2. Global Production, Outsourcing, and Logistics14
chapter
Global Production, Outsourcing, and Logistics
McGraw-Hill/Irwin
Global Business Today, 5e
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

3. Chapter 14: Global Production, Outsourcing, and Logistics
INTRODUCTION
Where in the world should productive activities 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 independent vendors?
How should a globally dispersed supply chain be managed, and what is the role of Internet-based information technology in the management of global logistics?
Should the firm manage global logistics itself, or should it outsource the management to enterprises that specialize in this activity?

4. Chapter 14: Global Production, Outsourcing, and Logistics
STRATEGY, PRODUCTION, AND LOGISTICS
How can production and logistics be conducted internationally to:
lower the costs of value creation
add value by better serving customer needs?
Production refers to activities involved in creating a product. Logistics refers to the procurement and physical transmission of material through the supply chain, from suppliers to customers.

5. Chapter 14: Global Production, Outsourcing, and Logistics
WHERE TO PRODUCE
There are three factors that should be when making a location decision:
Country Factors
Technological Factors
Product Factors

6. Chapter 14: Global Production, Outsourcing, and Logistics
THE STRATEGIC ROLE OF FOREIGN FACTORIES
The strategic role of foreign factories and the strategic advantage of a particular location can change over time.
A factory initially established to make a standard product to serve a local market, or to take advantage of low cost inputs, can evolve into a facility with advanced design capabilities
As governmental regulations change and/or countries upgrade their factors of production the strategic advantage of a particular location can change

7. Chapter 14: Global Production, Outsourcing, and Logistics
OUTSOURCING PRODUCTION: MAKE-OR-BUY DECISIONS
Should an international business make or buy the component parts to go into their final product?
Make-or-buy decisions are important factors in many firms' manufacturing strategies

8. Chapter 14: Global Production, Outsourcing, and Logistics
The Advantages of Make
The Advantages of Buy
Trade-offs
Strategic Alliances with Suppliers

9. Chapter 14: Global Production, Outsourcing, and Logistics
MANAGING A GLOBAL SUPPLY CHAIN
Logistics encompasses the activities necessary to get materials to a manufacturing facility, through the manufacturing process, and out through a distribution system to the end user.
The logistics function is complicated in an international business by factors such as distance, time, exchange rates, and customs barriers
Efficient logistics can have a major impact upon a firm's bottom line

10. Chapter 14: Global Production, Outsourcing, and Logistics
The Power of Just-in–Time Inventory
The Role of Information Technology and the Internet