International
Business
Environments & Operations
15e
Daniels
●
Radebaugh
●
Copyright © 2015 Pearson Education, Inc.
Sullivan
18-1
Chapter 18
Global Manufacturing
and Supply-Chain
Management
Copyright © 2015 Pearson Education, Inc.
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Learning Objectives
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Describe the different dimensions of a global
manufacturing strategy
Examine the critical factors in successful global
supply-chain management
Show how supplier networks function
Explain how quality affects global supply and
effective inventory management
Discuss how to establish successful
transportation networks as part of the global
supply chain
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The Global Component Network for Ford’s
European Manufacturing of the Escort
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What is Supply-Chain
Management?
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The supply chain: the network that links together the
different aspects of the value chain, coordinating materials,
information, and funds from the initial raw material supplier
to the ultimate customer
Supply chain management aka operations and
supply-chain management (OSM): the design,
operation, and improvement of systems that create and
deliver the firm’s primary products and services
Logistics (aka materials management): that part of the
supply chain process that plans, implements, and controls
the efficient and 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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An integrated supply chain and
operations model
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Global Supply Chain Strategies
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The success of a global manufacturing
strategy depends upon good strategies in
three specific areas:
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Compatibility
Manufacturing Configuration
Coordination and Control
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Compatibility
Compatibility-in the context of
manufacturing strategy, the degree of
consistency between a firm’s foreign
direct investment decisions and its
competitive strategy
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Manufacturing Configuration
The three basic configurations that MNEs
consider en route to developing their
global manufacturing strategies are:
 centralized manufacturing in a single
country
 regionalized manufacturing in specific
regions served
 local manufacturing in each country
market served
 Multidomestic manufacturing or marketing
is common among multinationals
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Coordination and Control
Coordination: the linking and integrating
of participants and activities throughout
the (global) supply chain into a unified
system
 Control: embraces systems such as
organizational structure and performance
measurement that are designed to help
ensure that strategies are implemented,
monitored, and revised, as appropriate
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Global Sourcing
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Sourcing: is the process of obtaining a supply of inputs
(raw materials and parts) for production. Firms pursue
global sourcing strategies in order….
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To reduce costs through cheaper labor, laxer work rules, and low land
and facilities costs
To improve quality
To increase exposure to worldwide technology
To improve the delivery-of-supplies process
To strengthen reliability of supply–supplementing domestic suppliers
with foreign ones
To gain access to materials that are only available abroad
To establish presence in a foreign market
To satisfy offset requirements
To react to competitors’ offshore sourcing practices
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Global Sourcing
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Global Sourcing-A Few Terms
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Outsourcing is when a company externalizes a function or
process to another business.
Contract Manufacturing is when the entire manufacturing
process is being handled by another firm.
Vertical Integration is when a company owns the entire
supplier network, or at least a significant part of it.
Industrial Clusters occur when buyers and suppliers
locate close to each other to facilitate doing business.
 Dell Computer in Malaysia
Keiretsu – Japanese group of independent companies that
work together to manage the flow of goods
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Total Quality Management
TQM is a process that stresses customer
satisfaction, employee involvement, and
continuous improvement of quality
Quality: conformance to specifications, value
enhancement, fitness for use, after-sales
support, and psychological impressions (image)
Six Sigma: aims to eliminate defects, slash
product cycle times, and cut costs across the
board. An idea perfected by Japanese
manufacturers who refuse to tolerate defects
(zero-defects) of any kind
Kaizen: the Japanese process of continuous
improvement, which requires identifying
problems and enlisting employees at all levels of
the organization to help eliminate them
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Quality Standards
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Levels of quality standards
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General
 ISO 9000
 Malcom Baldridge National Quality Award
Industry specific
Company specific
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Inventory Management
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Inventory management: the planning and
control of the levels, flows, and storage of inputs,
unfinished, and finished goods
Just-in time manufacturing (JIT): focuses on
reducing inefficiency and unproductive time in
the production process to improve continuously
the process and the quality of the product or
service. The system reduces inventory costs by
having inputs delivered just as they are needed
in the production process
Foreign trade zones (FTZs): governmentdesignated areas in which goods can be stored,
inspected, and/or manufactured without being
subject to formal customs procedures until they
actually enter a country
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Information Technology and Global
Supply-Chain Management
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Electronic Data Interchange
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Enterprise Resource Planning/Material
Requirements Planning
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links information flows from different parts of a business
and from different geographic areas
Radio Frequency ID (RFID)
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links suppliers, manufacturers, customers, and
intermediaries
labels products with an electronic tag, which stores and
transmits information regarding the product’s origin,
destination, and quantity
E-Commerce
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joins together suppliers with companies and companies
with customers
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Chapter 18: Discussion Questions
1.
2.
3.
4.
5.
Define and explain the role of “supply chain
management” in firm strategy.
Explain how the success of a global supply chain
strategy depends upon compatibility,
manufacturing configuration, and coordination and
control.
Define Total Quality Management and explain its
importance in global supply chain management.
Define global sourcing and explain the role it plays
in global supply chain management.
Explain Inventory Management in global supply
chain.
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Copyright © 2015 Pearson Education, Inc.
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