11- Global Supply Chain

Question 1

Global operations management

Answer 1

Production system - produces products
Manufacturing system - production system where goods dominate value of product
Service system - production system where services dominate value of product

Question 2

Operations management

Answer 2

Management of direct resources that are involved in the production system of a business organisation

Activities- procurement (acquisition of g+s), logistics (transport of materials in production system), production (transformations required by prod process), r+d (design of new products)

Question 3

Global procurement

Answer 3

Firm buys components and raw materials globally

Adv: no need to invest money associated with marketing, focus on product strategies with most value added, being firm doesn’t need to learn new business, avoids supplier business risks, simplified production process, input purchase costs lower due to econ of scale

Disadv: risk of relying on suppliers, difficulty enforcing contracts with supports, some profits go to suppliers, suppliers becoming competitors

Question 4

Global production advantages and disadvantages

Answer 4

Adv- knowledge of product =efficiency and cost advantages, allows control of component and quality, control of product delivery, in house prod may be req for highly specialised components, enables security.

Disadv- req firm to have expertise, international demand might not be sufficient to decrease costs with economies of scale, increased complexity, incur fixed and variable costs, inefficient.

Question 5

Location decision

Answer 5

Producing at 1 or more locations/location of facilities

Considerations: fixed costs, minimum efficient scale of a production facility (lowest point where firm can produce such that LR ave costs are minimised) in comparison to demand for output, transaction costs.

Where to locate: infrastructure availability, factor endowments (CA), financial political economic risks.

Question 6

Global supply chain

Answer 6

All activities associated with flow and transformation of g + s from raw material stage to end user, together with corresponding flows of monetary funds and info.