chapter 17 Flashcards
what are the two value creation activities
production and supply chain management
what is production
Activities involved in creating a product.
both seercuce and manufacturing activities because either a service of physical product is made
what is supply chain management
The integration and coordination of logistics, purchasing, operations, and market channel activities from raw material to the end-custome
how are production and supply chain management closely linked
because a firms ability to perform its production activities efficiently depends on a timely supply of high quality material and information inputs for which purchasing and logistics are critical
what is purchasing
The part of the supply chain that includes the worldwide buying of raw material, component parts, and products used in manufacturing of the company’s products and services.
what are logistics
The part of the supply chain that plans, implements, and controls the effective flows and inventory of raw material, component parts, and products used in manufacturing.
the production and supply chain management functions aka purchasing and logistics have important strategic objectives. what are they
- ensure that the total cost of moving from raw materials to finished goods is as lowas possible (to lower costs–> manage supply chain efficiency and diaper production to different places )
- To increase product (or service) quality (reliability ) by establishing process-based quality standards and eliminating defective raw material, component parts, and products from the manufacturing process and the supply chain.
where should the quality assurances be embedded
in both the upstream and downstream parts of the global supply chain
what is the upstream supply chain
The portion of the supply chain from raw materials to the production facility
what is the downstream supply chain
The portion of the supply chain from the production facility to the end-customer.
improved quality control reduces by (relatiosnhip with between quality and costs)
- increasing productivity because time is not wasted producing products that cant bw sold
- lowering rework and scrap costs associated with defective products
- reducing the warranty costs and time associated with fixing defective products
what is the pririnciap tool that most managers use now to increase the reliability of their product
six sigma quality improvement method
what is the total quality management
Management philosophy that takes as its central focus the need to improve the quality of a company’s products and services.
six sigma is a descendent of this
what is Edward Deming say about the TQM philopshy
- say that management should embrace the ohilsiophy that mistake, low quality are not acceptable and should be eliminated
- quality of supervision should be improved by allowing ,ore time for suoervirvos to work with employees and make a giod nevriomnemt
- have to train employees new skills to keep pace with changes
- better quality requires the commitment of everyone in the company
what is six sigma
- based on TQM and says that we should reduce defects, boost prdoucuvity, eliminate waste and cut costs throughout a company
- good in structuring global processes that multinational corps can follow In quality and productive initiatives
what is ISO 9000
Certification process that requires certain quality standards that must be met.
- could be bureaucratic and costly for the firms
- does focus management attention on the need to improve the quality of products and processes
what are two other important objectives in international businesses
- supply and production functions must be able to accommodate demands for local responsiveness
- production and supply chain mamahgemt must be able to respond quickly to shifts in customer demand
what are the three factors that a firm must consider on where to best produce its stuff
- country factors
- technological factors
- production factors
what are country factors
Political and economic systems, culture, and relative factor costs differ from country to country.
Location economies.
Formal and informal trade barriers.
Transportation costs.
Rules and regulations.
Exchange rate movements.
what are technological factors
the type of technology a firm uses to perform specific manufacturing activities can be pivotal in location decisions
what are the three chataceirstics of manufacturing technology
the level of fixed costs, the minimum efficient scale and the flexibility of the technology
when fixed costs are high
- firm must service the world market from a single location or very few locations
ex; lets sya you want to ship smtg and the costs to rent a truck are very expemsive, you may jst want to send stuff from one location
when fixed costs are low
make it economical to perform a particular activity in several locations at once–> better to accommodate demands for local responsiveness, may also help the firm not become too dependent on one location which is risky due to floating exchange rates
what is the minimum efficient scale
The level of output at which most plant-level scale economies are exhausted.beimg efficient
refers to the lowest level of production at which a firm can produce goods or services at the lowest average cost per unit
what are the implications of the minimum efficient scale
- the larger the MES of a plant relative to its total global demand, the greater the argument for centralizing production in a single location or a limited number of locations
In simple terms, if your big cookie factory is super good at making cookies efficiently, and not everyone in the world wants a ton of cookies, it might be smarter to have just a few super-efficient factories in one or a few locations rather than many smaller ones everywhere.
what are advantages of the MES
- allowing the firm to accommodate demands for local responsiveness
- hedge against currency risk by manufacturing the same product in several locations–>If you made the cookies in just one country and the currency value of that country changes a lot, it could affect your costs. But, if you have a few factories in different countries making the same cookies, you’re spreading the risk. If one country’s currency goes up or down, it doesn’t affect all your cookie-making. So, having a few efficient factories in different places helps protect your cookie business from the ups and downs of currency values.
what is flexible manufactirnh technology or lean production
Manufacturing technology designed to improve job scheduling, reduce setup time, and improve quality control.
being really efficient
why is lean production used
- reduce step times for complex equipment
- increase the utilization of indovudal machines through better scheduling
- improve the quality control of all stages of the manufacturing process
what is mass customization
The production of a variety of end products at a unit cost that could once be achieved only through mass production of a standardized output.
coined to flexible manufactring
Mass customization is about offering a variety of options to meet individual customer preferences while maintaining efficiency in production.
what are flexible machine cells
Flexible manufacturing technology in which a grouping of various machine types, a common materials handler, and a centralized cell controller produce a family of products
each cell contains 4-6 machines that can do a lot of different things
a flexible machine cell is like a team of robots that can easily switch between different tasks in a factory, making the whole production process more adaptable and efficient.
what are pros of flexibe machine sells
improved capacity utilization–> comes from the reduction of set up times
reductions in work progress–> tight coordination between machines
and reductions in waste –> due to the ability of computer controlled machinery
lowers costs
companies can customizer products to the demands of small consumer hgroups
help a company achieve mass customization
help a firm custzomie products for dif national markets
what are the production factors
- product features
- locating production facilities
- strategic roles for production facilities
what are the two product features that affect location decisions
- products value to weight ratio–> influence on transpiration costs, great pressure to make these products in multiple locations close to major markets to reduce transportation costs
2,whether the product serve universal needs (needs that are the same everywhere )–> meed for local responsiveness is reduced
what are the two basic strategies for locating prdocutin facilities
- concentrating them in a centralized location and serving the world market from there
- decrentraling them in various regional or national locations that are close to major markets
why is there growth of global production among multinational companies growing so much
multinationals are trying to capture the gains associated with a dispersed global production system
managers need to be ready to make the decision to open a new production facility outside their home base
They set up production in different places to make the most of skills and resources around the world. Managers decide to open new production facilities outside their home base to be closer to customers and make their products more efficiently.
