Chapter 15: Global Production, outsourcing and logistics

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Flashcards on Chapter 15: Global Production, outsourcing and logistics, created by Ari Minors on 31/03/2018.
Ari Minors
Flashcards by Ari Minors, updated more than 1 year ago
Ari Minors
Created by Ari Minors over 6 years ago
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Question Answer
Define Production The activities involved in creating a product -we use the term to denote both service and manufacturing activities
Materials Management The activity that controls transmission of physical materials through the value chain
Logistics refers to the procurement and physical transmission of material through the supply chain from suppliers to customers
2 reasons for production and material management functions 1. Lower costs: by managing the global supply chain efficiently so as to better match supply and demand 2. Increase product quality: by eliminating defective products from supply chain and manufacturing process
Improved Quality Control reduces cost in three ways: 1. increasing productivity because time is not wasted manufacturing poor-quality products that cannot be sold, leading to direct reduction in unit cost 2. Lowering rework and scrap costs 3. lowering warranty cost
Total Quality Management -Management philosophy that takes as its central focus the need to improve the quality of a company's products and services -Edwards Deming, Joseph Juran, A.V. Feigenbaum -USE TQM to the boost their product quality
Six Sigma Modern successor TQM, a statistically based philosophy that aims to reduce defects, boost productivity, eliminate waste, and cuts cost throughout a company *3.4 defects per million units*
ISO 9000 Certification process that requires certain quality standards that must be met
3 Factors to consider for international production 1. Country Factors 2. Technological Factors 3. Product Factors
Country Factors economical, political, and cultural factors differe
Minimum Efficient Scale the level of output at which most plant level scale economies are exhausted
The Larger the minimum efficient scale of a plant the greater the argument for centralizing production in a single location or a limited number of locations
Flexible Manufacturing Technology (Lean Production) Manufacturing technologies designed to improve job scheduling, reduce setup time, and improve quality control
Technology Factors -the type of technology a firm uses in its manufacturing can be pivotal in location decisions -may be feasible to serve world market from one location or multiple locations
Mass Customization describes the ability of companies to use flexible manufacturing technology to reconcile two incompatible goals 1. low cost 2. product customization
Product Factors Two Product features affect location decisions: 1. value-to-weight ratio 2. Universal needs
Concentrated Manufacturing makes sense when... 1. differences exists between countries in factor costs, political, economy, and culture 2. trade barriers exist 3. the products value-to-weigh ration is high ratio 4. the product serves universal needs
Decentralization of manufacturing is approriate when 1. differences between countries does not have substantial impact 2. trade barriers are high 3. the product does not serve universal needs
Make or buy decisions are important factors in many firms' manufacturing strategies
The Advantage of Make 1. lower cost 2. facilitate specialized investment 3. protect proprietary product technology 4. improve scheduling
The Advantage of Buy 1. strategic flexibility 2. lower costs 3.offsets
Outsourcing Someone else does the work for us
Off-shoring The work is done overseas
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