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ChapterGlobalManufacturingandMaterialsManagement16ChapterGlobalManufacturinganCase:CompetitiveadvantageatDellDellsbusinessmodelbasedondirectsellingofcustomizedproductatlowpricesLocationadvantages(Brazil,Ireland,Malaysia,China&US)ClosetomarketsLowshippingcostsSpeedofdeliverySupplybaseglobalDellmanagesglobalsupplychaintominimizeinventoryandcustomizePCsinthreedays16-2Case:Competitiveadvantageat

MaterialsmanagementActivitythatcontrolsthetransmissionofphysicalmaterialsthroughthevaluechainIncludesprocurement,productionandintodistributionLogistics:Procurementandphysicaltransmissionofmaterialsthroughthesupplychain,fromsupplierstocustomers16-3 MaterialsmanagementActivityManufacturingandmaterialsmanagement

StrategicobjectivesLowercostsDispersemanufacturingactivitiestoefficientgloballocationsIncreaseproductivityUsingTotalQualityManagement (W.EdwardDemming)16-4ManufacturingandmaterialsmaManufacturingandmaterialsmanagement

StrategicobjectivesAccommodatedemandsforlocalresponsivenessdecentralizeproductionRespondquicklytoshiftsoncustomerdemandtime-basedcompetitionextremelyimportant16-5ManufacturingandmaterialsmaTherelationshipbetweenqualityandcost16-6Fig16.1Therelationshipbetweenquali

Wheretomanufacture?16-7CountryFactorsTechnologicalFactorsProductFactorsLocatingManufacturingFacilities Wheretomanufacture?16-7Cou

CountryfactorsOptimumeconomic,political,andculturalconditionsExternalitiesSkilledlaborpoolsSupportingindustriesFormalandinformaltradebarriersExchangerate16-8 CountryfactorsOptimumeconoTechnologicalfactorsFixedcostsMinimumefficientscaleFlexiblemanufacturingreducesetuptimesforcomplexequipmentincreasemachineutilizationimprovequalitycontrolflexiblemachinecellstoperformavarietyofoperations16-9MasscustomizationLowcostProductcustomizationTechnologicalfactorsFixedcosManufacturinglocationFixedcostsaresubstantialMinimumefficientscaleishighFlexiblemanufacturingtechnologiesavailableFixedcostsarelowMinimumefficientscaleislowFlexiblemanufacturingtechnologiesunavailableTradebarriersandtransportationcostsremainmajorimpediments16-10Majormarketlocationsifitbettermeetslocaldemands.Singleorfewlocations.ManufacturinglocationFixedcoAtypicalunitcostcurve16-11Fig16.2Atypicalunitcostcurve16-11ProductfactorsandlocationstrategiesTwoproductfeaturesaffectlocationdecisions:Valuetoweightratio.Productservesuniversalneeds

TwobasicstrategiesConcentratinginacentralizedlocationandservingtheworldmarketDecentralizingtheminvariousregionalornationallocationsclosetomajormarketswhenoppositeconditionsexist16-12ProductfactorsandlocationsCentralizedlocationFactorcostshavesubstantialimpactLowtradebarriersExternalitiesfavorcertainlocationStableexchangeratesHighfixedcosts,highminimumefficientscalerelativetoglobaldemandorflexiblemanufacturingtechnologyProduct’svalue-to-weightratioishighProductservesuniversalneeds16-13CentralizedlocationFactorcosDecentralizedlocationFactorcostsdonothavesubstantialimpactHightradebarriersLocationexternalitiesnotimportantExchangeratesvolatileLowfixedcosts,lowminimumefficientscaleFlexiblemanufacturingtechnologyunavailableProduct’svalue-to-weightratioislowSignificantdifferencesinconsumertastesandpreferencesexistbetweennations.16-14DecentralizedlocationFactorcLocationstrategyandmanufacturing16-15LocationstrategyandmanufactStrategicroleofforeignfactoriesInitially,establishedwherelaborcostslowLater,importantcentersfordesignandfinalassemblyUpwardmigrationcausedbypressuresto:ImprovecoststructureCustomizeproducttomeetcustomerdemand. andAnincreasingabundanceofadvancedfactorsofproduction16-16DispersedcentersofexcellenceareconsistentwithaTransnationalStrategyStrategicroleofforeignfactMakeorbuydecisionsShouldafirmmakeorbuythecomponentpartsthatgointotheirfinalproduct?Advantagesofmakingowncomponents:LowercostsifmostefficientproducerFacilitatingspecializedinvestmentsProprietaryproducttechnologyprotectionImprovedscheduling16-17MakeorbuydecisionsShouldaAdvantagesofbuyversusmakeStrategicflexibilityinsourcingcomponentsLowerfirm’scoststructureOffsetsStrategicallianceswithsuppliersgivebenefitsofverticalintegrationwithouttheassociatedorganizationalproblems16-18Advantagesofbuyversusmake1ManagingaglobalsupplychainObjectiveofmaterialsmanagementinmanagingafirm’sglobalsupplychainMaintainlowestpossiblecostInawaythatbestservesthecustomer’sneedsRoleofjust-intimeinventoryEconomizeoninventoryholdingcostsSpeedsinventoryturnoverDrawback:nobufferstock16-19Managingaglobalsupplychain RoleoforganizationOrganizationallinkagesmorenumerousandcomplexMoredifficulttocontrolcostsRequireseparatematerialsmanagementasafunctionEqualweightwithotherdepartmentsDecidebetweencentralizedanddecentralizedorganizationalstructure16-20 RoleoforganizationOrganizaPotentialmaterialsmanagementlinkages16-21Fig16.3PotentialmaterialsmanagementTraditionalorganizationalstructure16-2216.4ATraditionalorganizationalstrOrganizationstructurewithmaterialsmanagementasseparatefunction16-23Stra

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