supplier
Strategic alliance build a trust between the firm and its supplier.
Trust results when a firm makes a credible commitment to continue purchasing from a supplier on reasonable terms.
Alliance are not all good
i.e. : Kodak and Canon , Sony build laptop for Apple , Microsoft and Flextronics.

17. Managing a Global Supply Chain
Lowest possible cost
Best serves customer needs

18. The Role of Just-in-Time Inventory
JIT system is to economize on inventory holding cost by having materials arrive at a manufacturing plant just in time enter the production process and not before.
The major cost saving comes from speeding up inventory turnover.
This reduces inventory holding cost, such warehousing and storage cost.

19. The Role of IT and The Internet

20. Terima Kasih