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Production strategy


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How MNE's chose their production strategy.

Published in: Business, Technology

Production strategy

  1. 1. Production strategy
  2. 2. <ul><li>Objectives </li></ul><ul><li>Introduction </li></ul><ul><li>Research, development and innovation </li></ul><ul><li>Generation of good and services </li></ul>
  3. 3. <ul><li>Examine the role of research, development, and innovation in production strategy </li></ul><ul><li>Relate some of the most critical steps in generating goods and services, including global sourcing, costing techniques, quality maintenance, effective materials handling, inventory control, and the proper emphasis on service </li></ul><ul><li>Describe the nature and importance of international logistics in production strategy </li></ul>
  4. 4. <ul><li>MNEs, like domestic firms, are concerned with the efficient use of labor and capital. Both are also interested in: </li></ul><ul><ul><li>investing in research and development (R&D) </li></ul></ul><ul><ul><li>organizing operations to generate successful new product lines and to increase production and service efficiency </li></ul></ul>
  5. 5. <ul><li>MNEs need to organize their production management so that they can minimize operating costs through the use of logistics and inventory control </li></ul><ul><ul><li>Backward integration: The ownership of equity assets used earlier in the production cycle, such as an auto firm that acquires a steel company </li></ul></ul><ul><ul><li>Forward integration: The purchase of assets or facilities that move the company closer to the customer such as a computer manufacturer that acquires a retail chain which specializes in computer products </li></ul></ul><ul><ul><li>Horizontal integration: The purchase of firms in the same line of business such as a computer chip firm which acquires a competitor. </li></ul></ul>
  6. 7. <ul><li>In the past many MNEs focused most heavily on the production strategy aspect of operations, failing to realize that an effective production strategy begins with new product development </li></ul><ul><ul><li>New product development/service development </li></ul></ul><ul><ul><li>Speed to market </li></ul></ul><ul><ul><ul><li>Time-to-market accelerators: Factors that help to reduce bottlenecks and errors and to ensure product quality </li></ul></ul></ul><ul><ul><ul><li>Modular integrated robotized system: A software-based production process that relies entirely on robots </li></ul></ul></ul><ul><ul><ul><li>Concurrent engineering: The process of having design, engineering, and manufacturing people working together to create a product, in contrast to working in a sequential manner. </li></ul></ul></ul>
  7. 9. <ul><li>Global sourcing: The use of suppliers anywhere in the world, chosen on the basis of their efficiency. </li></ul><ul><li>Manufacturing of goods: </li></ul><ul><ul><li>Cost </li></ul></ul><ul><ul><ul><li>Modular manufacturing: a process that allows suppliers of parts to take on part of the assembly </li></ul></ul></ul><ul><ul><li>Quality </li></ul></ul><ul><ul><ul><li>Continuous improvement </li></ul></ul></ul><ul><ul><li>Production systems </li></ul></ul><ul><ul><ul><li>Location, layout, materials handling </li></ul></ul></ul><ul><li>Inventory control </li></ul><ul><ul><li>Just-in-time, Demand-Flow Technology TM </li></ul></ul>
  8. 10. <ul><li>Developing a strong service orientation: </li></ul><ul><ul><ul><li>Many products have a service element associated with them </li></ul></ul></ul><ul><li>Determining the product/service balance </li></ul><ul><li>Providing the right amount of service </li></ul>
  9. 12. <ul><li>International logistics: The designing and managing of a system to control the flow of materials and products throughout the firm </li></ul><ul><ul><li>Transportation </li></ul></ul><ul><ul><ul><li>For example: ocean shipping and air shipping </li></ul></ul></ul><ul><ul><li>Choice criteria of transportation </li></ul></ul><ul><ul><ul><li>Time, predictability, cost and non-economic factors </li></ul></ul></ul><ul><ul><li>Packaging </li></ul></ul><ul><ul><li>Storage </li></ul></ul>