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CHAPTER 17 GLOBAL PRODUCTION, OUTSOURCING, AND LOGISTICS

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Jennifer Oquindo

on 7 September 2015

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Transcript of CHAPTER 17 GLOBAL PRODUCTION, OUTSOURCING, AND LOGISTICS

SUMMARY
A supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer. Supply chain activities involve the transformation of natural resources, raw materials, and components into a finished product that is delivered to the end customer. In sophisticated supply chain systems, used products may re-enter the supply chain at any point where residual value is recyclable. Supply chains link value chains.
Logistics is the management of the flow of things between the point of origin and the point of consumption in order to meet requirements of customers or corporations. The resources managed in logistics can include physical items, such as food, materials, animals, equipment and liquids, as well as abstract items, such as time, information, particles, and energy. The logistics of physical items usually involves the integration of information flow, which is material handling, production, packaging, inventory, transportation, warehousing, and often security.
The choice of an optimal manufacturing location must consider country factors, technological factors, and product factors.
Location strategies either concentrate or decentralize manufacturing. The choice should be made in light of country, technological, and product factors. All location decisions involve trade-offs.
Materials management encompasses all the activities that move materials to a manufacturing facility, through the manufacturing process, and out through a distribution system to the end user. The materials management function is complicated in an international business by distance, time, exchange rates, custom barriers, and other things.
Just-in-time systems generate major cost savings from reduced warehousing and inventory holding costs. In addition, JIT systems help the firm spot defective parts and remove them from the manufacturing process quickly, thereby improving product quality.
In business, outsourcing involves the contracting out of a business process to another party and may involve business process outsourcing. Outsourcing sometimes involves transferring employees and assets from one firm to another.

Outsourcing is a very important tool for reducing cost and improving quality.

CHAPTER 17 GLOBAL PRODUCTION, OUTSOURCING, AND LOGISTICS
Information technology, particularly electronic data interchange, plays a major role in materials management. EDI facilitates the tracking of inputs, allows the firm to optimize its production schedule, allows the firm and its suppliers to communicate in real time, and eliminates the flow of paperwork between a firm and its suppliers.
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