CHAPTER 4
GLOBAL PRODUCTION AND
OPERATIONS
GLOBAL
PRODUCTION
• Global. Relate to the underlying geography of the global economy. It
considers space as a facilitator of economic efficiency, notably in
terms of comparative advantages, but also as a constraint in terms of
distance and market fragmentation. It expresses the locational reality
of the global economy with differences in input costs and market
potential.
• Production. Relate to the variety of activities involved in the creation
and transformation of resources, parts, and final goods. It expresses
the value generation reality, both for goods and services, of the global
economy with differences in manufacturing capabilities.
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Example:
The global perspective comes in where these production
activities take place in different parts of the world. For
example if the parts are made in Indonesia, the
technologies/software is manufactured in India
and the assembly of all these parts takes place in
Britain, this constitutes global productions and
operations. Global production and operations could also
mean that the production processes are
simultaneously done in various parts of the world.
PRODUCTION STRATEGIES
1. Mass Production
Mass production focuses on long term forecasts, a push strategy based on
stable demand assumption. A push strategy means the products are
produced based on forecast (stable) demand and then pushed (sold) to the
customer. This strategy focuses on cost reduction, efficiency and big scale.
Note earlier that we said this is a production strategy that assumes demand
for the product is stable. However, demand rarely is stable throughout the
year and usually fluctuates based on market pressures. If there is not
enough demand to fit the forecasted quantity that were produced, the
manufacturing firm will find itself with excess goods that nobody would buy-
dead or obsolete stocks that are costly and brings down forecasted profit.
2. Lean Manufacturing
Lean manufacturing is based on a set of integrated set of activities with
focus on minimizing movement and use of raw materials, work-in-process,
and finished goods inventories during production.
Lean manufacturing is also based on pull system. A pull system is a system
where production is based on actual order or demand from the customer.
In this system, customer will order first (with specific quantity) and
production will start based on the specific quantity. Therefore, in this type
of system, to reduce the risk of overproduction and having obsolete or
dead stock thereby reducing waste and costs.
Limitation of Lean manufacturing
Lean manufacturing, however, despite its many benefits, also have
several limitations. The biggest challenge of lean manufacturing is to
get the product out quickly from the manufacturing facilities. Some
customers don’t want to wait for the product to be produced.
When the customer wants the product immediately, lean
manufacturing cannot cater to this requirement. This would result in
loss of customer and profit.
3. Flexible Manufacturing
Flexible manufacturing focuses on reactive capability. Reactive capability
describes the capability of the production to respond effectively to
challenges of production described earlier. One type of reactive capability is
machine flexibility. In this strategy, machines and equipment’s have a
general purpose (more than one purpose)and the staff/workers are cross-
trained(trained in more than one type of work)this why, both the
machines/equipment’s and the workers will be able to produce different
types of product(from the same machine). It could therefore support
different transformation processes and small batches of different product
can be produced more cost-effectively.
4. Adaptive Manufacturing
Adaptive manufacturing is leverages lean manufacturing strategies. Six
Sigma best practices, and real time actionable intelligence from the
factory floor. The adaptive approach rejects traditional reliance on
standard lead times and long range forecasts in favour of a more
demand driven approach in which the supply side quickly senses and
responds to what customers want. The result is increased production
flexibility and demand fulfilment velocity.
Adaptive manufacturing is a relatively new concept in manufacturing
industry. Adaptive manufacturing has 5 characteristics:
