Transcript PRODUCTION AND OPERATIONS MANAGEMENT

PRODUCTION AND
OPERATIONS
MANAGEMENT
Ch. 3: Operations in a Global
Environment
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Learning Objectives
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What is the difference in terms of
operations management when the
company is global?
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Management Issues in Global
Operations
Global Strategic
Context
• Differentiation
• Cost leadership
• Response
Supply Chain
Management
Location
Decisions
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Logistics
Management
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Possible strategies
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Important issues to consider
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How to organize the flow of goods Supply chain management
Where to deploy resources- Facility
location decisions
• Types of facilities
• Locations
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How are you going to move supplies
and products - Materials
management
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Supply-Chain Management
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Sourcing
Vertical integration
Make-or-buy decisions
Partnering
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Location Decisions
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Country-related issues
Product-related issues
Government policy/political risk
Organizational issues
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Materials Management
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Flow of materials
Transportation options and speed
Inventory levels
Packaging
Storage
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Reasons to Globalize
Operations
Tangible
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Intangible
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Reduce costs (labor, taxes, tariffs,
etc.)
Reduce risks (foreign exchange,
etc.)
Improve supply chain
Provide better goods and services
Attract new markets
Learn to improve operations
Attract and retain global talent
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Trade and Tariff
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Maquiladoras - Mexican factories located
along the U.S.-Mexico border that receive
preferential tariff treatment
GATT - an international treaty that helps
promote world trade by lowering barriers
to the free flow of goods across borders
NAFTA - a free trade agreement between
Canada, Mexico, and the United States
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THOUGHT
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Free trade may take us into the era
of the floating factory - a six person
crew will take a factory from port to
port in order to obtain the best
market, material, labor and tax
advantages
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Achieving Global Operations
Four Considerations
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Global product design
Global process design and technology
Global factory location analysis
Impact of Culture and Ethics
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Global
Product Design
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Remember social and cultural
differences
• packaging
and marketing can help make
product seem “domestic” but  “liter”
versus “quart”
 “sweetness” and “taste”
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Global
Process Design and Technology
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Information technology enables
management of integrated,
globally dispersed operation
Texas Instruments: 50 plants in
19 countries
Hewlett-Packard - product
development teams in U.S., Japan,
Great Britain, and Germany
Reduces time-to-market
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Global
Facility Location Analysis
Using CSFs (Country specific factors) for Country Selection
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Select CSFs based on parent
organization’s strategic or
operations objectives
Obtain country-specific information
on the CSFs
Evaluate each country’s CSFs using
a 1 (bad) to 5 (good) rating scale
Sum the ratings
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You May Wish To Consider
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national literacy rate
rate of innovation
rate of technology
change
number of skilled
workers
stability of
government
product liability laws
export restrictions
similarity in language
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work ethic
tax rates
inflation
availability of raw
materials
¨ interest rates
¨ population
¨ number of miles of
highway
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Global
Impact of Culture and Ethics
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Cultures differ! Some accept/expect:
• variations
in punctuality
• long lunch hours
• expectation of thievery
• bribery
• little protection of intellectual property
• Extended working time
• Smaller salaries
• No social benefits….
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To Establish Global Services
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Determine if sufficient people or
facilities exist to support the service
Identify foreign markets that are
open - not controlled by
governments
Determine what services are of most
interest to foreign customers
Determine how to reach global
customers
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