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c hapter 17 international operations management Chapter Objectives 1 Describe the nature of international operations management Analyze the supply chain management and vertical integration decisions facing international production managers

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C hapter 17 l.jpg

chapter 17

international operations management


Chapter objectives 1 l.jpg
Chapter Objectives 1

  • Describe the nature of international operations management

  • Analyze the supply chain management and vertical integration decisions facing international production managers

  • Analyze the meaning of productivity and discuss how international firms work to improve it

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Chapter Objectives 2

  • Explain how firms control quality and discuss total quality management in international business

  • Analyze how international firms control the information their managers need to make effective decisions

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Operations Management

Operations management is the set of activities an organization uses to transform different kinds of inputs (materials, labor, and so on) into final goods and services.

International operations management refers to the transformation-related activities of an international firm.

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Figure 17 1 the international operations management process l.jpg
Figure 17.1 The International Operations Management Process

Strategic context

Production

Acquisition

of resources

Location

decisions

Logistics

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Complexities of International Operations Management

Resources

Location

Logistics

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Forms of Operations Management

Production

management

Service

operations

management

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Supply Chain Management

Supply chain management is the set of processes and steps a firm uses to acquire the various resources it needs to create its products.

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Influence Factors for the Make-or-Buy Decision

Size

Scope of operations

Technological

expertise

Nature of product

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Necessary Trade-Offs in the VulnerabilityMake-or-Buy Decision

Flexibility

Cost

Trade-offs

Investment

Control

Risk

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Factors Affecting Location Decisions Vulnerability

Country-related issues

Product-related issues

Government policies

Organizational issues

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Country-Related Issues Vulnerability

Resource availability

Cost

Infrastructure

Country-of-origin effects

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Country-Related Issues Vulnerability

Such issues play key roles in location decisions for manufacturers.

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Product-Related Issues Vulnerability

Value-to-weight

ratio

Required

production

technology

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Government Policies Vulnerability

  • Stability of political process

  • National trade policies

  • Economic development incentives

  • Existence of foreign trade zones (FTZ)

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Organizational Issues Vulnerability

Business strategy

Organizational

structure

Inventory management

policies

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International Logistics Vulnerability

International logistics is the management of the flow of materials, parts, supplies, and other resources from suppliers to the firm; the flow of materials, parts, supplies, and other resources within and between units of the firm itself; and the flow of finished products, services, and goods from the firm to customers.

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Factors Distinguishing International and Domestic Logistics Vulnerability

Transport

distance

Number of

transport modes

Complexity of

regulatory content

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Characteristics of International Services Vulnerability

  • Services are intangible

  • Services are not storable

  • Services may require customer participation

  • Services may be tied to the purchase of other products

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Managing Service Operations Vulnerability

Capacity planning

Location planning

Facilities design and layout

Operations scheduling

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Productivity Vulnerability

Productivity is an economic measure of efficiency that summarizes the value of outputs relative to the value of the inputs used to create the outputs.

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Strategies for Enhancing Productivity Vulnerability

  • Spend more on R&D

  • Improve operations

  • Increase employee involvement

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Figure 17.4 Essential Components of Total Quality Management

Strategic Commitment

to Quality

Employee

Involvement

High-Quality

Materials

Up-to-Date

Technology

Effective

Methods

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Key Components of ManagementTotal Quality Management

Statistical

process

control

Benchmarking

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