production strategy
DESCRIPTION
How MNE's chose their production strategy.TRANSCRIPT
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Production strategy
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ObjectivesIntroductionResearch, development and innovationGeneration of good and services
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Examine the role of research, development, and innovation in production strategy
Relate some of the most critical steps in generating goods and services, including global sourcing, costing techniques, quality maintenance, effective materials handling, inventory control, and the proper emphasis on service
Describe the nature and importance of international logistics in production strategy
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MNEs, like domestic firms, are concerned with the efficient use of labor and capital. Both are also interested in: investing in research and development (R&D)organizing operations to generate successful
new product lines and to increase production and service efficiency
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MNEs need to organize their production management so that they can minimize operating costs through the use of logistics and inventory control Backward integration: The ownership of equity
assets used earlier in the production cycle, such as an auto firm that acquires a steel company
Forward integration: The purchase of assets or facilities that move the company closer to the customer such as a computer manufacturer that acquires a retail chain which specializes in computer products
Horizontal integration: The purchase of firms in the same line of business such as a computer chip firm which acquires a competitor.
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In the past many MNEs focused most heavily on the production strategy aspect of operations, failing to realize that an effective production strategy begins with new product developmentNew product development/service developmentSpeed to market
Time-to-market accelerators: Factors that help to reduce bottlenecks and errors and to ensure product quality
Modular integrated robotized system: A software-based production process that relies entirely on robots
Concurrent engineering: The process of having design, engineering, and manufacturing people working together to create a product, in contrast to working in a sequential manner.
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Global sourcing: The use of suppliers anywhere in the world, chosen on the basis of their efficiency.
Manufacturing of goods:Cost
Modular manufacturing: a process that allows suppliers of parts to take on part of the assembly
QualityContinuous improvement
Production systemsLocation, layout, materials handling
Inventory controlJust-in-time, Demand-Flow Technology TM
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Developing a strong service orientation:Many products have a service element associated
with them
Determining the product/service balanceProviding the right amount of service
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International logistics: The designing and managing of a system to control the flow of materials and products throughout the firmTransportation
For example: ocean shipping and air shippingChoice criteria of transportation
Time, predictability, cost and non-economic factorsPackagingStorage