Supply Chain Management Review (Photo credit: Wikipedia)
English: Supply Chain Network Example (Photo credit: Wikipedia)
* Enterprise Business Relationships, including ORM (Photo credit: Wikipedia)
English: Supply Chain of Indian Automobile Industry (Photo credit: Wikipedia)
Chapter 17 is about Global Production Locations, outsourcing and supply chain issues.
Manufacturing of a vessel dished end (Photo credit: Wikipedia)
The International Journal of Advanced Manufacturing Technology (Photo credit: Wikipedia)
English: Incheon Airport Logistics Center of Pantos Logistics (Korean Logistics company) (Photo credit: Wikipedia)
English: Screenshot Logistics Designer (Photo credit: Wikipedia)
Logistics versus Supply Chain (Photo credit: Wikipedia)
The Amazon Kindle 2 (Photo credit: Wikipedia)
Kindle 2.0 (Photo credit: Wikipedia)
English: Supply Chain of Indian Automobile Industry (Photo credit: Wikipedia)
A supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer. Supply chain activities involve the transformation of natural resources, raw materials, and components into a finished product that is delivered to the end customer. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable. Supply chains link value chains.
In business, outsourcing involves the contracting out of a business process to another party and may involve business process outsourcing. Outsourcing sometimes involves transferring employees and assets from one firm to another.
Outsourcing includes both foreign and domestic contracting,[5] and sometimes includes offshoring (relocating a business function to another country).[6] Financial savings from lower international labor rates can provide a major motivation for outsourcing or offshoring.
The opposite of outsourcing, insourcing, entails bringing processes handled by third-party firms in-house, and is sometimes accomplished via vertical integration.
Outsourcing is a very important tool for reducing cost and improving quality.
Logistics is the management of the flow of things between the point of origin and the point of consumption in order to meet requirements of customers or corporations. The resources managed in logistics can include physical items, such as food, materials, animals, equipment and liquids, as well as abstract items, such as time, information, particles, and energy. The logistics of physical items usually involves the integration of information flow, which is material handling, production, packaging, inventory, transportation, warehousing, and often security. The complexity of logistics can be modeled, analyzed, visualized, and optimized by dedicated simulation software. The minimization of the use of resources is a common motivation in logistics for import and export.
The term production system may refer to:
- In operations management and industrial engineering, a production system comprises both the technological elements (machines and tools) and organizational behavior (division of labor and information flow) needed to produce something.
- In computer science, a production system (or production rule system) is a computer program typically used to provide some form of artificial intelligence.
- Toyota Production System, organizes manufacturing and logistics at Toyota
- The Computer Animation Production System (CAPS) is a proprietary collection of software, scanning camera systems, servers, networked computer workstations, and custom desks developed by The Walt Disney Company together with Pixar in the late-1980s.
Learning objectives
Explain why production and logistics decisions are of central importance to many multinational businesses.
Explain how country differences, production technology, and product features all affect the choice of where to locate production activities.
Recognize how the role of foreign subsidiaries in production can be enhanced over time as they accumulate knowledge.
Identify the factors that influence a firm’s decision of whether to source supplies from within the company or from foreign suppliers.
Describe what is required to efficiently coordinate a globally dispersed production system.
This chapter focuses on two major activities—production and materials management, and attempts to clarify how when they are performed internationally, the cost of value creation can be lowered, and how value can be added by better serving customer needs.
The choice of an optimal manufacturing location must consider country factors, technological factors, and product factors.
Foreign factories can improve their capabilities over time, and this can be of immense strategic benefit to the firm. Managers need to view foreign factories as potential centers of excellence and encourage and foster attempts by local managers to upgrade factory capabilities.
An essential issue in many international businesses is determining which component parts should be manufactured in-house and which should be outsourced to independent suppliers.
The chapter also discusses the contributions of information technology to these activities. This is especially important in the era of the Internet.
The opening case explores Amazon’s manufacturing strategy for its popular ebook reader, the Kindle. Amazon relies on companies through Asia for most of the Kindle’s key components. The closing case examines why India has become a hot production location for automakers.
OUTLINE OF CHAPTER 17: GLOBAL PRODUCTION, OUTSOURCING, AND LOGISTICS
Opening Case: Making the Amazon Kindle
Where to Produce: If an electronics firm is considering how to supply the world market and the manufacturing plant costs $500 million to construct and requires a highly skilled workforce and the tariffs are low, should they favor concentrated or decentralized manufacturing?
The Industry Week magazine ranking can be located by searching for the term “Industry Week” at http://globaledge.msu.edu/ResourceDesk/. The resource is titled “IndustryWeek: IW 1000 – World’s Largest Manufacturing Companies” and is located under the globalEDGE Category “Research: Rankings”. Be sure to click on the Resource Desk link to search this area of the globalEDGE website.
Visit the Website: http://www.industryweek.com/iwinprint/iw1000/
The Chartbook of International Labor Comparisons can be located by searching for the term “Chartbook of International Labor Comparisons” at http://globaledge.msu.edu/ResourceDesk/. The resource is titled “A Chartbook of International Labor Comparisons” and is located under the globalEDGE Category “Research: Statistical Data Sources”. Hourly compensation costs are listed under the
“Competitiveness Indicators for Manufacturing” section of this report. Be sure to click on the Resource Desk link to search this area of the globalEDGE website.
Website: http://www.bls.gov/fls/chartbook.htm
