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  1. 1. Global Manufacturing and Supply Chain Management International Business (MB 40)
  2. 2. Outline <ul><li>Dimensions of Global Manufacturing </li></ul><ul><li>Elements of Global Supply Chain Management </li></ul><ul><li>Role of Information Systems </li></ul><ul><li>Issues of Quality and Global Supply Chain </li></ul><ul><li>Inventory Management and Global Supply Chain </li></ul><ul><li>Transportation Networks </li></ul>
  3. 3. Why Manufacture Globally? <ul><li>Cost </li></ul><ul><li>Access to raw-material </li></ul><ul><li>New Markets </li></ul><ul><li>Multi-Point Communication </li></ul><ul><li>Overall goal, improvement in cash flows of the parent firm to maximize shareholder wealth </li></ul>
  4. 4. Global Manufacturing Strategies <ul><li>Manufacturing </li></ul><ul><ul><li>Setting up a subsidiary versus Virtual Manufacturing </li></ul></ul><ul><ul><li>Depends on manufacturing compatibility </li></ul></ul><ul><li>What is manufacturing compatibility? </li></ul><ul><li>Compatibility depends on: </li></ul><ul><ul><li>Efficiency </li></ul></ul><ul><ul><li>Dependability </li></ul></ul><ul><ul><li>Quality </li></ul></ul><ul><ul><li>Flexibility </li></ul></ul><ul><ul><li>Innovation </li></ul></ul>
  5. 5. Global Manufacturing Strategies <ul><li>Manufacturing Configuration </li></ul><ul><ul><li>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 </li></ul></ul><ul><ul><li>When should we have a centralized location? </li></ul></ul><ul><ul><li>When should we go for multidomestic location? </li></ul></ul><ul><li>Coordination and Control </li></ul><ul><ul><li>Linking or integrating activities into a unified system is called COORDINATION </li></ul></ul><ul><ul><li>Defining organizational structure and reporting systems to ensure timely implementation of policies is termed as CONTROL </li></ul></ul>
  6. 6. Global Manufacturing Strategies <ul><li>Plant Location Strategies </li></ul><ul><ul><li>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. </li></ul></ul><ul><li>Plant Layout Planning Strategies </li></ul><ul><ul><li>physical arrangement of economic activity centers within a manufacturing facility </li></ul></ul><ul><ul><li>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 </li></ul></ul>
  7. 7. Global Supply Chain Management <ul><li>Meaning of Supply Chain Management </li></ul><ul><ul><li>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. </li></ul></ul><ul><li>Elements of Supply Chain Management </li></ul><ul><li>Supply Chain Management and Enterprise Resource Planning (ERP) </li></ul><ul><li>E-Commerce </li></ul><ul><li>Internet, intranet, and extranet </li></ul>
  8. 8. Role of Information Systems and Technology <ul><li>Key to successful global supply chain management </li></ul>
  9. 9. Supply Chain Management <ul><li>LINKAGE OF ACTIVITIES </li></ul><ul><ul><li>BUYING </li></ul></ul><ul><ul><li>MAKING </li></ul></ul><ul><ul><li>MOVING </li></ul></ul><ul><li>INTEGRATES </li></ul><ul><ul><li>SUPPLIER </li></ul></ul><ul><ul><li>DISTRIBUTOR </li></ul></ul><ul><ul><li>LOGISTICS REQUIREMENTS </li></ul></ul>
  10. 10. MAJOR ENTITIES Supplier Manufacturer Distributor Retail Outlets Customer Capacity, inventory levels, delivery schedule, payment terms Orders, return requests, repair and service requests, payments
  11. 11. What Does Supply Chain Involve? <ul><li>NETWORK OF FACILITIES </li></ul><ul><ul><li>MATERIALS </li></ul></ul><ul><ul><li>RAW MATERIALS – PRODUCTS </li></ul></ul><ul><ul><li>FINISHED PRODUCTS </li></ul></ul><ul><li>LINKS </li></ul><ul><ul><li>PROCUREMENT </li></ul></ul><ul><ul><li>LOGISTICS </li></ul></ul><ul><li>ELIMINATE </li></ul><ul><ul><li>REDUNDANCY </li></ul></ul><ul><ul><li>DELAYS </li></ul></ul><ul><ul><li>RESOURCES </li></ul></ul>
  12. 12. What Does Supply Chain Involve? <ul><li>RIGHT AMOUNT OF PRODUCT </li></ul><ul><ul><li>SOURCE </li></ul></ul><ul><ul><li>CONSUMPTION POINT </li></ul></ul><ul><ul><li>LEAST </li></ul></ul><ul><ul><ul><li>TIME </li></ul></ul></ul><ul><ul><ul><li>COST </li></ul></ul></ul>
  13. 13. ROLE OF INFORMATION SYSTEMS <ul><li>coordinate, schedule, and control </li></ul><ul><ul><li>procurement, </li></ul></ul><ul><ul><li>production, </li></ul></ul><ul><ul><li>inventory management, and </li></ul></ul><ul><ul><li>delivery of products and services </li></ul></ul>
  14. 14. ROLE OF INFORMATION SYSTEMS <ul><li>Integrate </li></ul><ul><li>demand planning, </li></ul><ul><li>production forecasting, </li></ul><ul><li>materials requisition, </li></ul><ul><li>order processing, </li></ul><ul><li>inventory allocation, </li></ul><ul><li>order fulfillment, </li></ul>
  15. 15. ROLE OF INFORMATION SYSTEMS <ul><li>transportation services, </li></ul><ul><li>receiving, invoicing, and payment. </li></ul>
  16. 16. Supply chain management systems <ul><li>Intranets </li></ul><ul><li>Extranets </li></ul><ul><li>Supply chain management software </li></ul>
  17. 17. EXAMPLE Enterprise System Sales Representative (Brussels) Factory (Hong Kong) Warehouse Customer Service Representative Accounting Balance Sheets Accounts Receivables/ Payables Payroll Available Cash Cost Centers Customer Order Shipment Date Stock of Parts Track Production online replenishes Corporate Headquarter (London)
  18. 18. Quality and Supply Chain <ul><li>Meaning of Quality </li></ul><ul><li>Meeting or exceeding the expectations of a customer </li></ul><ul><li>Total Quality Management (TQM) versus Acceptable Quality Level (AQL) </li></ul><ul><li>Zero defects and TQM </li></ul>
  19. 19. Challenges in Supply Chain Management <ul><li>Operational Threats </li></ul><ul><li>Different languages </li></ul><ul><li>Differences in Currencies </li></ul><ul><li>Differences in Measurement Systems (metric versus decimal) </li></ul><ul><li>Strategic Challenges </li></ul><ul><li>National Cultures </li></ul><ul><li>Technological capabilities </li></ul><ul><li>Tax Policies </li></ul><ul><li>National Culture </li></ul><ul><li>Western culture typically foster adversarial positions in which buyers and sellers share as little information as possible. </li></ul><ul><li>Toyota requires a broad understanding of a potential supplier’s manufacturing capabilities and financial position </li></ul>
  20. 20. Supplier Networks <ul><li>Meaning of outsourcing </li></ul><ul><li>The process of a firm having inputs supplied to it from outside suppliers for the production process. </li></ul><ul><li>Domestic outsourcing versus global outsourcing </li></ul><ul><li>Why go for domestic sourcing? </li></ul><ul><li>Why go for global sourcing? </li></ul><ul><li>Why pursue global outsourcing? </li></ul><ul><li>Reduce costs </li></ul><ul><li>improve quality </li></ul><ul><li>exposure to global technology </li></ul><ul><li>improve delivery of supplies </li></ul><ul><li>access to materials non-available otherwise </li></ul><ul><li>establish presence in a foreign market </li></ul><ul><li>to compete in the global market </li></ul>
  21. 21. Outsourcing Configurations <ul><li>Vertical Integration </li></ul><ul><li>Arm’s-length purchases from outside suppliers </li></ul><ul><li>Japanese keiretsu relationships with suppliers </li></ul>
  22. 22. Make or buy Decisions
  23. 23. Supplier Relations <ul><li>How much should be the degree of involvement with your suppliers? </li></ul>
  24. 24. Inventory Management <ul><li>Outsourcing from around the world and its impact on inventory management </li></ul><ul><li>issues of distance, time, and uncertainty in foreign environment </li></ul><ul><li>Just-In-Time Systems </li></ul>