Transcript The Global of Operations Strategies

The Global of Operations
Strategies
Phutthiwat Waiyawuththanapoom
Globalization Is Increasing



1 ใน 5 ผลิตภัณฑ์ของสหรัฐอเมริ การมาจากต่างประเทศ
บริ ษทั สัญชาติอเมริ การมากกว่าครึ่ งมีการดาเนินการในต่างประเทศ
บริ ษทั สัญชาติผสมเติบโตอย่างรวดเร็ วทั้งในและต่างประเทศ
A Conceptual Framework
Global market
Forces
Global cost Forces
Globalization
process of
operations
strategies
Political and
macroeconomic
Forces
Technological
Forces
Global Market Forces





Intensify Foreign Competition in Local Market
Growth in Foreign Demand
Global Market Presence as a Competitive Treat
Changing Competitive Priorities in Product Market
Presence in State-of-the-Art Market
Technological Forces




Technological Advancements and Effective Mass
Customization in Global Market
Diffusion of Technology Knowledge and Global
Location
Technology Sharing and Interfirm Collaborations
Global Location of R&D Facilities
Global Cost Forces



Diminishing Importance of Direct Labor Cost in
Offshore Sourcing Strategies
Emergence of New Cost Priorities in the Location
of Global Operating Activities
Increasing Capital Intensity of Production Facilities
Political And Macroeconomic
Forces



Exchange Rate Fluctuations and the Value of
Operating Flexibility in Global Manufacturing and
Sourcing Networks
Emergence of Regional Trade Agreements and
Their Impact on the Structuring of Global
Manufacturing and Logistics Networks
Effect of Trade Protection Mechanisms on Global
Operation Strategies
Current and Future Challenges




The globalization of operations strategies pays
Pursuing fewness pays
Global locations of R&D pays
Globalization is a gradual process, not a one-time
event
Global marketing
Strategies
Changing Consumer Behavior





Foreign markets not only are physical removed; they also differ
culturally
Specific cost structure in the foreign market may dictate special
pricing
Distribution channel found in the domestic environment may be
available in the foreign market
Portion of the product may have to modified to meet local needs
Promotional methods may need to be adjusted to local media
Types of Consumer Behavior
1. Individualism
 WWI, Asian or Western cultures
 ABC Product Classification
 (A = Moderate movers, B = Slow movers, C =
based on level of sale)

Types of Consumer Behavior
2. Time-Based Competition
 Enter to market faster(Design, production and
distribution)
3. Environmentalism
 Green products, recover packaging, transport
4. Global Products
Geographical Integration: Global
Versus Local marketing

Operate in different environment, coordinating
international activities, and learning from
experience
Global Marketing

Driven by three business development trends



A Global consumer base offers buyers with the same
need
Consumer are prepared to give up specific
requirements in order to obtain a better deal – quality
and lower price
Companies are more aggressive in pursuing
economics of scale in both manufacturing and
marketing
Marketing Tools/technology




Database (Point-of-sale)
Media development (satellite TV)
Advertising agencies setting up worldwide network
Product standardization (firm, brand name,
product characteristics, sale technique, methods
to distribution)
Local Marketing



Focus national, regional and personal
characteristics
Complexity to enter International market
Local to Global
Functional Integration Of Logistics
And Operation: The Global
Products

1. Product /service expectations



Identify and define service component
Prioritize service components by customer need
Define the quantitative measures for each component
Functional Integration Of Logistics
And Operation: The Global
Products

2. Interactions between Marketing, Operation
Management and Logistics




The physical characteristics of product (size, volume,
weight, or fragility)
The product’s modularity and its suitability for pre- and
post-manufacturing
Product packaging
The system used to track products throughout the flow
channel
Simultaneous Development of
Marketing and Logistics
T
I
M
E
Marketing
-Product
-Packaging
-Price
-Promotion
Logistics
-Procureme
nt
-Manufactur
ing
-Distribution
-Catalogue
-After-sale
T
I
M
E
Marketing
-Product
-Packaging
-Price
-Promotion
Logistics
-Procureme
nt
-Manufactur
ing
-Distribution
-Catalogue
-After-sale
Sectorial Integration:
Manufacturer/Distributor


Maximize customer satisfaction/ Low cost
Fundamental Question



What will the partners’ strategic position be at the end
of the alliance?
Why would the prospective partner agree to an
alliance?
Which of the partner’s weakness would be alliance
improve?
Sectorial Integration:
Manufacturer/Distributor
Practical Question:





What resource are the partners willing to contribute to
the relationship
How will conflicts and problems be resolved?
What assessment method will be used to evaluate the
working of the partnership and its results?
How will performance results be shared?
What are the provisions for negotiating or dissolving
the partnership
The Goal of Cooperation




Addressing uncertainty (demand, price, cost,
supply)
Maintaining management oversight and control
over the service provider
Achieving goals
Solving problems or resizing opportunities
Efficient Consumer Response(ECR)



Electronic Data Interchange (EDI)
Quick Response (QR)
Efficient Consumer Response (ECR
Efficient Consumer
Response(ECR)





Launch in US in 1992
By Kurt Salmon Associates
Supermarket industry links in supply chain
Cut inventory (from 104 to 61)
Cut price (10.8%)
The ECR Program
Demand and Information flow
Warehouse
Supplier
Warehouse
Distributor
Point-of-sale
Good and supply flow
Customer

Figure shows





Product flow optimization
Promotions and terms of sale
Product mix
New product introduction incorporating logistics and
product life cycle
The main prerequisites for the proper
implementation of an ECR project are:





Developing EDI
Setting up special partnerships
Elaborating indicators and performance assessment
measures
Putting together multi-functional team
Involving Top management

The following conditions will guarantee the
success of ECR:






Never losing sight of the goal: customer satisfaction
Getting the project piloted by the managing director
Adopting a positive win-win attitude and rejecting winlose attitude
Measuring the contribution of data processing to the
process
Setting up the means to measure real performance and
controlling progress achieved
Taking into account as realistically as possible
competitors’ strong points
ECR


Focuses on customer’s actual demand
Uses information drive the system
Potential Areas of Cooperation in
ECR
Product flow optimization:
-Reduced product lead-time
-EDI
-Distribution optimization
-Packaging
New product introduction:
-Product introduction
-Promotional Introduction
-Product life cycle issues
Customer
Satisfaction
Product mix:
-Use of scanning determinant
-Management of categories
Promotion and term of sale:
-Optimization of purchase
term
-Promotional rationalization
-Reduction of speculative
purchasing
The Need For A Global Marketing
Approach



Geographical integration in choosing between
global and local strategy
Functional integration in achieving the
development of the global product and finding
ways to customize it as late as possible in the
value chain
Sectorial integration in achieving the timely and
cost-efficient product delivery to the demanding
consumer via coordinated electronic information
flow
Global Operation and
Logistics
Planning:Supplier
Network Development
Traditional versus New Supplier
partnerships
Traditional Approach
•
•
•
•
•
•
•
•
•
Primary emphasis on price
Short-term contact
Evaluation by bids
Many suppliers
Improvement benefits shared
based on relative power
Improvement at discrete times
intervals
Problems are suppliers’
responsibility to correct
Clear delineation of business
responsibility
Information is proprietary
Supplier Partnerships
• Multiple criteria
• Longer term contracts
• Intensive and extensive
evaluation
• Fewer selected suppliers
• Improvement benefits are shared
more equitably
• Continuous improvement is
sought
• Problems are jointly solved
• Quasi-vertical integration
•Information is shared
Reason for Outsourcing

Strategic Reasons





Improve business focus
Gain access to world class-capability
Accelerate re-engineering benefits
Share risks
Free resources for other purpose
Reason for Outsourcing

Tactical Reasons





Reduce or control operating costs
Make capital funds available
Create cash infusion
Compensate for lack of internal resources
Improve management of difficult or out-of-control
functions
The elements of outsourcing
1. Industry level changes: Tierization of Industry and
the Supplier Pyramid
The elements of outsourcing
2. Company level changes: System purchasing
Multiple criteria
-Low cost
-High quality
-High flexibility
-High service
-Continuous improvement
and innovation
System sourcing
-Increase value of purchase
-Reduced number of vendors
-Tier structure of supply chain
Collaborative program
-Product design and development
-Quality upgrade
-Continuous improvement
Increase value of purchase
per vendor
Long term relationship with
vendors
Benefits due to:
-Economic of scale
-Learning curve
The elements of outsourcing
3. Black box design
4. Reduce vendor base
A Framework Of Analysis



Which products/components should be
outsourced?
What criteria should be used for supplier
selection?
How might these factors change across the life of
the main product
The Strategic Importance and
Critical matrix
1. The strategic value of the part itself
- Stand alone = Print cartridges for laser printer
- Fit into product, technology complexity
2. The criticality of the part to the final product
- A second important of the part
- Extent to quality and reliability
Framework to decide what part to
final assembly
High
Strategic
value of
the part in
isolation
Novelty
Proprietary
(Outsource/In-house)
Technology
Quality
Service
(In-house)
Technology
Quality
Commodity
Utility
(Outsource)
Price
(Outsource)
Cooperation
Service
Low
Low
Criticality of the part to final assembly
High
Dynamic Evolution with the
Product Life cycle

Resource capability factors – technology and quality
to a vendor’s infrastructure capabilities

Service factors – a consistent, highly cooperative
attitude toward service and delivery on the part of vendor

Price factor – any price advantage offered by a vendor
that may be exploited by its customer

Environment factors – element beyond the control of
companies, such as government regulations that limit a
company’s choice of vendor