Bally Wedding Dress Company Individual Case Report (>600 Words)
yinghual li
Session6SourcingandManufacturinginChinaSlides.pptxSourcing & Manufacturing in China
DVD Program 3: Chapter 2 Labor and Logistics 18:00 – 26:00 or so RiverEdge Furniture
Discussion Q Number 1
Dicussion Q No. 2-4 (40mins)
/Students discussion of the short articles and slides
Optional: DVD Program 3, Chapter 1
1
Discussion Questions
Why has China become the world factory?
The cost of manufacturing in China has increased significantly in the past decade. What are the reasons for this rise? Should companies look to locate their manufacturing facilities elsewhere? Why or why not? How should companies respond to the rising costs?
What kind of logistics partners should a company work with in China? Why? What other issues do you need to consider to have an effective logistics for a company’s domestic and export business in China?
What are the challenges manufacturing/outsourcing in China?
2
Q1. Why World Factory
Cheap and skilled labor with high productivity
Compound annual growth rate for productivity was 16.5% during 2004 – 2010.
Developed infrastructure in logistics and shipping
High quality supplier network
Large local market to exploit, especially when China is shifting to domestic consumption economy
Reliability and flexibility of production
DVD Program 3: Chapter 2 Labor and Logistics 18:00 – 26:00 or so RiverEdge Furniture
Discussion Q Number 1
3
Q2: Why is the cost of manufacturing increasing?
Shortage of labor
Elderly population will increase 60% by 2020 and working-age population decreases by 35%
Land and raw material costs rose rapidly
Currency appreciation
Chinese government incentives for westward expansion and minimum wage increase in rich areas
Rise of urban middle class demanding higher wages to compensate for inflation
In addition to higher land and raw material costs, urban manufacturing wages in China have more than doubled from 2003 to 2010.
The discussion article: China’s rising cost
Ask students to discuss the article.
Show the video
Summarize with slides
4
US$ has been depreciating against Chinese RMB until 2014
Optional: Show DVD program4, Chapter 1
6
Re-shore or change strategy in China?
Instead of leaving China, perhaps move to inland China
The labor costs in inland is growing rapidly too.
Increase productivity by automation
Export-oriented companies could focus more on China market
At the same time, it might make sense to diversify the production bases and move some of the facilities to other low-cost countries
Should everyone re-shore?
Show the videos
7
Q3: 9 Rules for Logistics
Carefully select a logistics and transportation suppliers – larger ones might be better and more reliable but small ones may provide customized services
Make sure logistics providers have IT systems capabilities – ERP systems are essential
Compare rates and services
long term relationships are valuable
Bidding every 2-3 years
Consider central China for manufacturing
Rigorously review logistics providers and two-way feedback communication – activities, quality, and productivity should all be measured
Know your Incoterms (International Commerce Terms of Sale) – who pays for shipping and who assumes risks.
Export/import compliance is required – use a partner that can check the compliance and prepare the documents and review with them these procedures regularly
Determine the best approach to serve Chinese market – the logistics and distribution are different
Visit China often – monitoring and auditing are important
The discussion article: 9 rules of logistics in China
Ask students to share the article
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9
Q4. Managing Off-shored & Outsourced Operations: Challenges
Design-manufacturing separation and coordination
The complexity of management and control of supply chain
Training and development of suppliers and managing the relationships with the suppliers
Ethics related issues (product safety; working conditions, environment, etc.)
Quality control
Intellectual property theft
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There are costs associated managing outsourced or off-shored operations:
In an outsourced relationship, the design and manufacturing functions are separated. The design function is handled by the corporate headquarters whereas manufacturing is handled in foreign country by either the company itself or vendors contracted by the company. The separate is more severe in vendor relationship.
Coordination between design and manufacturing is essential not only to ensure the product is manufactured as design specifications, but also to ensure the lessons learned during the manufacturing process are fed back to the design function.
OPTIONAL: DVD Program 3: Chapter 1
