Chapter 14a Global Production, Outsourcing, and Logistics

Chapter 14a Global Production, Outsourcing, and Logistics -...

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Unformatted text preview: 14-1Click to edit Master subtitle styleChapter 14Global Production, Outsourcing, and Logistics14-2IntroductionIn todays global economy, firms must decidewhere 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 outsource14-3Strategy, Production, and LogisticsQuestion:How can production and logisticsbe conducted internationally to1.lower the costs of value creation2.add value by better serving customer needs?&Productionrefers to activities involved in creating a product&Logisticsrefers to the procurement and physical transmission of material through the supply chain, from suppliers to customers14-4Strategy, Production, and LogisticsThe strategic objectives of the production and logistics function areto lower coststo increase product quality by eliminating defective products from both the supply chain and the manufacturing processThese two objectives are interrelated14-5The Supply Chain14-6Strategy, Production, and LogisticsBetter quality control helps firms reduce costs because time is not wasted manufacturing poor quality products that cannot be soldre-work and scrap costs are lowerwarranty costs and the time used to fix defective products are lower14-7Strategy, Production, and LogisticsQuestion: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 Unions ISO 9000 standards14-889-8Quality Control StandardsSix Sigma (&) Quality (measurement)3.4 defects per million units(getting it right 99.9997% of the time)Statistical Quality Control (SQC)Continually monitor all phases of production process for quality14-999-9Quality Control StandardsISO 9000:2004ISO 14000 (EMS)14-10109-10ISO Quality StandardsISO 9000: voluntary standards for quality management set by International Organization for Standardization (ISO)ISO 14000: concentrates on environmental management14-11119-11ISO Quality StandardsISO was founded in 1947At the end of 2004, the worldwide total of certificates:ISO 9000 670,000 in 154 countriesISO 14000 90,000 in 127 countriesSource: Business Week Online, March 17, 200614-12Strategy, Production, and LogisticsTwo other objectives are important for international companies 1.production and logistics functions must be able to accommodate demands for local responsiveness2.production and logistics must be able to respond quickly to shifts in customer demand14-13...
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This note was uploaded on 09/23/2011 for the course ECON 101 taught by Professor Smith during the Spring '11 term at North Shore.

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Chapter 14a Global Production, Outsourcing, and Logistics -...

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