Global Manufacturing and Supply Chain Management

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Global Manufacturing and Supply Chain Management

• International Business (MB 40)

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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

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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

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Global Manufacturing Strategies

• Manufacturing
• Setting up a subsidiary versus Virtual
  Manufacturing
• Depends on manufacturing compatibility
• What is manufacturing compatibility?
• Compatibility depends on
• Efficiency
• Dependability
• Quality
• Flexibility
• Innovation

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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

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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 layoutlocal conditions such as cost of
  labor, cost of land, local culture must be
  considered in deciding about the plant layout

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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

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Role of Information Systems and Technology

• Key to successful global supply chain management

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Supply Chain Management

• LINKAGE OF ACTIVITIES
• BUYING
• MAKING
• MOVING
• INTEGRATES
• SUPPLIER
• DISTRIBUTOR
• LOGISTICS REQUIREMENTS

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MAJOR ENTITIES
Capacity, inventory levels, delivery schedule,
payment terms
Supplier
Manufacturer
Distributor
Retail Outlets
Customer
Orders, return requests, repair and service
requests, payments
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What Does Supply Chain Involve?

• NETWORK OF FACILITIES
• MATERIALS
• RAW MATERIALS PRODUCTS
• FINISHED PRODUCTS
• LINKS
• PROCUREMENT
• LOGISTICS
• ELIMINATE
• REDUNDANCY
• DELAYS
• RESOURCES

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What Does Supply Chain Involve?

• RIGHT AMOUNT OF PRODUCT
• SOURCE
• CONSUMPTION POINT
• LEAST
• TIME
• COST

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ROLE OF INFORMATION SYSTEMS

• coordinate, schedule, and control
• procurement,
• production,
• inventory management, and
• delivery of products and services

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ROLE OF INFORMATION SYSTEMS

• Integrate
• demand planning,
• production forecasting,
• materials requisition,
• order processing,
• inventory allocation,
• order fulfillment,

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ROLE OF INFORMATION SYSTEMS

• transportation services,
• receiving, invoicing, and payment.

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Supply chain management systems

• Intranets
• Extranets
• Supply chain management software

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

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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 suppliers manufacturing capabilities
  and financial position

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Supplier Networks

• 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

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Outsourcing Configurations

• Vertical Integration
• Arms-length purchases from outside suppliers
• Japanese keiretsu relationships with suppliers

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Make or buy Decisions
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Supplier Relations

• How much should be the degree of involvement with
  your suppliers?

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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