Logistics and Manufacturing
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Transcript of Logistics and Manufacturing
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Global Production
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Strategy, Production, LogisticsValue chain activitiesProduction, marketing, logistics, R&D, HR, ISProduction: physical goods, as well as servicesLogistics: controls physical transmission of materials through the value chainProduction and logistics decisionsLower costs of value creationAdd value through better attention to customer needs
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Production and Materials Management / LogisticsProduction activitiesService and manufacturingConversion of inputs to a productMaterials management activitiesPhysical transmission of materials through value chain: procurement > production > distributionLogistics activities encompassProcurement and physical transmission of material through the supply chain suppliers > customers
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Relationship Between Quality and CostsImproves Performance ReliabilityIncreases ProductivityLowers Rework and Scrap CostsLowers Warranty CostsLowers Manufacturing CostsIncreases ProfitsLowers Service CostsQuality
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Quality and Cost ManagementTQM: technique to improve products and services quality Six Sigma: Statistically based cost cutting systemReduces defects, boosts productivity, eliminates wasteISO 9000European Unions standards for qualitySet by codeFirm must be certified ISO 9000 before it may access the EU marketplace
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Which Manufacturing Location?Country FactorsFavorable economic, political, cultural conditionsTechnological FactorsFixed costs relatively lowMinimum efficient scale Magnitude of plant output to realize scale-economiesMarket demand level adequacyFlexible manufacturing; lean productionMass customizationFlexible machine cellsProduct features: value-to-weight ratio, universal needs
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Where to Locate? Concentrate Manufacturing if:Costs of manufacturing are responsive to country environment (one location best)Trade barriers are lowProduct serves universal needsMinor difference in customer needsMinimal consumer preferences
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Where to Locate? Concentrate Manufacturing if:Trade barriers are lowExchange rates among currencies with impact on your business are stableProduction technologyHas high fixed costsHas high minimum efficient scaleExists in flexible manufacturing format
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Country environment does not affect costsTrade barriers are highProduction technologyHas low fixed costsHas low minimum efficient scaleDoes not exists in flexible manufacturing formatProduct value-to-weight ratio is lowProduct does not serve universal needsCustomer needs differentConsumer preferences differentWhen to Decentralize Manufacturing?
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Make-or-Buy?Make advantageLower costs in-house?Are specialized assets needed? Is proprietary technology needed?Know-how protection issue (Dunning)Buy advantageStrategic flexibility needed?Lower costs by buying?In either case improved scheduling is important
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Other IssuesStrategic alliances with suppliersJust-in-time inventory system managementThe role of information technologyThe role of the internet
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