GLOBAL SOURCING STRATEGY R D MANUFACTURING AND MARKETING

GLOBAL SOURCING STRATEGY: R & D, MANUFACTURING, AND MARKETING INTERFACES Chapter Ten John Wiley & Sons, Inc c 1998 1

Global Sourcing Strategy: R & D, Manufacturing, and Marketing Interfaces z Overview z 1. Extent and Complexity of Global Sourcing Strategy z 2. Trends in Global Sourcing Strategy z 3. Value Chain and Functional Interfaces z 4. Logistics of Sourcing Strategy z 5. Costs and Consequences of Global Sourcing John Wiley & Sons, Inc c 1998 2

Overview z. Three major limitations of the international product cycle theory y 1. The trend to increased pace of new product introduction and reduction in innovational lead time y 2. Ability to preempt the product life cycle-predictable sourcing development during the product life cycle. y 3. More active management of locational and corporate resources on a global basis. John Wiley & Sons, Inc c 1998 3

1. Extent and Complexity of Global Sourcing Strategy z. Exhibit 10 -1 Honda’s Worldwide Production and Sourcing Network John Wiley & Sons, Inc c 1998 4

2. Trends In Global Sourcing Strategy y. Exhibit 10 -2 Factors that Affect Global Sourcing Strategy z. Trend 1: The Decline of Exchange Rate Determinism of Sourcing z. Trend 2: New Competitive Environment Caused by Excess Worldwide Capacity y. Exhibit 10 -3 Key Factors for Sourcing from Abroad John Wiley & Sons, Inc c 1998 5

2. Trends in Global Sourcing Strategy (cont) z. Trend 3: Innovations in and Restructuring of International Trade Infrastructure z. Trend 4: Enhanced Role of Purchasing Managers z. Trend 5: Trend Towards Global Manufacturing John Wiley & Sons, Inc c 1998 6

3. Value Chain and Functional Interfaces y. Exhibit 10 -4 Value Chain Concept y. Exhibit 10 -5 Interfaces Among R&D, Manufacturing, and Marketing z. R&D/Manufacturing Interface z. Manufacturing/Marketing Interface y. Core Components Standardization y. Product Design Families y. Universal Product with All Features y. Universal product with Different Positioning z. Marketing/R&D Interface John Wiley & Sons, Inc c 1998 7

4. Logistics Of Sourcing Strategy y. Exhibit 10 -6 Types of Sourcing Strategy z. Intra-Firm Sourcing z. Outsourcing John Wiley & Sons, Inc c 1998 8

5. Costs and Consequences of Global Sourcing z. Need for Coordination z. Functional Mismatch z. Long - Term Consequences y. Strategic Alliances y. Dependence y. Gradual Loss of Design and Manufacturing Abilities John Wiley & Sons, Inc c 1998 9