Global production and supply chain management

Summary

Dr. Sharon Skimbre discusses the key concepts in global production and supply chain management from Chapter 17 of Charles Hill's 2021 textbook. The video highlights the strategic importance of production decisions, cost and quality management, and the role of logistics in global supply chains. It delves into factors influencing production location, the make-or-buy decision, and the importance of international standards like ISO 9000. Key topics include just-in-time inventory, reverse logistics, and the integration of electronic data systems. The discussion emphasizes both upstream and downstream supply chain management and the need for strong partnerships and coordination in a global context.

Takeaways

• 😀 Global production and supply chain management decisions are crucial for many global organizations as they impact cost, quality, and efficiency.
• 😀 Production is a value creation activity, while supply chain management focuses on integrating logistics, purchasing, operations, and market channel activities.
• 😀 The strategic objectives of production and supply chain management include minimizing total cost and maximizing quality through effective standards and control systems.
• 😀 Upstream activities (supply-side) involve moving raw materials to production facilities, while downstream activities (demand-side) cover the delivery of finished goods to customers.
• 😀 Increasing quality control reduces costs by improving productivity, lowering rework and warranty costs, and enhancing overall profit margins.
• 😀 Total Quality Management (TQM), popularized by Edwin Deming, uses statistics to reduce defects, improve productivity, and lower waste in the manufacturing process.
• 😀 Meeting international standards, like ISO 9000, is essential for improving product quality and maintaining consistency across global operations.
• 😀 Decisions on production location involve evaluating factors such as political and economic systems, technology, production costs, and transportation costs.
• 😀 The make-or-buy decision involves whether to manufacture in-house or purchase from external suppliers. This decision can be based on cost, expertise, capacity, and long-term strategic goals.
• 😀 Logistics and supply chain functions include distribution center management, inventory management, packaging, transportation, and reverse logistics, all of which are essential for global operations.
• 😀 Just-in-time (JIT) inventory reduces storage costs by delivering materials only as needed in the production process, increasing turnover and profitability.
• 😀 Electronic data interchange (EDI) and enterprise resource planning (ERP) systems play a key role in managing global supply chains by facilitating coordination, integration, and real-time decision-making.

Q & A

Why are global production and supply chain management decisions important for global organizations?

Global production and supply chain management decisions are critical because they directly affect a company’s efficiency, cost structure, and ability to deliver value to customers across different markets. Effective management ensures that raw materials, components, and finished products are efficiently produced and delivered, optimizing costs while meeting quality and service requirements.

What factors influence the choice of location for production activities?

Factors influencing the location of production include political and economic systems, cultural differences, relative factor costs, trade barriers, technological capabilities, transportation costs, exchange rates, and minimum efficient scale. Companies also need to consider whether to centralize or decentralize production and potential hidden costs in foreign markets.

How does total quality management (TQM) help improve production quality?

Total quality management (TQM), popularized by Edwin Deming in post-WWII Japan, focuses on improving quality by using statistical methods to reduce defects, boost productivity, eliminate waste, and lower costs. TQM aims to improve both the quality of the product and the processes used to produce it, ensuring continuous improvement across all levels.

What is ISO 9000, and why is it important in international business?

ISO 9000 is a certification process that focuses on improving the quality of both products and processes. It is crucial for international business, especially in the European Union, where companies must comply with these standards to ensure their products meet global quality requirements.

What is the difference between upstream and downstream supply chain activities?

Upstream supply chain activities involve the movement of raw materials and components through suppliers to the production facility, while downstream activities refer to the movement of finished goods from the production facility to end customers, involving wholesalers, retailers, and other intermediaries.

What are the strategic objectives of global production and supply chain management?

The strategic objectives of global production and supply chain management are to minimize total costs while maintaining quality, increase productivity, and improve product quality control. These objectives ensure that goods are produced efficiently and meet the standards expected by consumers.

What are the advantages of flexible manufacturing and mass customization?

Flexible manufacturing and mass customization enable companies to adapt quickly to changing consumer demands. Flexible manufacturing allows for reduced setup times and better scheduling, while mass customization enables companies to produce tailored products for small consumer groups or market niches, improving customer satisfaction.

What is the make or buy decision in global supply chains, and how is it made?

The make or buy decision determines whether a company should produce goods in-house or purchase them from a supplier. This decision is made based on factors like cost, quality control, intellectual property, supply chain capacity, and whether the company has the necessary expertise to produce the product itself.

How does just-in-time (JIT) inventory impact global supply chain management?

Just-in-time (JIT) inventory minimizes inventory storage costs by delivering parts only when needed in the production process. It reduces holding costs, frees up working capital, speeds up inventory turnover, and boosts profitability, but it also leaves the company vulnerable to supply chain disruptions if inventory levels are too low.

What role does technology play in managing global supply chains?

Technology plays a critical role in managing global supply chains by enabling better coordination, communication, and data exchange between different partners. Technologies like Electronic Data Interchange (EDI) and Enterprise Resource Planning (ERP) systems help integrate operations across global locations, improve decision-making, and facilitate the efficient flow of goods and information.