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Problems associated to managing operations internationally (best practice,…
Problems associated to managing operations internationally
Attractions
low costs
often short term rather than long term
challenges
poor supply chain total cost calculations
land costs
inventory holding costs
cost of obsolete products
cost to deliver product to end consumer
low cost often leads to poor output
trade off between increased transport costs vs decreased labour costs
benefits are often short term and do not outweigh the following over the long term
government is totalitarian and exploitative
roads are substandard
congested ports
as countries become more developed its natural that cost savings on labour will fade
no offshore/ global strategies
unprepared management of offshoring
slow to enter or respond to new markets
lose access to skills
exchange rates
monitoring and responding to changes and developments in foreign infrastructure and markets
best practice
site selection
go to countries of interest yourself
regional logistics assessment
countries assets and abilities
infrastructure
access and price to ports
legal system
financing options
duties and tariffs
government
illegal activities
local police/ army presence
business strategy
owning real estate overseas?
marketing strategy
is it flexible enough to meet sudden increases/ decreases in demand?
affordability and feasibility of entering a market quickly
most effective way to serve foreign markets is to access key facilities close to distribution areas
but expensive = large budget required
relationship with customs/ government officials
familiarity
local laws
culture
resources
hire managers with logistics and local end market knowledge/ experience
find a location before competitors do
timing is everything when entering emerging countries
no one size fits all solution
cultural differences
different supply chain requirements
regionally
nationally
distribution methods differ based on customer demands per country
Developing a global vision
contributes to success
effective corporate global vision
primary focus for developing and deploying a global supply base
management structures and systems to de-ploy their global vision
optimize the mix of local suppliers and global suppliers.
deploy resources to ensure that suppliers’ capabilities are aligned with their competitive and manufacturing strategies
using world bank index to source locations with similar laws etc to domestic country
most logistic friendly countries
ability to respond and change to business and politics in foreign countries is crucial for success
understanding what the other party's interests and satisfying them is KEY
monitoring logistics overseas is important
near-shoring
fastest globalisation trend
bringing key supply chain functions closer to home
factors pushing businesses to move production back to domestic land
rise in fuel prices
worldwide economic recession risk is rising
high sea prirates
fluctuations in currency rates
rising costs of raw materials
benefits
spread of geographical portfolios
cost competitiveness has increased in nearshore locations
reduction in risks associated to 3rd world offshoring
evolution of offshoring
two factors
advancements in shipping e.g. shipping container efficiencies led to businesses manufacturing products offshore because even with shipping costs, it worked out more cost effective
shipping least expensive transportation mode
technology advancements has facilitated speed and pace of global commerce