Chap014 - Chapter 14 Chapter Global Production,...

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Chapter 14 Chapter 14 Global Production, Outsourcing, and Logistics
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14-2 Introduction In today’s global economy, firms must decide where to locate productive activities what the long-term strategic role of foreign production sites should be whether to own foreign production activities or outsource those activities how to manage a globally dispersed supply chain and what the role of Internet-based information technology should be in the management of global logistics whether to manage global logistics or outsource
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14-3 Strategy, Production, and Logistics Question: How can production and logistics be conducted internationally to 1. lower the costs of value creation 2. add value by better serving customer needs? Production refers to activities involved in creating a product Logistics refers to the procurement and physical transmission of material through the supply chain, from suppliers to customers
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14-4 Strategy, Production, and Logistics The strategic objectives of the production and logistics function are to lower costs to increase product quality by eliminating defective products from both the supply chain and the manufacturing process These two objectives are interrelated
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14-5 Strategy, Production, and Logistics Better quality control helps firms reduce costs because time is not wasted manufacturing poor quality products that cannot be sold re-work and scrap costs are lower warranty costs and the time used too fix defective products are lower
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14-6 Strategy, Production, and Logistics Question: What management tool is used to increase the reliability of product offerings? The Six Sigma quality improvement program aims to reduce defects, boost productivity, eliminate waste, and cut costs throughout a company Six Sigma is a direct descendant of total quality management (TQM) In addition, some countries have also promoted specific quality guidelines like the European Union’s ISO 9000 standards
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14-7 Strategy, Production, and Logistics Two other objectives are important for international companies 1. production and logistics functions must be able to accommodate demands for local responsiveness 2. production and logistics must be able to respond quickly to shifts in customer demand
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14-8 Where to Produce Question: Where should production activities be located? When deciding where to locate production facilities, firms must consider country factors technological factors product factors
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14-9 Country Factors Firms should locate manufacturing activities where economic, political, and cultural conditions, including relative factor costs, are most conducive to the performance of that activity Regulations affecting FDI and trade can significantly affect the appropriateness of specific countries, as can expectations about future exchange rate changes
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14-10
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Chap014 - Chapter 14 Chapter Global Production,...

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