1. Global Manufacturing and Supply Chain Management
International Business (MB 40)

2. Outline Dimensions of Global Manufacturing
Elements of Global Supply Chain Management
Role of Information Systems
Issues of Quality and Global Supply Chain
Inventory Management and Global Supply Chain
Transportation Networks

3. Why Manufacture Globally?
Cost
Access to raw-material
New Markets
Multi-Point Communication
Overall goal, improvement in cash flows of the parent firm to maximize shareholder wealth

4. Global Manufacturing Strategies
Setting up a subsidiary versus Virtual Manufacturing
Depends on manufacturing compatibility
What is manufacturing compatibility?
Compatibility depends on:
Efficiency
Dependability
Quality
Flexibility
Innovation

5. Global Manufacturing Strategies
Manufacturing Configuration
Should manufacturing be centralized in one country or should we have manufacturing facilities in specific zones to service those zones or should we go multidomestic with a facility in each country
When should we have a centralized location?
When should we go for multidomestic location?
Coordination and Control
Linking or integrating activities into a unified system is called COORDINATION
Defining organizational structure and reporting systems to ensure timely implementation of policies is termed as CONTROL

6. Global Manufacturing Strategies
Plant Location Strategies
Transportation costs, duties, proximity to customers and suppliers, foreign exchange rate risk, economies of scale in the production process, government incentives, climate, technological requirements of the manufacturing process.
Plant Layout Planning Strategies
physical arrangement of economic activity centers within a manufacturing facility
Every manufacturing facility cannot have the same type layout—local conditions such as cost of labor, cost of land, local culture must be considered in deciding about the plant layout

7. Global Supply Chain Management
Meaning of Supply Chain Management
Describes managers’ effort to oversee the flows of raw materials, components, information, and finance through their network of suppliers, assemblers, and distributors, and customers located around the world.
Elements of Supply Chain Management
Supply Chain Management and Enterprise Resource Planning (ERP)
E-Commerce
Internet, intranet, and extranet

8. Role of Information Systems and Technology
Key to successful global supply chain management

9. Supply Chain Management
LINKAGE OF ACTIVITIES
BUYING
MAKING
MOVING
INTEGRATES
SUPPLIER
DISTRIBUTOR
LOGISTICS REQUIREMENTS

10. MAJOR ENTITIES
Capacity, inventory levels, delivery schedule, payment terms
Supplier
Manufacturer
Distributor
Retail
Outlets
Customer
Orders, return requests, repair and service requests, payments

11. What Does Supply Chain Involve?
NETWORK OF FACILITIES
MATERIALS
RAW MATERIALS – PRODUCTS
FINISHED PRODUCTS
LINKS
PROCUREMENT
LOGISTICS
ELIMINATE
REDUNDANCY
DELAYS
RESOURCES

12. What Does Supply Chain Involve?
RIGHT AMOUNT OF PRODUCT
SOURCE
CONSUMPTION POINT
LEAST
TIME
COST

13. ROLE OF INFORMATION SYSTEMS
coordinate, schedule, and control
procurement,
production,
inventory management, and
delivery of products and services

14. ROLE OF INFORMATION SYSTEMS
Integrate
demand planning,
production forecasting,
materials requisition,
order processing,
inventory allocation,
order fulfillment,

15. ROLE OF INFORMATION SYSTEMS
transportation services,
receiving, invoicing, and payment.

16. Supply chain management systems
Intranets
Extranets
Supply chain management software

17. EXAMPLE Sales Representative (Brussels) Factory (Hong Kong)
Customer Order
Production
online
replenishes
Warehouse
Enterprise System
Customer Service
Representative
Track
Shipment Date
Stock of Parts
Corporate Headquarter
(London)
Accounting
Payroll
Available Cash
Cost Centers
Balance Sheets
Accounts Receivables/ Payables

18. Quality and Supply Chain
Meaning of Quality
Meeting or exceeding the expectations of a customer
Total Quality Management (TQM) versus Acceptable Quality Level (AQL)
Zero defects and TQM

19. Challenges in Supply Chain Management
Operational Threats
Different languages
Differences in Currencies
Differences in Measurement Systems (metric versus decimal)
Strategic Challenges
National Cultures
Technological capabilities
Tax Policies
National Culture
Western culture typically foster adversarial positions in which buyers and sellers share as little information as possible.
Toyota requires a broad understanding of a potential supplier’s manufacturing capabilities and financial position

20. Supplier Networks Reduce costs improve quality
Meaning of outsourcing
The process of a firm having inputs supplied to it from outside suppliers for the production process.
Domestic outsourcing versus global outsourcing
Why go for domestic sourcing?
Why go for global sourcing?
Why pursue global outsourcing?
Reduce costs
improve quality
exposure to global technology
improve delivery of supplies
access to materials non-available otherwise
establish presence in a foreign market
to compete in the global market

21. Outsourcing Configurations
Vertical Integration
Arm’s-length purchases from outside suppliers
Japanese keiretsu relationships with suppliers

22. Make or buy Decisions

23. Supplier Relations
How much should be the degree of involvement with your suppliers?

24. Inventory Management
Outsourcing from around the world and its impact on inventory management
issues of distance, time, and uncertainty in foreign environment
Just-In-Time Systems