International business environment and operations 13e pearson chapter 17

International Business
Environments and Operations,
13/e
Part 6
Managing International
Operations
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Chapter 17
Global
Manufacturing
and SupplyChain
Management

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Chapter Objectives
• To describe the different dimensions of a global
manufacturing strategy
• To examine the elements of global supply-chain
management
• To show how quality affects the global supply chain
• To illustrate how supplier networks function
• To explain how inventory management is a key
dimension of the global supply chain
• To present different alternatives for transporting
products along the supply chain from suppliers to

customers
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What is Supply Chain
Management?
• Supply chain—the coordination of materials,
information, and funds from the initial raw-material
supplier to the ultimate customer.
• Logistics—part of the supply-chain process that
plans, implements, and controls the efficient, effective
flow and storage of goods, services, and related
information from the point of origin to the point of
consumption in order to meet customers’
requirements.
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Global Manufacturing Strategies
Four Key Factors:
• Compatibility
• Configuration
• Coordination
• Control

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Compatibility
Company managers must consider the
following strategies:
• Efficiency/Cost
• Dependability
• Quality & Innovation
• Flexibility
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Manufacturing Configuration
• Centralized manufacturing in one country
• Manufacturing facilities in specific regions to
service those regions
• Multidomestic facilities in each country

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Coordination Control
Control systems, such as organizational
structure and performance measurement
systems, ensure that managers implement
company strategies.

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Information Technology and
Global Supply Chain Management
• Electronic Data Interchange
• Enterprise Resource Planning/Material
Requirements Planning
• Radio Frequency ID (RFID)
• E-Commerce

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Quality
• Zero Defects versus Acceptable Quality Level
• The Deming Approach to Quality
Management
• Total Quality Management
• Six Sigma

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Quality Standards
Levels of quality standards:
• General level—ISO 9000, Malcolm Baldrige
National Quality Award
• Industry-specific level

• Company level

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Supplier Networks
•
•
•
•
•

Global Sourcing
Major Sourcing Configuration
The Make or Buy Decision
Supplier Relations
The Purchasing Function

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Global Sourcing

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Major Sourcing Configuration

• Vertical integration
• Outsourcing through industrial clusters
• Other outsourcing

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Make or Buy Decision
• Make or buy—outsource or supply parts from
internal production
• If MNEs outsource parts instead of sourcing
them from internal production, they need to
determine the degree of involvement with
suppliers.

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Supplier Relations
• Supplier relationships are very important but
sometimes complicated, especially for MNEs
trying to manage supplier relationships
around the world
– Case: Toyota
– Case: JCPenney

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The Purchasing Function
Global progression in the purchasing function:
• Domestic purchasing only
• Foreign buying based on need
• Foreign buying as part of a procurement
strategy
• Integration of global procurement strategy

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Major Sourcing Strategies
• Assign domestic buyers for foreign
purchasing.
• Use foreign subsidiaries or business agents.
• Establish international purchasing offices.
• Assign the responsibility for global sourcing to
a specific business unit or units.
• Integrate and coordinate worldwide sourcing.

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Inventory Management
• Lean Manufacturing and Just-In-Time
Systems

– Risks in Foreign Systems
– The Kanban System
• Foreign Trade Zones
• Transportation Networks

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Future: Uncertainty and the Global
Supply Chain
• Globalization encourages companies to
outsource to foreign suppliers to reduce
costs.
• Political events increase the risk of
supply chain disruption.

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All rights reserved. No part of this publication may be
reproduced, stored in a retrieval system, or transmitted,
in any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior
written permission of the publisher. Printed in the
United States of America.

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