W2: Hill & Hult (2022). Chapter 17 Flashcards
(58 cards)
Production
Used with both service and manufacturing activities
Supply chain management
The integration and coordination of logistics, purchasing, operations, and market channel activities from raw material to the end customer
Inbound supply chain
All the organisations and resources involved in the portion of the supply chain from raw materials to the production facility
Outbound supply chain
All the organisations that are involved in the portion of the supply chain from the facility to the end customer
Six Sigma
A quality improvement methodology. The principal tool that most managers use to increase reliability. It is the modern successor of TQM. It is a statistically-based philosophy that aims to reduce defects, boost productivity, eliminate waste, and cut costs. It is particularly informative in structuring global processes that multinationals can follow in quality and productivity initiatives
Total Quality Management (TQM)
Philosophy popularised in the 1980s and 1990s. It was developed by American consultants, who advocated for a philosophy of eliminating mistakes and poor-quality materials. It suggests an environment in which employees do not fear reporting problems or recommending improvements. Management has the responsibility to train employees in new skills
ISO 9000
Companies should adhere to the quality outlined in ISO 9000 in the EU. However, it is quite bureaucratic
Minimum efficient scale of output
The level of output at which most plant-level scale economies are exhausted
Flexibility of technology
Flexible manufacturing technology/lean production is meant to reduce set-up time, increase utilisation, and improve quality control
Mass customisation
Realises low cost and product customisation
Flexible machine cells
Grouping of various types of machinery controlled by a computer. This leads to improved capacity utilisation and reductions in work-in-progress and waste
Value-to-weight ratio
Products with high value-to-weight ratios can be produced in the optimal location and serve the world market from there. Products with low value-to-weight ratios should be produced in multiple locations to reduce transportation costs
Universal needs
Products that serve universal needs, e.g. industrial and modern consumer products, have reduced the need for local responsiveness, thereby increasing the attractiveness of concentrating production at an optimal location
Global learning
The idea that valuable knowledge does not reside just in a firm’s domestic operations. It can also be found in its foreign subsidiaries
Offshore factory
Developed and set up mainly for producing component parts or finished goods at a lower cost than producing them at home or in any other market. Investments in technology and managerial resources should be kept to a minimum. Ideally, minimal-everything
Source factory
Also drives down costs in the global supply chain. The difference with an offshore factory is the strategic role, which is more significant for a source factory. Managers have more of a say in certain decisions, such as purchasing raw materials and component parts used in the production at the source factory. They also have strategic input into production planning, process changes, logistics issues, product customisation, and implementation of newer designs when needed. They should be located where production costs are low, where infrastructure is well-developed, and where it’s easy to find a skilled workforce
Server factory
Linked to the global supply chain for a global firm to supply specific countries or regional markets around the globe. It is set up to overcome tangible and intangible barriers, such as tariff barriers, reduce taxes, and reinvest money made in the region. It is also used to reduce or eliminate costly global supply chain operations that would be needed if the factory were located further away from the end customers
Contributor factory
Serves a specific country or world region. Main difference with server factory is that it has responsibilities for product and process engineering and development. It is very stand-alone; it has its own infrastructure when it comes to development, engineering, and production
Outpost factory
An intelligence-gathering unit. It is often placed near competitors’ headquarters or main operations, the most demanding customers, or near key suppliers. It could be used to enhance the position of the global firm in strategic countries
Lead factory
Intended to create new processes, products, and technologies that can be used throughout the global firm. This is where cutting-edge production should take place. It is probably located in an area with high-skilled employees, as its prominent role is to set the bar high for how the global firm wants to provide products to customers
Make-or-buy decision
The strategic decision concerning whether to make an item in-house or buy it from an outside supplier. They are made at strategic and operational levels. The strategic level focuses on the long term, while the operational level focuses on the short term. Whether a decision is correct depends on product success, specialised knowledge, and strategic fit
Make decision
Elements that favour it beyond the core elements of cost and production capacity include quality control, proprietary technology, having control, excess capacity, limited suppliers, assurance of continual supply, and industry drivers
Buy decision
Involves minimal restrictions, lacking expertise, supplier competencies, small volumes, inventory planning, and brand preferences
Logistics
The part of the supply chain that plans, implements, and controls the effective flows and inventory of raw materials, component parts, and products used in manufacturing. The core activities are global distribution centre management, inventory management, packaging and materials handling, transportation, and reverse logistics
