Are Lean Production and Global Sourcing Compatible? Just-in-time Shipping times Freight costs Inventory levels 30 days of inventory for shipping by sea.

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Presentation transcript:

Are Lean Production and Global Sourcing Compatible? Just-in-time Shipping times Freight costs Inventory levels 30 days of inventory for shipping by sea Time and forecast accuracy Design-for-Manufacturing proximity helps Need frequent and quick replies

Delivery Times for Each CCT Plant and Market (in days) To Markets U.S.EuropePacific (Japan) From Plants Air Sea/ Land Air Sea/ Land Air Sea/ Land California Ireland 41435NA Singapore

Freight Cost and Product Type (Percentage of Cost of Goods Sold) Low-End Product High-End Product Peripheral (Monitor) Air Freight5.4%4.0%20.9% Sea Freight1.2%1.0%1.0

Inventory/Sales Ratio and Pipeline Time Short PipelineLong Pipeline Mean pipeline time (in days) Mean Inventory/ Sales Ratio Inventory cost as % CGS 1.27%3.54%

Distance and Monthly Sales Forecast Errors Local MarketRemote Market Mean 30 day forecast error 12%22% Mean 90 day forecast error 3845

Solutions Frequent visits to suppliers Build in domestic plant first, then outsource Teleconferences Incorporate DFM rules into CAD DFM and TQM are more feasible than JIT and low inventory

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