Boeing's Global Supply - Chain Strategy
Supplier
Headquaters country
Components
Latecore
Labinel
Dassault
France
Passanger doors
wiring
Design and PLM software
Germany
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Reasons to globalize
UK
Japan
Italy
Cobham
Rolls-Royce
Fuel pumps and valves
Engines
Central computer system
Improve the supply chain
Reduce costs and exchange rate risks
Improve operations
Understand markets
Improve products
Attract and retain global talent
Reduce costs
Risks associated with currency exchange rates
Reduce direct and indirect costs
Trade agreements can lower tariffs
Improve operations
Understand difference between how business is handled in other countries
International operations can improve response time and customer services
Understand markets
Interacting with foreig customers, suppliers, competition can lead to new operations
Cell phone design moved from Europe to Japan
Extend the product life cycle
Companies want to consider
National literacy rate
Rate of innovation
Rate of technology change
Number of skilled workers
Work ethic
Tax rates
Inflation
Availability of raw materials
Communication systems
Political stability
Variation in languages
Developing missions and strategy
Mission statements tell an organization where it is going
The strategy tells the organization how to get there
Provide boundaries and focus
Organization's purpose for being
Factors affecting missions
Philosophy and values
Profitability and growth
Public image
Customers
Environment
Strategy
Strategic process
Organization's mission
Functional area missions
Finance/ accounting
Operations
Marketing
Action plan to achieve mission
Functional areas have strategies
Strategies exploit opportunities and strengths, neutralize threaths and avoid weakness
Experience differentiation
Engaging a customer with a product through imaginative use of the five senses, so the customer "experiences" the product
Theme parks use sight, sound, smell and participation
Movie theatres use sight, sound, moving seats, smells, and mists of rain
Restaurants use music, smell, and open kitchen
Competing on cost
Provide the maximum value as perceived by customer. Does not imply low quality
Southwest Airlines - secondary airports, no frills service, efficient utilization of equipment
Walmart - small overhead, shrinkage and distribution cost
Franz Colruyt – no bags, no bright lights, no music, and doors on freezers
Competing on response
Flexibility is matching market changes in design innovation and volumes - A way of life at Hewlett-Packard
Reliability is meeting schedules - German machine industry
Quickness in design, production, and delivery Johnson Electric, Pizza Hut
Issues in operation strategy
Resources view
Value-chain analysis
Porter’s Five Forces model
Operating in a system with many external factors
SWOT analysis
Internal weakness
External opportunities
Mission
Internal strengths
External threats
Strategy
Strategy development process
Analyze the environment
Identify the strengths, weaknesses, opportunities, and threats. Understand the environment, customers, industry, and competitors
Determine the Corporate Mission
State the reason for the firm’s existence and identify the value it wishes to create
Form a strategy
Build a competitive advantage, such as low price, design, or volume flexibility, quality, quick delivery, dependability, after-sale service, broad product lines
( Activity Mapping at Southwest Airlines) Competitive advantage : low cost
Courteous, but Limited Passenger Service
Short Haul, Point-to-Point Routes, Often to Secondary Airports
Standardized Fleet of Boeing 737 Aircraft
Lean, Productive Employees
Strategic Planning, Core Competencies, and Outsourcing
Outsourcing – transferring activities that traditionally been internal to external suppliers
Accelerating due
Increased technological expertise
More reliable and cheaper transportation
Rapid development and deployment of advancements in telecommunications and computers
Theory of Comparative Advantage
If an external provider can perform activities more productively than the purchasing firm, then the external provider should do the work
Purchasing firm focuses on core competencies
Drives outsourcing
Rating Outsourcing Providers
Insufficient analysis most common reason for failure
Factor-rating method
Points and weights assigned for each factor to each