Global Outsourcing, Production and Logistics Strategy

A set of vocabulary flashcards covering the key concepts and terminology of global outsourcing, production, and supply chain management based on the lecture notes.

Production

Activities involved in creating a product.

Logistics

Procurement and physical transmission of material through the supply chain, from suppliers to customers.

Six Sigma Program

A descendant of Total Quality Management (TQM) that aims to reduce defects, boost productivity, eliminate waste, and cut costs throughout the company.

ISO 9000

Specific standards that firms must meet before gaining access to the European Union marketplace.

Country Factors

Economic, political, and cultural conditions, including trade barriers and skilled labor availability, that affect location decisions for manufacturing.

Minimum Efficient Scale

The level of output at which most plant-level scale economies are exhausted.

Flexible Manufacturing Technology

Also known as lean production, this technology reduces set up times for complex equipment, increases machine utilization, and improves quality control.

Value-to-weight ratio

A product factor impacting location decisions: if high, products are usually produced in a single location and exported; if low, there is pressure to manufacture in multiple locations.

Universal Needs

When products serve these, the need for local responsiveness falls and concentrating manufacturing in a central location makes sense.

Vertical Integration

The process of making component parts in-house.

Proprietary Technology

Technology owned by a company; in-house production is often preferred for parts containing it to protect the technology.

Strategic Alliances

Long-term partnerships with key suppliers that allow firms to capture benefits of vertical integration without the associated organizational problems.

Just-in-Time (JIT) Inventory

Systems that economize on inventory holding costs by having materials arrive at a manufacturing plant just in time to enter the production process.

Electronic Data Interchange (EDI)

Information technology that facilitates the tracking of inputs, allows for real-time communication with suppliers, and eliminates the flow of paperwork.

Hidden Costs of Foreign Production

Potential issues such as high employee turnover, poor workmanship, poor product quality, and low productivity.