the activity that controls the transmission of physical materials through the value chain from procurement through production and into distribution.
Improved quality control reduces costs by...
- 1. increasing productivity because time is not being wasted producing poor-quality products that cannot be sold
- 2. lowering rework and scrap costs associated with defective products
- 3. reducing the warranty costs and time associated with fixing defective products.
Total Quality management
- Management philosophy that takes as its central focus the need to improve the quality of a company's products and services.
- developed by Deming and gang and stated that quality of supervision should be improved by allowing for more time with supervisors to work with employees and by providing them with te tools they need to do the job.
statisically based philosophy that aims to reduce defects, boost productivity, eliminate waste and cut costs through a company.
- EU requires the quality of the firm's manufacturing processes and products be certified under a quality standard before the firm is allowed access to the EU marketplace
- seen as costly for the firms
- but gives management the areas that need to be focused on for quality of products and processes
What three factors are considered when choosing a country to produce in?`
- 1. Country factors
- 2. technological factors
- 3. product factors
Flexible manufacturing technology (or lean production)
- covers a range of manufacturing technologies designed to
- 1) reduce setup times for complex equipment
- 2) increase the utilization of individual machines through better scheduling
- 3) improve quality control at all stages of the manufacturing process
the ability of companies to use flexible manufacturing technology to reconcile two goals that were once thought to be incompatible - low cost and product customization.
Minimum efficient scale of output
- the level output at which most plant-level scale economies are exhausted
- the larger the min. efficient scale of a plant relative to total global demand, the greater the argument for centralizing/production in a single location or limited # of locations
Flexible machine cells
- another common flexible manufacturing technology.
- a grouping of carious types of machinery, a common materials handler and a centralized cell controller
- the settings on machines are computer controlled which allows each cell to switch quickly between the production of different parts of products.
the idea that valuable knowledge does not reside just in a firm's domestic operations; it may also be found in its foreign subsidiaries
decisions about whether they should perform a certain value creation activity themselves or outsource it to another entity
The advantages of make
- 1. lowering costs: if the firm is more efficient at that production activity than any other enterprise.
- 2. Facilitating specialized investments: Ford may feel dependent on one supplier because they have the specialized equipment to product their fuel injection machine.
- 3. protecting product technology: to protect competitive technology.
- 4. accumulating dynamic capabilities: used to describe skills that become more valuable over time through learning. Firms can learn from their experience how to lower costs, design better products, increase product reliability, etc.
- 5. Improving Scheduling: production cost savings result because it makes planning, coordination, and scheduling adjacent processes easier.
The Advantages to buy
- 1. Strategic flexibility: firm can maintain its flexibility, switching orders between suppliers as circumstances dictate...particularly useless with exchange rates
- 2. lower costs: has fewer subunits to control and the competition lowers prices
- 3. offsets: may help the firm capture more orders from that country e.g. us gov't urges japanese auto companies to purchase more component parts from US suppliers to partially offset the large volume of care exports from Japan to the US.
Just in time inventory
- economize on inventory holding costs by having materials arrive at a manufacturing plant just in time to enter the production process and not before.
- major cost savings comes from speeding up inventory turnover - lowers warehousing and storage.
- reduces the chance that inventory will have to be wrote off or sold at a low price