IB 3101 Lecture Notes - Lecture 12: Outsourcing, Lean Manufacturing, Mass Customization
17 May 2017
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Week 12 chapter 15 global production and outsourcing. Production- primary activity in the valuation chain of the firm, activities involved in creating a product. Logistics- supporting activity, procurement and physical transmission of material through the supply chain, form suppliers to customers. Strategy production and logistics: lower costs of value creation, production can improve reliability of a product jit arrival, add value by better serving customer needs. Value to weight: low weight / high value, pharmaceutical, tech, low transportation costs, expensive products, ok to decentralize product, exceptions cars. If the value-to-weight ratio is high, produce the product in a single location and export it. Example swiss watches. locations across the world. If the value-to-weight ratio is low, manufacture the product in multiple. The minimum efficient scale of production is high. Flexible manufacturing technologies are available (so one facility can make a lot of different stuff) Strategic role of foreign factories (can change over time)
