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PRODUCTION AND OPERATIONS MANAGEMENT

PRODUCTION AND OPERATIONS MANAGEMENT. Ch. 3: Operations in a Global Environment. Learning Objectives. What is the difference in terms of operations management when the company is global?. Supply Chain Management. Location Decisions. Logistics Management.

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PRODUCTION AND OPERATIONS MANAGEMENT

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  1. PRODUCTION AND OPERATIONS MANAGEMENT Ch. 3: Operations in a Global Environment POM - J. Galván

  2. Learning Objectives • What is the difference in terms of operations management when the company is global? POM - J. Galván

  3. Supply Chain Management Location Decisions Logistics Management Management Issues in Global Operations Global Strategic Context • Differentiation • Cost leadership • Response POM - J. Galván

  4. Possible strategies POM - J. Galván

  5. Important issues to consider • How to organize the flow of goods - Supply chain management • Where to deploy resources- Facility location decisions • Types of facilities • Locations • How are you going to move supplies and products - Materials management POM - J. Galván

  6. Supply-Chain Management • Sourcing • Vertical integration • Make-or-buy decisions • Partnering POM - J. Galván

  7. Location Decisions • Country-related issues • Product-related issues • Government policy/political risk • Organizational issues POM - J. Galván

  8. Materials Management • Flow of materials • Transportation options and speed • Inventory levels • Packaging • Storage POM - J. Galván

  9. Reasons to Globalize Operations • Reduce costs (labor, taxes, tariffs, etc.) • Reduce risks (foreign exchange, etc.) • Improve supply chain • Provide better goods and services • Attract new markets • Learn to improve operations • Attract and retain global talent Tangible Intangible POM - J. Galván

  10. Trade and Tariff • Maquiladoras - Mexican factories located along the U.S.-Mexico border that receive preferential tariff treatment • GATT - an international treaty that helps promote world trade by lowering barriers to the free flow of goods across borders • NAFTA - a free trade agreement between Canada, Mexico, and the United States POM - J. Galván

  11. THOUGHT • Free trade may take us into the era of the floating factory - a six person crew will take a factory from port to port in order to obtain the best market, material, labor and tax advantages POM - J. Galván

  12. Achieving Global OperationsFour Considerations • Global product design • Global process design and technology • Global factory location analysis • Impact of Culture and Ethics ... POM - J. Galván

  13. Global Product Design • Remember social and cultural differences • packaging and marketing can help make product seem “domestic” but - • “liter” versus “quart” • “sweetness” and “taste” POM - J. Galván

  14. Global Process Design and Technology • Information technology enables management of integrated, globally dispersed operation • Texas Instruments: 50 plants in 19 countries • Hewlett-Packard - product development teams in U.S., Japan, Great Britain, and Germany • Reduces time-to-market POM - J. Galván

  15. Global Facility Location Analysis Using CSFs (Country specific factors) for Country Selection • Select CSFs based on parent organization’s strategic or operations objectives • Obtain country-specific information on the CSFs • Evaluate each country’s CSFs using a 1 (bad) to 5 (good) rating scale • Sum the ratings POM - J. Galván

  16. You May Wish To Consider • national literacy rate • rate of innovation • rate of technology change • number of skilled workers • stability of government • product liability laws • export restrictions • similarity in language • work ethic • tax rates • inflation • availability of raw materials • interest rates • population • number of miles of highway POM - J. Galván

  17. GlobalImpact of Culture and Ethics • Cultures differ! Some accept/expect: • variations in punctuality • long lunch hours • expectation of thievery • bribery • little protection of intellectual property • Extended working time • Smaller salaries • No social benefits…. POM - J. Galván

  18. To Establish Global Services • Determine if sufficient people or facilities exist to support the service • Identify foreign markets that are open - not controlled by governments • Determine what services are of most interest to foreign customers • Determine how to reach global customers POM - J. Galván

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