International Operations
Management
MGMT 6367
Fall 2013
Instructor: Yan Qin
Outline

Course Overview
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◦
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Learning objectives
Topics to cover
Course assessment
Contact information
Introduction to International Operations/Logistics
◦ What is Operations Management
 International Vs. Domestic
 Global Operations Strategy
◦ Supplement: Goods Vs. Services
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Learning Objectives

As a result of this course, students will be able to
◦ Understand the key strategic and operational aspects of
international operations management to help in the design,
planning, and execution of a firm's international operations;
◦ Comprehend how effective global operations can lower costs and
improve responsiveness to customer requirements to provide a
firm with competitive advantages;
◦ Apply theory and case examples on global supply chain
management to help in the coordination of globally dispersed
supply-chain activities;
◦ Apply theory and case examples on decision-making frameworks
for global outsourcing and location of production facilities to help
in the development of effective international operations strategies.
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Topics to cover

Global Operations Strategy

Global Sourcing
◦ Make or Buy
◦ Vendor Selection

Supply Chain Coordination
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Facility Layout

Transportation Management
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Distribution network design
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Facility Location

Risk Management in the global context

Information Systems
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Grading scale

Your letter grade is determined using the grade distribution that
follows.You can calculate your percentage grade at any time in the
semester by dividing the points you have accrued by the total points
available up to that point. This percentage is then matched to a letter
grade.
A
90% or higher
B
80 to 89%
C
70 to 79%
D
60 to 69%
F
Less than 60%
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Course Assessment

Grade breakdown
◦ Class Participation
20%
◦ Individual Case Analysis
20%
◦ Individual Assignments
20%
◦ Two Exams
40%
* Please refer to the tentative class schedule for all the post and due
dates of the four individual assignments.
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Individual Case Analysis

The purpose of this assignment is to identify and apply IOM
(International Operations Management) concepts/tools to solve
problems in managing international operations. To this purpose, you
should find an interesting IOM problem from the real business world
and think about how you can apply the IOM concepts/tools that you
learned in this course to solve the problem.

Detailed instructions can be found in the document titled “Individual
project instructions”.
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Assignments & Exams

Individual Assignments
◦ There will be four individual assignments in total. Each assignment
may consist of problem-solving questions, case-related discussion
questions, or essay questions about specific issues in managing
international operations. Each assignment accounts for 5% of the
final grade.

Two Exams
◦ There will be two non-cumulative exams in total. Both will be
counted in the final grade. Each accounts for 20% of the final grade.
The exams will be individual, timed, and open-book/notes. Only
multiple-choice questions will be given on the exams.
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Contact information

Course Website: http://www2.uhv.edu/qiny
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Class meeting time: Monday, 7 pm – 9:45 pm, except holiday
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Email: qiny@uhv.edu
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Office: Room 338, Brazos Hall, UHSSL
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Office Hours: Every Monday, 6 pm – 7 pm, Or by
appointment
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Contact number: 281-275-8821
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Operations Management
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Production is the creation of goods and services.

Operations include all the activities that relate to the
creation of good and services through the transformation
of inputs to outputs.

Operations Management (OM) refers to the
management of Operations activities to ensure the
efficient utilization of all kinds of resources in meeting
customer expectations.
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Example: Operations activities in a Commercial
Bank
Commercial Bank
Operations:
Teller scheduling
Check Clearing
Collection
Transaction Processing
Facility Layout/design
Vault Operations
Maintenance
Security
Finance:
Investment
Securities
Real estate
Accounting
Auditing
Marketing:
Loans
Commercial
Industrial
Financial
Personal
Mortgage
Trust
Department
Source: “Operations Management” by Heizer and Rander.
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Example: Operation activities in a manufacturing
organization
Manufacturing
Operations:
Facilities
Construction; Maintenance
Production and Inventory Control
Quality assurance and control
Supply Chain Management
Product Design
Industrial Engineering
Efficient use of machine, space
Process analysis
Finance:
Disbursements/credits
Accounts receivable
Accounts payable
Funds Management
Capital requirements
Stock issue
Bond issue and recall
Marketing:
Sales promotion
Advertising
Sales
Market research
Source: “Operations Management” by Heizer and Rander.
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OM’s Transformation Role
Source: Raid and Sanders 2005
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The 10 major OM decisions
Ten Decision Areas
Sample Issues
Design of goods and services
What good or service should we offer?
Managing quality
How do we define the quality?
Process and capacity
What process and what capacity will these products
require?
Location strategy
Where should we put the facilities?
Layout strategy
How should we arrange the facilities?
Human resources and job design
How do we provide a reasonable work environment?
Supply chain management
Should we make or buy this component?
Inventory, material requirements
planning, and JIT
How much inventory of item should we have? When
do we reorder?
Intermediate and short-term
scheduling
Are we better off keeping people on the payroll
during slowdowns?
Maintenance
Who is responsible for maintenance?
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Operations Strategy

Mission: the purpose or rationale for an organization’s
existence.
◦ Ford Motor: “We are a global family with a proud heritage
passionately committed to providing personal mobility for
people around the world.”

Operations Strategy is a long-term plan of actions
designed to achieve a firm’s operational objectives, which
are consistent with the mission.
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Four competitive Priorities
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Cost
◦ Low cost strategy
--- Low cost does not mean low value or quality. Wal-Mart provides low
cost through its efficient management of transportation, inventory, and
warehousing.

Quality (2 dimensions)
◦ Design Quality
--- The features, styling, and other product attributes that enhance
fitness for use.
◦ Conformance Quality
--- Product conformance to set production standards.
Four competitive Priorities

Service (2 dimensions)
◦ Delivery Speed
--- Ability to produce and deliver the product quickly.
◦ Delivery Reliability
--- Ability to produce and deliver according to contractually specified
time intervals.

Flexibility (3 categories)
◦ New-Product Flexibility
--- Ability to introduce new products quickly and effectively.
Four competitive Priorities
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Flexibility (Cont.)
◦ Product Mix Flexibility
--- Ability to efficiently and effectively adjust the production mix in
response to market demand.
◦ Production Ramp-up/down Flexibility
--- Ability to rapidly expand/shrink the production process to
accommodate changes in demand.

It is very difficult for a company to excel in all aspects
simultaneously due to limited resources. Each company must
carefully identify the areas that may provide competitive
advantages.
Questions: Competitive priorities

What are the competitive priorities of the following companies
based on the descriptions?
(1) HP demonstrates great flexibility in both design and volume
changes in the business of personal computers.
(2) Safeskin Corporation is number one in latex exam gloves
because it has differentiated itself and its products. It did so by
providing gloves that were designed to prevent allergic reactions.
When other companies caught up, it developed hypoallergenic
gloves. Then it added texture. Then it developed a synthetic
disposable glove for those allergic to latex.
Qualifying and Winning Criteria

Qualifying criteria
The basic criteria that permit the firm’s products to be
considered as candidates for purchase by customers.

Winning criteria
The criteria that differentiate the products or services of one
firm from another.
New trends in OM

Global focus
◦ Decline in communication and transportation costs has made
markets global;
◦ Resources such as personnel and capital are available
globally;
◦ Operations managers are responding with innovations that
generate and move ideas, production, and finished good
rapidly.
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New trends in OM

Just-In-Time performance
◦ How to free assets from inventory and improve responsiveness

Supply Chain partnering
◦ Operations managers are outsourcing and building long-term
relationship with its suppliers all over the world.

Rapid product development
◦ Requires rapid responses in operations especially in high-tech
industries
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New trends in OM

Mass Customization
◦ Mass customization aims at supplying customized products
and services to each customer in a responsive and cost
effective way.
◦ Broadening product variety gives a company a distinctive
competitive advantage in quickly responding to everchanging market environments and customer tastes.
◦ Challenges in cost control and responsiveness.
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New trends in OM

Empowered employees
◦ Operations managers are moving more decision making to the
individual worker as more competence is now required at
workplace.

Environmentally sensitive production
◦ Concerned with designing products and processes that are
environmentally friendly.

Ethics
◦ Continuing challenge to enhance ethical behavior
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Operations: Global Vs. Domestic

Riskier and more complex
◦ More risk factors to consider
◦ Transportation becomes more complex and costly.
◦ Product proliferation due to localization and mass
customization.
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Sources of Risk in the global environment
Risk Factors
Natural disasters
Shortage of skilled personnel
Geopolitical uncertainty
Terrorist infiltration of cargo
Volatility of fuel prices
Currency fluctuation
Port operations/custom delays
Customer/consumer preference shifts
Performance of business partners
Logistics capacity/complexity
Forecasting/planning accuracy
Supplier planning/communication issues
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Operations: Global Vs. Domestic

Attention paid to cultural, political, and economic factors
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More difficult interpersonal management task:
◦ International business partners
◦ Officials in central and local governments

Inventory cost gets higher.
◦ Longer and slower pipeline leads to more pipeline
inventory
◦ Uncertainty in politics and production leads to more safety
stock.
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International Operations Management

Now what is International Operations Management (IOM)?
◦ IOM is just Operations Management in the global context.

Why do we need to study Operations Management in the
global context?
◦ Similarities and differences in the economic, cultural, legal, and
political aspects in different countries bring about both opportunities
and risks in the business world. IOM, as compared to OM, focuses
on the use of operational strategies to take advantage of the unique
opportunities that appear during the globalization process without
being exposed to an unacceptable level of risk.
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Supplement: Goods Vs. Service
Attributes of Goods
Attributes of Services
Tangible product
Intangible product
Product can be resold.
Reselling a service is unusual.
Product can be inventoried.
Many services cannot be inventoried.
Some aspects of quality are
measurable.
Many aspects of quality are difficult to
measure.
Selling is distinct from production.
Selling is often a part of the service.
Product is transportable.
Provider, not product, is often
transportable.
Site of facility is important for cost. Site of facility is important for
customer contact.
Often easy to automate.
Service is often difficult to automate.
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The output from most operations is a mixture of goods
and services
Similarities between service providers
and manufacturers

Both use technology

Both have quality, productivity, & response issues

Both must forecast demand

Each will have capacity, layout, and location issues

Both have customers and suppliers

Both have scheduling and staffing issues
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The Week after Labor Day
 Global Sourcing
◦ Concepts in Sourcing
◦ Key decisions in Outsourcing
◦ What should be outsourced?
◦ Which vendors/providers are most suitable partners?
◦ What forms of relationship with partners should be used?
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