978-1259317224 Module C Part 1

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

Module C: Global Operations and Supply Chain

Management

Use this Instructor Guide to incorporate the unique content of this product and facilitate your

Face-to-Face, Online, and Hybrid classes. This guide has been designed to be interactive and links

have been created within each title in the Table of Contents to guide you to each section. You

can also link back to the main page by clicking at the button at the bottom of each page.

Here is the Table of Contents highlighting what you’ll be able to find to support you in teaching

this module:

YOUR CONTENT

Summary

Learning Objectives

Key Terms & Key Terms with Definitions

Content Outline

CONNECT TOOLS FOR CLASS PREPARATION

SmartBook

What is SmartBook?

How Does SmartBook Help You/Students?

How to assign SmartBook to ensure students come to class prepared?

ENGAGEMENT & APPLICATION (FACE TO FACE & ONLINE & HYBRID)

BOXED TEXT DISCUSSION QUESTIONS WITH SUGGESTED ANSWERS

IB IN PRACTICE

GLOBAL DEBATE

Video Suggestions

Team Exercises

Supplemental Lecture

Tools & Tricks

Controversial Issues

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

CONNECT TOOLS FOR ASSESSEMENT OF LEARNING

Interactive Applications

Assigning Interactives

Time-Saving Hints:

Connect Content Matrix

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

YOUR CONTENT

SUMMARY

Global markets and global competition have pushed ICs to search for methods to lower costs

and improve product quality. These same pressures have resulted in a new focus on supply

chain management, the process of coordinating and integrating the flow of materials,

information, finances, and services within and among companies in the value chain from

suppliers to the ultimate consumer.

LEARNING OBJECTIVES

LO C-1 Explain the concept of supply chain management.

LO C-2 Discuss the relationship between design and supply chain management.

LO C-3 Describe the reasons for sourcing globally, the five global sourcing arrangements,

and the benefits and challenges of global sourcing.

Backward vertical integration

(p. 490)

An arrangement in which facilities are established to

manufacture inputs used in the production of a firm’s final

products.

Bottleneck (p. 482)

Operation in a manufacturing system whose output sets the

limit for the entire system’s output.

Indirect procurement(p. 477)

The purchasing of goods and services that are not part of

finished goods.

Intermediate technology

(p. 494)

Production methods between capital- and labor-intensive

methods.

Intrafirm trade (p. 476)

Trade that occurs between a parent company and its foreign

affiliates.

Just-in-time (JIT) (p. 480)

A balanced system in which there is little or no delay time and

idle in-process and finished goods inventory.

Logistics (p. 484)

Managerial functions associated with the movement of

materials such as raw materials, work in progress, or finished

goods.

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

Manufacturing rationalization

(p. 488)

Division of production among a number of production units,

thus enabling each to produce only a limited number of

components for all of a firm’s assembly plants.

Mass customization (p. 483)

The use of flexible, usually computer-aided, manufacturing

systems to produce and deliver customized products and

services for different customers worldwide.

Offshoring (p. 475)

Relocation of some or all of a business’s activities or processes

to a foreign location.

Outsourcing (p. 472)

Hiring others to perform some of the noncore activities and

decision making in a company’s value chain, rather than

having the company and its employees continue to perform

those activities.

Quality circle (p. 481)

Small work group that meets periodically to discuss ways to

improve its functional areas and the quality of the product.

Six Sigma (p. 483)

Business management process for reducing defects and

eliminating variation.

Standards (p. 486)

Documented agreements containing technical specifications

or other precise criteria that will be used consistently as

guidelines, rules, or definitions of the characteristics of a

product, process, or service.

Supply chain management

(p. 472)

The process of coordinating and integrating the flow of

materials, information, finances, and services within and

among companies in the value chain from suppliers to the

ultimate consumer.

Synchronous manufacturing

(p. 482)

An entire manufacturing system with unbalanced operations

that emphasizes total system performance.

Total quality management

(TQM) (p. 481)

A companywide management approach in which the entire

organization is managed so that it excels on all dimensions of

product and services that are important to the customer.

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

LO C-1

Explain the concept of supply chain management

• Introduction

Managing global supply chains

Key Terms:

• Outsourcing

• Supply chain

management

Lecture Outline and Notes:

I. Introduction

To improve competitiveness, international and domestic companies seek ways to lower costs

while improving their products. A common solution is outsourcing. Any activity in the value

chain can be outsourced

II. Managing Global Supply Chains (Fig. C.1)

Supply chain refers to activities involved in producing products and services and how they are

linked together

Supply chains are integral to global quality and cost management

Shorter, less predictable product life cycles, plus impact of unplanned economic, political, and

social events, place further emphasis on achievement of effective supply chain performance

Operations in each step of the supply chain must be synchronized

Measurement of supply chain performance varies by industry and company, because the way

success is defined also tends to vary and performance assessment should be aligned with a

company’s strategic objectives and the key factors for success

LO C-2

Discuss the relationship between design and supply chain

management

I. Design of products and services

Key Terms:

•

Lecture Outline and Notes:

I. Design of Products and Services

Design of a company’s products and services has a fundamental relationship with the types of

inputs a company will require

Operations can be standardized or adapted to meet different needs of various markets

Traditional “over-the-wall” approach – sequential steps to design

Alternative approaches – cross-functional participation in each stage of design, identifying and

avoiding many potential sourcing, manufacturing

1. Many companies also pull customers into design activities

2. Can improve products, generate new product ideas, and engage customer

BACK TO

MAIN PAGE

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

LO C-3

Describe the reasons for sourcing globally, the five global

sourcing arrangements, and the benefits and challenges of

global sourcing

• Sourcing globally

• Reasons for sourcing globally

• Global sourcing arrangements

• Importance of global sourcing

• The increasing use of electronic purchasing for

global sourcing

o Options for global electronic

procurement

o Benefits of global electronic

procurement systems

o Problems with global sourcing

Key Terms:

• offshoring

• intrafirm trade

• indirect procurement

•

Lecture Outline and Notes:

I. Sourcing Globally

Reasons for Sourcing Globally:

1. The primary reason is to obtain lower prices. In addition, certain products may not be

available locally. Firms’ competitors may be using components of better quality or

better design.

2. When deciding to source internationally, companies either set up their own facilities

or outsource the production to other companies.

a. A company’s decision to relocate some or all of its activities or processes to a

foreign location is called offshoring

focus scarce resources on their core competencies and leverage the skills of other

companies to reduce costs and capital investments, improve flexibility and speed

of response, enhance quality, or provide other strategic benefits.

c. Any part of the value chain can be outsourced.

3. The value of global sourcing is the existence of suppliers with improved

competitiveness in terms of cost, quality, timeliness, and other relevant dimensions.

4. The rate at which developing nations shift to more sophisticated processes is often

more rapid than the initial emergence of these processes in a developed country. In

part, this may be due to an emerging nation’s ability to transfer technology and

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This

document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

processes previously invented and commercialized in the more developed nations,

thus avoiding the cost and time of inventing these technologies on its own.

5. The ability to effectively and efficiently use global sources has been enhanced by the

drop in cost of communications, widespread use of standardized interfaces such as

World Wide Web browsers, and the increasing pace at which companies are

automating and digitizing data.

Global Sourcing Arrangements

1. Wholly owned subsidiary – established in a country with low cost labor or producing a

product not made in the home country.

assembled or just assembled by an independent contractor in an in-bond plant.

4. Overseas independent contractor – common in the clothing industry in which firms

with no production facilities such as DKNY, Liz Claiborne, and Nike, contract with

foreign manufacturers to make clothing to their specifications with their label.

5. Independent overseas manufacturer.

Importance of Global Sourcing

1. Intrafirm trade (trade between U.S. parent companies and their foreign affiliates)

b. Accounts for 35% to 50% of U.S. imports.

2. Cost of Goods Sold is rising, because of:

a. Greater product complexity

b. Increasing focus on firm’s core business

d. Pressure to reduce concept-to-market cycle times

The Increasing Use of Electronic Purchasing for Global Sourcing

Entering exporter and the product name in a search engine will bring up Web sites of exporters

around the world that have on-line catalogs and information on how to order their products –

purchasing needs online for all prospective suppliers to view, and suppliers can then

BACK TO

MAIN PAGE

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

submit private quotes to the buyer.

3. Benefits of Global Electronic Procurement Systems

substantial benefits, in savings and breadth of offerings because suppliers can be

global:

a. Streamline operations, cut costs, improve productivity in supply chain

management and customer response

b. Smaller companies benefit from lower barriers, using Internet to purchase raw

materials and to sell products to customers, often on worldwide basis

c. Industry-based business–to–business (B2B) exchanges can help optimize the

a. Following are the costs of importing with an estimated percentage of the quoted

price that each adds:

i. International freight, insurance, and packing (10-12%)

ii. Import duties (0-50%)

iii. Customhouse broker fees (3-5%)

viii. Rework of products out of specifications (0-15%)

b. Other Disadvantages

c. Importers can face an increase in price because the home currency has lost value

as a result of exchange rate fluctuation. To address this risk (discussed in Chapter

17), hedging may be used.

d. Some efforts at developing e-procurement systems have been done in isolation

f. Security can also be a significant concern for e–procurement, including allowing

competitors or customers to see proprietary details of their business. Different

country standards are also a concern when attempting to implement international

e-procurement systems.

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

LO C-4

Explain why manufacturing systems and logistical elements

may vary, even within the same company.

• Manufacturing systems and logistics

• Advanced production techniques can enhance

quality and lower costs

o Reducing costs through just-in-time

manufacturing systems

o Improving quality through total quality

management

o Enhancing total system performance

through synchronous manufacturing

o Managing costs and customer needs

through mass customization

o Improving quality and costs through Six

Sigma

• Logistics and supply chains

Key Terms:

• Just-in-time (JIT)

• Total quality

management (TQM)

• Quality circle

• Synchronous

manufacturing

• Bottleneck

• Mass customization

• Six Sigma

• Logistics

•

Lecture Outline and Notes:

I. Manufacturing Systems and Logistics

Because international firms maintain manufacturing facilities in countries at various levels of

development, manufacturing systems often vary considerably in cost and quality from country

to country and even in the same country.

1. Advanced production techniques can enhance quality and lower costs

and enhance quality; they are balanced systems in which there is little or no delay time and idle

in-process and finished goods inventory

What is important is “big JIT” – a total system covering management of people, materials, and

relationships with suppliers

b. Teams are necessary in the implementation of TQM, and one useful kind of team

is the quality circle.

2. Enhancing Total System Performance through Synchronous Manufacturing

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

a. Synchronous manufacturing, also called the theory of constraints (TOC), is an

entire manufacturing system with unbalanced operations that emphasizes total

system performance.

b. The system’s output is determined by and limited to the output of the slowest

operation, or bottleneck, that is working at full capacity.

c. Instead of attempting to achieve a balanced system like JIT, synchronous

manufacturing aims to balance the product flow through the system, which leaves

output levels of the various operations unbalanced.

d. A defective part or component at any point in the production process can shut

down a JIT system. But because a synchronous manufacturing system has excess

capacity in all operations except at the bottleneck, any defective part produced

before the bottleneck can be remade, and thus the entire system is not stopped.

3. Managing costs and customer needs through mass customization

a. Mass customization refers to a company’s use of flexible, usually computer-aided,

manufacturing systems to produce and deliver customized products and services

for different customers worldwide.

b. Four basic approaches to mass customization

ix. collaborative—company helps customers choose the required product features

x. adaptive—company offers a standard product that users can modify

themselves

xi. cosmetic—only product’s presentation is customized, such as packaging or

color

xii. transparent—customers are provided with individualized product or service

offerings withouttheir knowing it, such as on website interfaces

c. Mass customization is usually appropriate where it is feasible to delay

differentiating the product for a particular customer until the last possible point in

the supply network. In practice, this means reconceptualizing and often

reconfiguring the company’s entire supply chain

d. benefits of such a comprehensive approach to operations are that the company

will be able to function at maximum efficiency and to rapidly respond to

• Standardization and the management of global

operations

o Benefits of standardization of global operations

o Organization and staffing

o Purchasing

• Manufacturing

rationalization

• Backward vertical

integration

• Intermediate