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.
what is global learning
The flow of skills and product offerings from foreign subsidiary to home country and from foreign subsidiary to foreign subsidiary.
foreign factors can have Manu strategic roles
- offshore factory
- source factory
- server factory
- contributor factory
- put[pst factory
- lead factory
what is an offshore factory
A factory that is developed and set up mainly for producing component parts or finished goods at a lower cost than producing them at home or in any other market.
minimal everything
not innovative
what is a source factory
A factory whose primary purpose is also to drive down costs in the global supply chain.
more of a strategic role than the offshore factory
managers have more of a say
have strategic oinpuut
should be lpcated where production costs are low, inrraysrycie is well developed and there is a skilled workforce
A source factory also is established to gain access to low-cost production; but unlike an offshore factory, it has the resources and the expertise to develop and produce a part or a product for the company’s global markets.
what is a server factory
A factory linked into the global supply chain for a global firm to supply specific country or regional markets around the globe.
reduces costly global supply chain operations
they dont have more input than managers in an offshore factory
just serves a specific country or region
what is a contributor factory
A factory that serves a specific country or worldregion
has repsoinbilityes for a product and process eng
more of a choice in terms of which suppliers to use for raw materials
stand alone
A contributor factory both serves a local market and assumes responsibility for product customization, process improvements, product modifications, or product developmen
what is an outpost factory
A factory that can be viewed as an intelligence-gathering unit
often placed near a competitors headquarters
operates as a serve and also an offshore factory
what is a lead factory
A factory that is intended to create new processes, products, and technologies that can be used throughout the global firm in all parts of the world
cutting edge production, testing
located in an area with highly skilled employees
mamagers and employees have a direct connection to and say in which suppliers to use, what designs
what are the hidden costs to basing production in foreign locations
- high employee turnover
- shoddy workmanship
- poor product quality
- low productivity
what is a make or buy decision
The strategic decision concerning whether to produce an item in-house (“make”) or purchase it from an outside supplier (“buy”).
what are two factors that make or buy decisions are based on
cost and priductopn capacity
what are cost issues
acquiring raw materials, component parts, any other inputs
what is production capacity
does the firm have the capacity to produce the product ay a cost that is at least no higher than the cost of buying It from an external supplier
opportunity cost
when is a make choice favoured
- 9f the firm has excess capaoctuy that otherwise would not be prodyicbityly used
- if supply cannot be guaranteed if the firm moves its production overseas
- various trust and commitment reasons
when is a buy decision favoured
- of the firm lacks the needed expertise to make a product or component part and the supplier or otusorucd production choice has that expertise
- small volumes–> more cost efficient
- strategically managing inventory
what are the core activities performed in logistics
- global distribution centre management
2, inventrory management
3, packagin and maaterials handling - tarsnpration
- reverse logistics
what is a global distribution centre
A facility that positions and allows customization of products for delivery to worldwide wholesalers or retailers or directly to consumers anywhere in the world; also called a global distribution warehouse.
used by imports, experts, wholesalers, retailers
is at the centre of the global supply chain
what is the global inventory management
The decision-making process regarding the raw materials, work-in-process (component parts), and finished goods inventory for a multinational corporation
how much inventory to hold, in what form and where to locate it in he supply chain
what is packaging
The container that holds the product itself. It can be divided into primary, secondary, and transit packaging.
what are the three types of packaging
second, primary and transit
what is primary packaging
- holds yje product itself
what is secondary palacking
designed to contain several primary paalcgaes
what is transit packaging
comes into use when a number of primary and secondly packagies are assembled on a pallet or unit laid for transportation
what are the functions of packaging
perform
protect
inform
what is perform
ability for the product in the apalcage to handle being ytasn[orted between nodes in the global supply chain
the product can be stored for a while
helps supply chain partners and the end customers
what is protect
- contain the products proroperky
- preserve the products
- provide the necessary security and safety si that the product reaches the end destination well
what is inform
- local and sufficient instructions
statement of compelling product guarantee
info about service for the product if and when it is needed
what is transportation
The movement of inventory through the supply chain
rates are heavily influenced by economies of scale and oil
what Is reverse logistics
The process of moving inventory from the point of consumption to the point of origin in supply chains for the purpose of recapturing value or proper disposal.
want to save money and resources
important in global supply chains
what is level 1
companies engaging in domestic purchasing activities only
what is level 2 and 3
international purchasing
2= engage only as needed, reactive and uncoordinated
3= engage as part of the firms overall supply chain management strategy
level 4 and 5
global purchasing
4= integrated across worldwide locations
5=siphisfacted form of world-wide purchasing, engaging in global purchasing activities that are integrated across worldwide locations
what re the basic choices of how companies should engage with markets
- how to purchase
- where to purchase
- types of purchasing
what is outsourcing
A multinational corporation buys products or services from one of its suppliers that produces them somewhere else, whether domestically or globally.
DOMESTIC OR GLOBAL
what is insourcing
A multinational corporation decides to stop outsourcing products or services and instead starts to produce them internally; insourcing is the opposite of outsourcing.
what is offshoring
A multinational corporation buys products or services from one of its suppliers that produces them somewhere globally (outside the MNCs home country).
GLOBAL
what is offshoring outsourcing
A multinational corporation buys products or services from one of its suppliers in a country other than the one in which the product is manufactured or the service is developed.
what is near sourcing
A multinational corporation transfers business or info processes to suppliers in a nearby country, usually one that boarders your country
not a purchasing activitiy
what is co sourcing
A multinational corporation uses both its own employees from inside the firm and an external supplier to perform certain tasks, often in concert with each other.
what are the four main areas of concern of managing a global supply chain
the role of just in time inventory, the role of information technology, coordination in global supply chains and the interorganzatioanl relationships in global supply chains
what are just in time inventory systems
Inventory logistics system designed to deliver parts to a production process as they are needed, not before.
speeding up inventory turnover –> frees up capital, won’t have unsold inventory
can improve product quality
what is the issue with a JIT system
leaves a firm without a buffer stock of inventory
buffer stocks help a firm respond quickly to increases in demand
how do firms reduce the risk of global supply Chains that operate using just in time principles
- some firms source these inputs from several suppliers located in different countries
how does the role of information technology help supply chains
web and cloud based info helps as firms can track component parts ib the suppply chain easily–> accelerates production
if you dont use these systems, you will be at a disadvantage
helps coordinate the flow of materials into manufacturing, through manufacturing and out to customers
how does blockchain technology help the supply chain
makes it possible for ecosystems of supply chain partners to share info easily
they synchronize all data and transactions across the global network
companies gain a live real time digital ledger of all transactions
but its also expensive and may not have short term immediate advantages
what is global supply chain coordination
The shared decision-making opportunities and operational collaboration of key global supply chain activities.–> creates a more integrated, efficient global supply chain
shared diecison making is not..
a joint decision making, its a decision making involving joint considerations
to achieve operational integration and collaboration within a global supply chain, what are the six operational adjectives
repsonsivness –> firms ability to satisfy customer requirements in a timely matter
variance reduction–> integrating a control system across global supply cgain functons to eliminate global supply chain disruptions
inventory reduction –> integratng an inventory system
shipment consolidation–> using various programs to combine small shipments
quality–> intergating a system so it achieves zero defects throughout the global supply chains
life cycle support–> integrating the activities of reverse logistics, product recall, product disposal
what are the two key parts of inter organizational relationships
trust and commitment
not all relationships are equally as valuable
For the upstream/inbound portion of the global supply chain, the three logical scenarios of interacting organizations are
as vendors, suppliers, and partners. Each scenario is based on the degree of coordination, integration, and transactional versus relationship emphasis that the firm should adopt in partnering with other entities in the global supply chain.
For the downstream/outbound portion of the global supply chain, the three logical scenarios of interacting organizations are
as buyers, customers, and clients. As with the upstream/inbound examples, each downstream/outbound scenario is based on the degree of coordination, integration, and transactional versus relationship focus that the firm should adopt in partnering with other entities in the global supply chain.
what has caused unanticipated stress on global supply chains
tariffs, wars, covid, envrioemntal changes
what is a real hedging strategy
- where a company decides to produce or source products from several different nations
- its done because its so hard to predict the future
