Chapter 16. Global Production, Outsourcing, and Logistics. Introduction . trade barriers fall & global market develop ⇒⇒ Firms confront something : 1. production activity location 2. the long - term strategic of foreign production site
Chapter 16. Global Production, Outsourcing, and Logistics
⇒⇒ Firms confront something :
1. production activity location
2. the long - term strategic of foreign production site
3. own production ? or another production ?
4. globally dispersed supply chain be managed
5. manage global logistics itself
or outsource the management to enterprises
1. lower costs
2. increasing quality
1. Accommodate demands for local responsiveness
2. Shift in customer demand quickly
perform a certain value activity
themselves or outsource it to another
When substantial investments in specialized assets are required to manufacture a component, the firm will prefer to make the component internationally rather than contract it out to a supplier.
Pioneered by Japanese firms during the 1950s and 60s, just in time inventory systems now play a major role in most manufacturing firms. The basic philosophy behind just in time (JIT) systems is to economize on inventory holding costs by having materials arrive at a manufacturing plant just in time to enter the production and not before.
Information technology, particularly internet based electronic data interchange, plays a major role in material management. EDI facilities the tracking of inputs, allows the firm to optimize it's production schedule, lets the firm and its supplier communicate in real time and eliminates the flow of paperwork between a firm for its supplier.
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