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    Global Manufacturing and Materials Management

    Copyright:

    © All Rights Reserved
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    Download as ppt, pdf, or txt
    212 views20 pages

    GSCM-18-Global Manufacturing and Materials Management

    Uploaded by

    abdul rehman
    Global Manufacturing and Materials Management

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    of 20

    Global Manufacturing and

    Materials Management

    © McGraw Hill Companies, Inc., 2000


    Materials Management
    Materials Management: the activity that
    controls the transmission of physical materials
    through the value chain, from procurement
    through production and into distribution.
    Logistics: the procurement and and physical
    transmission of material through the supply chain,
    from suppliers to customers.

    © McGraw Hill Companies, Inc., 2000


    16-1
    Manufacturing and Materials Management
    - Strategic Objectives -
    Lower costs and,
    Simultaneously, increase product quality.
    Accommodate demands for local
    responsiveness.
    Respond quickly to shifts in
    customer demand.

    © McGraw Hill Companies, Inc., 2000


    16-2
    The Relationship Between Quality and
    Costs
    Increases
    Productivity Lowers
    Manufacturing
    Costs
    Improves Lowers Increases
    Performance Rework and Profits
    Reliability Scrap Costs

    Lowers
    Service Costs
    Lowers
    Warranty and
    Rework Costs
    Figure 16.1

    © McGraw Hill Companies, Inc., 2000


    16-3
    Total Quality Management
    (TQM)
     The leaders: W. Edwards Deming, Joseph
    Juran, and A.V. Feigenbaum

    “We have learned to live in a world of mistakes and


    defective products as if they were necessary to life.
    It is time to adopt a new philosophy in America.” W.
    Edwards Deming

    © McGraw Hill Companies, Inc., 2000


    16-4
    Where to Manufacture
    Country factors.
    Technological factors:
    Fixed costs.
    Minimum efficient scale.
    Flexible manufacturing (Lean Production).
    • Reduce setup times.
    • Increase machine utilization. Mass customization
    • Improve quality control
    Flexible machine cells.
    © McGraw Hill Companies, Inc., 2000
    16-5
    A Typical Unit Cost Curve

    Minimum
    Efficient Scale Figure 16.2

    Volume

    © McGraw Hill Companies, Inc., 2000


    16-6
    Manufacturing Location
     Fixed costs are substantial
     Minimum efficient scale is high Single or few
     Flexible manufacturing technologies locations.
    available

     Fixed costs are low Major market


     Minimum efficient scale is low locations if it better
     Flexible manufacturing technologies meets local
    unavailable demands.

    [ Trade barriers and transportation costs remain major impediments]

    © McGraw Hill Companies, Inc., 2000


    16-7
    Product Factors and Location Strategies

    Two product features affect location


    decisions:
    Value to weight ratio.
    Product serves universal needs.
    Two strategies for locating manufacturing
    facilities:
    Concentration.
    Decentralization.

    © McGraw Hill Companies, Inc., 2000


    16-8
    Location Strategy and Manufacturing
    Favored Manufactured Strategy

    Country Factors Concentrated Decentralized

    Differences in political economy Substantial Few


    Differences in culture Substantial Few
    Differences in factor costs Substantial Few
    Trade barriers Few Many
    Technological Factors
    Fixed costs High Low
    Minimum efficient scale High Low
    Flexible manufacturing technology Available Not Available
    Product Factors
    Value-to-weight ration High Low
    Serves universal needs Yes No
    Table 16.1
    © McGraw Hill Companies, Inc., 2000
    16-9
    Enfield Basildon
    Belfast Instruments, fuel Radiators, water
    Carburetors and and water gauges, pump assembly,
    distributors plugs engine components

    Treforest Genk
    Spark plug Body panels,
    insulators road wheels

    Leamington Wülfrath
    Foundry production Transmission
    of engine parts, engine
    components components

    Dagenham Cologne
    Final assembly Die-cast transaxle
    casings, gear and
    engine components
    Bordeaux
    Transmissions
    Valencia Saarlouis
    Final assembly Final assembly

    © McGraw Hill Companies, Inc., 2000 Map 16.1 in Text 16-10


    Strategic Role of Foreign Factories

    Initially, established where labor costs low.


    Later, important centers for design and final
    assembly.
    Upward migration caused by:
    Pressure to improve cost structure. Dispersed Centers
    Pressure to customize product to of Excellence are
    meet customer demand. consistent with a
    Transnational
    Increasing abundance of advanced
    Strategy
    factors of production.

    © McGraw Hill Companies, Inc., 2000


    16-11
    Make or Buy
    Advantages of Make:
    Lower costs.
    Facilitating specialized investments.
    Proprietary product production technology
    protection.
    Improved scheduling.
    Advantages of Buy:
    Strategic flexibility.
    Lower costs.
    Offsets.
    © McGraw Hill Companies, Inc., 2000
    16-12
    Coordinating a Global
    Manufacturing System
    Materials management (includes logistics):
    Achieve lowest possible cost that meets
    customer’s needs.
    Power of ‘Just-in-Time’:
    Economize on inventory
    holding costs.
    Drawback: no buffer inventory.
    © McGraw Hill Companies, Inc., 2000
    16-13
    The Role of the Organization
    Organizational linkages are more numerous
    and complex.
    More difficult to control costs.
    Functionally separate materials management:
    Equal weight with other departments.
    Purchasing, production and
    distribution are one basic task:
    • controlling material flow from
    purchase to customer.

    © McGraw Hill Companies, Inc., 2000 16-14


    Potential Materials Management Linkages
    North America Europe Far East

    Market A Market B Market C Markets

    Figure 16.3

    Manufacturing
    Plant 1 Plant 2 Plant 3
    Locations

    Source
    Source A Source B Source C
    Locations

    © McGraw Hill Companies, Inc., 2000


    16-15
    Traditional Organizational Structure
    CEO

    Purchasing Manufacturing Marketing Finance

    Production
    Planning Distribution
    Figure 16.4A
    and Control

    © McGraw Hill Companies, Inc., 2000


    16-16
    Organization Structure with Materials
    Management as Separate Function
    Strategic
    manager/CEO

    Materials
    Manufacturing Marketing Finance
    management

    Production
    Purchasing planning Distribution Figure 16.4B
    and control

    © McGraw Hill Companies, Inc., 2000


    16-17
    Role of Information Technology
     Track component parts to assembly plant:
    Optimize production scheduling.
    Accelerate production, when necessary.
    Creating linkages between a firm and its
    suppliers and shippers.
    Communicate without time delay.
    Minimizes paperwork.

    © McGraw Hill Companies, Inc., 2000


    16-18
    © McGraw Hill Companies, Inc., 2000
    16-19

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