is1 workshop 3 make, take sell challenge v2 student
TRANSCRIPT
Organisations continually strive to maximiseefficiencies whilst sourcing the best quality andsustainable raw materials. A key consideration whendeveloping a product is how best to manufacture it inorder to achieve the scale required to servicecustomers. There are a variety of options to considerthat we will explore in this workshop.
We will also discuss the issues with sourcing andmanufacturing in one country and then selling it inanother. Finally, we will develop our understanding ofthe various manufacturing implications on yourproduct and come up with the optimal approach.
Overview
• Develop and determine how to source a variety of raw materials from around the world to maximiseproduct efficiencies
• Critically evaluate the variety of manufacturing options you have available and apply them appropriately to your business
• Be able to forecast the demand for your product
• Articulate the various manufacturing implications of producing a product in one country and selling it in another
Learning outcomes for these workshops
A three point plan to identifying raw material suppliers
Analysethe
situation
Supplier Evaluation
1
2
3
Identify Opportunities
Identify Opportunities: What do you need?
Opportunities are usually triggered by a business requirement for a product or service.
Material Requirements Service Requirements
Equipment
Components
Raw materials
Computer programmers
Transportation services
Maintenance service
Analyse the situation: Determine ease of getting materials to your factory
You need to assess the associated costs of transport and other factors such as tariffs. Therefore, the lowest cost production
option may not be the best route to go down.
Once we have identified where, the question is whom is the best supplier?
QualityProcesses/Ca
pabilities
Price Regulations/Ethics
Do they offer the best product within the price that you
want to pay?
Do they have the ability to deliver what is expected currently
and in the future?
Do they offer the best product at the most competitive
price?
Do they work within an internationally
accepted regulatory/ethical
code?
So you know what you want to produce… lets understand how to produce it… consider three
routes…
Outsource
Insource
Outsource &
Insource
1
2
3
Outsourcing Production: Implications
Pros
Cons
Immediate access to skilled
personnel
Speed of delivery
Minimal management
risk
Lack of
control
Requires continual
monitoring
Viability of service provider
Insourcing: Zara in Action
It is claimed that Zaraneeds just two weeks todevelop a new productand get it to stores,compared to the six-month industry average,and launches around10,000 new designseach year. Zara hasresisted the industry-wide trend towardstransferring fast fashionproduction to low-costcountries.
Insourcing Production: Implications
Pros
Cons
Complete control over
process
Easier planning
cycle
Learning economies
Longer to put
in place
Potentially more costly
New capability required
Hybrid Production: Implications
Pros
Cons
Ability to
move quickly
Scale with
demand
Maintain majority control
Coordination issues
Bottlenecks harder
to identify
Worst of
both worlds?
Considering risk and reward
Home Country Host Country
• Less upfront cost
• Less risky
• Less restrictions
However…
• May not make to local spec
• Tariffs & duties to be paid
• Issues in logistics
• Less logistical issues
• More tailored to needs
• Speed to market
However…
• Set up costs/investment
• Adhere to local regimes/requirements
• Not easy to pull out
Forecasting demand helps to minimise risk
Total Population
Income on Food
Income on beverages
Income on alcohol
Income on beer
Source: Kotler et al (2012)
Consider local tariff and non-tariff barriers
Duty on importsLocal content requirements
Quotas Anti-dumping regulations
A tax collected on imports and some exports by the customs authorities of a country. This tax is used to raise state revenue.
A minimum level of local content is requireed under
trade laws when giving foreign companies the
right to manufacture in a particular place.
A limited quantity of a particular product which
under official controls can be produced, exported, or
imported.
A company is dumping if it is exporting a product to the EU at prices lower than the normal value of
the product
End of Workshop
Note: This recording is for your personal use only and not for further distribution or wider review.
© Pearson College 2013