W2: Hill & Hult (2022). Chapter 17 Flashcards
Production
Used with both service and manufacturing activities
Supply chain management
The integration and coordination of logistics, purchasing, operations, and market channel activities from raw material to the end customer
Inbound supply chain
All the organisations and resources involved in the portion of the supply chain from raw materials to the production facility
Outbound supply chain
All the organisations that are involved in the portion of the supply chain from the facility to the end customer
Six Sigma
A quality improvement methodology. The principal tool that most managers use to increase reliability. It is the modern successor of TQM. It is a statistically-based philosophy that aims to reduce defects, boost productivity, eliminate waste, and cut costs. It is particularly informative in structuring global processes that multinationals can follow in quality and productivity initiatives
Total Quality Management (TQM)
Philosophy popularised in the 1980s and 1990s. It was developed by American consultants, who advocated for a philosophy of eliminating mistakes and poor-quality materials. It suggests an environment in which employees do not fear reporting problems or recommending improvements. Management has the responsibility to train employees in new skills
ISO 9000
Companies should adhere to the quality outlined in ISO 9000 in the EU. However, it is quite bureaucratic
Minimum efficient scale of output
The level of output at which most plant-level scale economies are exhausted
Flexibility of technology
Flexible manufacturing technology/lean production is meant to reduce set-up time, increase utilisation, and improve quality control
Mass customisation
Realises low cost and product customisation
Flexible machine cells
Grouping of various types of machinery controlled by a computer. This leads to improved capacity utilisation and reductions in work-in-progress and waste
Value-to-weight ratio
Products with high value-to-weight ratios can be produced in the optimal location and serve the world market from there. Products with low value-to-weight ratios should be produced in multiple locations to reduce transportation costs
Universal needs
Products that serve universal needs, e.g. industrial and modern consumer products, have reduced the need for local responsiveness, thereby increasing the attractiveness of concentrating production at an optimal location
Global learning
The idea that valuable knowledge does not reside just in a firm’s domestic operations. It can also be found in its foreign subsidiaries
Offshore factory
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. Investments in technology and managerial resources should be kept to a minimum. Ideally, minimal-everything
Source factory
Also drives down costs in the global supply chain. The difference with an offshore factory is the strategic role, which is more significant for a source factory. Managers have more of a say in certain decisions, such as purchasing raw materials and component parts used in the production at the source factory. They also have strategic input into production planning, process changes, logistics issues, product customisation, and implementation of newer designs when needed. They should be located where production costs are low, where infrastructure is well-developed, and where it’s easy to find a skilled workforce
Server factory
Linked to the global supply chain for a global firm to supply specific countries or regional markets around the globe. It is set up to overcome tangible and intangible barriers, such as tariff barriers, reduce taxes, and reinvest money made in the region. It is also used to reduce or eliminate costly global supply chain operations that would be needed if the factory were located further away from the end customers
Contributor factory
Serves a specific country or world region. Main difference with server factory is that it has responsibilities for product and process engineering and development. It is very stand-alone; it has its own infrastructure when it comes to development, engineering, and production
Outpost factory
An intelligence-gathering unit. It is often placed near competitors’ headquarters or main operations, the most demanding customers, or near key suppliers. It could be used to enhance the position of the global firm in strategic countries
Lead factory
Intended to create new processes, products, and technologies that can be used throughout the global firm. This is where cutting-edge production should take place. It is probably located in an area with high-skilled employees, as its prominent role is to set the bar high for how the global firm wants to provide products to customers
Make-or-buy decision
The strategic decision concerning whether to make an item in-house or buy it from an outside supplier. They are made at strategic and operational levels. The strategic level focuses on the long term, while the operational level focuses on the short term. Whether a decision is correct depends on product success, specialised knowledge, and strategic fit
Make decision
Elements that favour it beyond the core elements of cost and production capacity include quality control, proprietary technology, having control, excess capacity, limited suppliers, assurance of continual supply, and industry drivers
Buy decision
Involves minimal restrictions, lacking expertise, supplier competencies, small volumes, inventory planning, and brand preferences
Logistics
The part of the supply chain that plans, implements, and controls the effective flows and inventory of raw materials, component parts, and products used in manufacturing. The core activities are global distribution centre management, inventory management, packaging and materials handling, transportation, and reverse logistics
Global distribution centre/warehouse
A facility that positions and allows customisation of products for delivery to worldwide wholesalers or retailers or directly to customers anywhere in the world. It became a distribution centre when it shifted to strategic assortments and processing (adding value). They should be located strategically in the marketplace, considering the aggregate total labour and transportation cost of moving products from plants or suppliers through the distribution centre and then delivery them to customers
Global inventory management
The decision-making process regarding the raw materials, work-in-process (component parts), and finished goods inventory for a multinational corporation. The decisions include how much inventory to hold, in what form to hold it, and where to locate it in the supply chain
Packaging
Can be divided into three different types: primary, secondary, and transit
Primary packaging
Holds the product itself
Secondary packaging/case-lot packaging
Designed to contain several primary packages
Transit packaging
Comes into use when the number of primary and secondary packages are assembled on a pallet for transportation
Unit-load packaging
The outer packaging envelope that allows for easier handling or product transfer among intermediaries in the supply chain
Performance (packaging)
The ability of the product in the package to handle being transported between nodes in the global supply chain, the ability to be stored, and the package providing convenience expected by the supply chain partners and customers
Protection (packaging)
The ability to contain the products properly, preserve the products to maintain their freshness/newness, and provide the necessary security and safety to ensure that the products reach their end destination in the intended shape
Information (packaging)
The package’s inclusion of logical and sufficient instructions for use, a statement of a compelling product guarantee, and information about service for the product if and when it’s needed
Transportation
Refers to the movement of raw materials, component parts, and finished goods throughout the global supply chain. The primary drivers of transportation rates and the resulting aggregate cost are distance, transport mode, size of load, load characteristics, and oil prices
Reverse logistics
The process of planning, implementing, and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods, and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. The ultimate goal is to optimise the after-sale market activity or make it more efficient. It is an important part of the global supply chain
Outsourcing
A multinational corporation buys products or services from one of its suppliers that produces them somewhere else, whether domestically or globally. In that sense, it refers to external purchasing in relation to purchasing strategy
Insourcing
A multinational corporation decides to stop outsourcing products or services and instead starts to produce them internally; it is the opposite of outsourcing. Thus, it refers to internal purchasing
Offshoring
A multinational corporation buys products or services from one of its suppliers that produces them somewhere globally (outside the MNCs home country). It is thus a form of global external purchasing
Offshore 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. This is a form of global external purchasing
Nearshoring
A multinational corporation transfers business or information technology processes to suppliers in a nearby country, often one that shares a border with the firm’s own country. While it is not a purchasing activity per se, it involves facilitating global external purchasing
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. This applies to all four forms of purchasing strategy. It implies that the relationship between the firm and its supplier is rather strategic in nature. Often, this involves the top suppliers in a particular product or component category
Just-in-Time
An inventory system where the materials arrive just in time, so there is no inventory. This reduces inventory holding costs and can improve product quality, as defective materials are spotted right away, which can then be sourced. However, the firm does not have a buffer stock. Reducing risks can be done by depending on several suppliers located in different countries, which guards against country-specific disruptions
Buffer stock
Can help in responding quickly to increases in demand
Web- and cloud-based information systems
Play a crucial role in modern materials management. They enable a firm to optimise its production scheduling according to when components are expected to arrive. This allows accelerated production when needed
Electronic data interchange (EDI)
Refers to the electronic interchange of data between two or more companies
Enterprise Resource Planning (ERP)
A wide-ranging business planning and control system that includes supply chain-related subsystems (e.g. MRP)
Collaborative planning, forecasting, and replenishment (CPFR)
Developed to fill the inter-organisational connections that ERP cannot fill
Vendor management of inventory (VMI)
Allows for a holistic overview of the supply chain with a single point of control for all inventory management
Warehouse management system (WMS)
Often operates in combination with ERP systems
Global supply chain coordination
Refers to shared decision-making opportunities and operational collaboration of key global supply chain activities
Shared decision-making
Creates a more integrated, coherent, efficient, and effective global supply chain. It is not joint decision-making; it is decision-making involving joint considerations. It fosters a culture of coordination and integration
Responsiveness
Global firm’s ability to satisfy customer requirements across global supply chain functions in a timely manner
Variance reduction
Integrating a control system across global supply chain functions to eliminate disruptions
Inventory reduction
Integrating an inventory system, controlling asset commitment, and turning velocity across global supply chain functions
Shipment consoldiation
Using various programs to combine small shipments and provide timely, consolidated movement
Quality
Integrating a system so that it achieves zero defects
Life-cycle support
Integrating the activities of reverse logistics, recycling, after-market service, product recall, and product disposal
