Global Production Outsourcing and Logistic
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Transcript of Global Production Outsourcing and Logistic
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GlobalProduction ,
Outsourcing ,
and Logistic
Sandy Wibisono
0706306522
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Introduction
Where in the world should production activity be located ? What should be the long-term strategic role of foreign
production sites ?
Should the firm own foreign production activities, or is it
better to outsource those activities to independentvendors ?
How should a globally dispersed supply chain be
managed , and what is the role of internet based
information technology in the management of globallogistic ?
Should the firm manage global logistics itself, or should it
outsource the management to enterprises that specialize
in this activity ?
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Strategy , Production , and
Logistics
Productionas the activities involved in
creating product.
Logisticis the activity that control the
transmission of physical material through
value chain , from procurement through
production and into distribution.
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Strategy , Production , and
Logistics
Strategic Objective
Lower cost.
Increasing Quality.
Production and logistic function must be able
to accommodate demands for local
responsiveness.
Production and logistic must be able torespond quickly to shifts in customer
demands.
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Strategy , Production , and
Logistics
Increase
Productivity
Improves
Performance
Reliability
Lowers Rework
and Scraps
Cost
Lower warranty
Cost
Lowers
Manufacturing
Cost
Lower Services
Cost
Increases Profit
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Where to Produce
CountryFactor
TechnologicalFactor
ProductFactor
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Country Factor
Political
Economy
Culture
RelativeFactor Cost
Externalities
FormalTrade Barrier
InformalTrade Barrier
ExchangeRates
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Technological Factor
TechnologicalFactor
Fixed Cost
MinimumEfficient Scale
FlexibleManufacturingand Mass
Customization
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Product Factors
Value toweight ratio
Serveuniversal
needs
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Concentrated
Production
Favored
Decentralized
Production
Favored
Country Factor
Differences in political economy Substantial few
Differences in culture Substantial few
Differences in factor cost Substantial few
Trade Barriers few Substantial
Location externalities Important in industry Not important in industry
Exchange rates stable volatile
Technological Factor
Fixed Costs High Low
Minimum efficient scale High Low
Flexible manufacturing technology Available Not available
Product Factor
Value to weight ratio High Low
Serve universal needs Yes no
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The Strategic Role of Foreign
Factories
Pressure from the center to improve a
factorys cost structure and/or customize a
product to the demands of consumers in a
particular nation can start a chain ofevents that ultimately leads to
development of additional capabilities at
the factory
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The Strategic Role of Foreign
Factories
Improvement in the capabilities of a
foreign factory can be the increasing
abundance of advanced factor of
production in the nation in which thefactory is located
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Outsourcing Production
Make
Buy
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The Advantage of Make
LoweringCost
FacilitatingSpecializedInvestments
ProtectingProprietary
ProductTechnology
ImprovingScheduling
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The Advantage of Buy
StrategicFlexibility
LowerCosts
Offsets
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Strategic Alliances With Supplier
Strategic alliance build a trust between the
firm and its supplier.
Trust results when a firm makes a credible
commitment to continue purchasing from a
supplier on reasonable terms.
Alliance are not all good
i.e. : Kodak and Canon , Sony build laptop
for Apple , Microsoft and Flextronics.
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Managing a Global Supply Chain
Lowest possible cost
Best serves customer needs
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The Role of Just-in-Time Inventory
JIT system is to economize on inventory
holding cost by having materials arrive at a
manufacturing plant just in time enter the
production process and not before.
The major cost saving comes from
speeding up inventory turnover.
This reduces inventory holding cost, such
warehousing and storage cost.
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The Role of IT and The Internet
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