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Global Production, Outsourcing, and Logistics

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Presentation on theme: "Global Production, Outsourcing, and Logistics"— Presentation transcript:

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2 Global Production, Outsourcing, and Logistics
14 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?

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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.

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WHERE TO PRODUCE There are three factors that should be when making a location decision: Country Factors Technological Factors Product Factors

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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

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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

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The Advantages of Make The Advantages of Buy Trade-offs Strategic Alliances with Suppliers

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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

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The Power of Just-in–Time Inventory The Role of Information Technology and the Internet


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