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International BusinessInternational Business

Chapter EighteenChapter Eighteen

Global Manufacturing and Global Manufacturing and Supply Chain ManagementSupply Chain Management

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2004, Prentice Hall, Inc

Supply Chain TermsSupply Chain Terms

Supply chains – the coordination of Supply chains – the coordination of materials, information, and funds from the materials, information, and funds from the initial raw material initial raw material suppliersupplier to the to the ultimate ultimate customercustomer

Logistics (materials management) – that Logistics (materials management) – that part of the supply chain process that part of the supply chain process that plans, implements, and controls the plans, implements, and controls the efficient, effective efficient, effective flow and storageflow and storage of of goods, services, and related informationgoods, services, and related information

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Factors Managers Must ConsiderFactors Managers Must Consider

Efficiency Efficiency - reduction of - reduction of manufacturing and transport costmanufacturing and transport cost

Dependability Dependability - degree of trust in a - degree of trust in a company’s products and its delivery company’s products and its delivery promisespromises

QualityQuality - performance reliability, - performance reliability, service quality, speed of delivery, service quality, speed of delivery, and maintenance qualityand maintenance quality

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Factors ManagersFactors ManagersMust Consider, con’tMust Consider, con’t

FlexibilityFlexibility - ability of the production - ability of the production process to make different kinds of process to make different kinds of products and to adjust the volume of products and to adjust the volume of outputoutput

Innovation Innovation - ability to develop new - ability to develop new products and ideasproducts and ideas

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Manufacturing ConfigurationsManufacturing Configurations

Centralized manufacturingCentralized manufacturing offering a offering a selection of standard, lower-priced selection of standard, lower-priced products to different marketsproducts to different markets

Regional manufacturingRegional manufacturing to serve to serve customers within a specific regioncustomers within a specific region

Multi-domestic manufacturingMulti-domestic manufacturing (market (market expansion) in individual countries as their expansion) in individual countries as their demand becomes significant so demand becomes significant so manufacturing is closer to customers and manufacturing is closer to customers and meeting local needsmeeting local needs

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Supplier NetworksSupplier Networks

Companies can manufacture parts Companies can manufacture parts internally or purchase them from internally or purchase them from external manufacturersexternal manufacturers

““make or buy”make or buy” decision decision Outsourcing is the process of a Outsourcing is the process of a

company having inputs supplied to it company having inputs supplied to it from outside suppliers for the from outside suppliers for the production processproduction process

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Global Component NetworkGlobal Component Network

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Advantages of Global SourcingAdvantages of Global Sourcing Reduce Reduce costscosts due to less expensive labor due to less expensive labor Improve qualityImprove quality Increase exposure to worldwide Increase exposure to worldwide

technologytechnology Strengthen reliability of supply by Strengthen reliability of supply by

supplementing domestic with foreign supplementing domestic with foreign supplierssuppliers

Gain access to materials available only Gain access to materials available only abroadabroad

Establish Establish presencepresence in a foreign market in a foreign market Satisfy “offset requirements”Satisfy “offset requirements”

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Chapter ObjectivesChapter Objectives Describe different dimensions of global Describe different dimensions of global

manufacturing strategymanufacturing strategy Examine elements of global supply chain Examine elements of global supply chain

managementmanagement Show how quality effects global supply chain Show how quality effects global supply chain Illustrate how supplier networks functionIllustrate how supplier networks function Explain how inventory management is a key Explain how inventory management is a key

dimension of the global supply chaindimension of the global supply chain Present different alternatives for transporting Present different alternatives for transporting

products along the supply chain from suppliers to products along the supply chain from suppliers to customerscustomers

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Studying Supply Chain AlternativesStudying Supply Chain Alternatives

Customer requirementsCustomer requirements Plant and distribution center network designPlant and distribution center network design Inventory managementInventory management Outsourcing and 3Outsourcing and 3rdrd-party logistics relationships-party logistics relationships Key customer and supplier relationshipsKey customer and supplier relationships Business processesBusiness processes Information systems Information systems Organizational design and training requirementsOrganizational design and training requirements Performance metricsPerformance metrics Performance goalsPerformance goals

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QualityQuality

Quality is the ability to meet Quality is the ability to meet or exceed the expectations of or exceed the expectations of the customerthe customer• Conformance to specificationsConformance to specifications• ValueValue• Fitness for useFitness for use• Support provided by the Support provided by the

companycompany• Psychological impressions Psychological impressions

(image)(image)

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Quality TermsQuality Terms Acceptable Quality Level (AQL) premise Acceptable Quality Level (AQL) premise

allows an acceptable level of bad qualityallows an acceptable level of bad quality Total Quality Management (TQM) is a Total Quality Management (TQM) is a

philosophy to eliminate all defectsphilosophy to eliminate all defects• TQM stresses:TQM stresses:

Customer satisfactionCustomer satisfaction Employee involvementEmployee involvement Continuous improvementContinuous improvement

• TQM focuses on:TQM focuses on: BenchmarkingBenchmarking Product and service designProduct and service design Process designProcess design purchasingpurchasing

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