Lecture 1 (31.08)
Production Management
Change processes towards lean production: The role of the remuneration system (Karlsson and
Ahlstrom, 1995) keep people motivated
Strategic production environment
Effectiveness through strategic relationships with the strategic production environment
It starts with the environment, which affects your strategy.
Institutional environment: law and ownership, structure of an organization (shareholder-/
stakeholder aimed). Aspects in the institutional environment around your organisation that try to
influence your organization.
Market characteristics
Costumer need (order winner, order qualifier)
Product Lifecyle (introduction, growth, maturity, decline)
o When to launch new products?
o When to ramp up?
o When to disinvest?
Competitive position / competitor action
Be on top of market developments, you may not be able to sell your factories. (Philips that
underestimated the success of the flatscreen).
Technology
Investments in technology
Infrastructural facilities
o ICT
o Cluster of knowledge
o Energy
,Technology: Industry 4.0
Linking the physical world of machines to the digital world
Machines communicate without intervention of humans
Machines operate autonomously (not automatically, or preprogramed)
Institutions: Varieties of Capitalism (Labour Relations)
Liberal market Coordinated market
Level wage coordination Firm National
Degree wage coordination Employee and employer Unions and employer-
association
Labour turn over Hight: fluid labour market Low
Investments in personnel Low High
Working relationships
Wages stayed almost the same in 20 years in a US slaughterhouse in Texas
• It is estimated a quarter of the workers consists of illegal immigrants
• One year it was reported labor turnover was 100%
• Injured employees risk losing their job
Bargaining power, lots of illegal immigrants. Working life is not always fun for shop floor workers.
Institutions: Varieties of Capitalism (Corporate governance)
Liberal market Coordinated market
Shareholder power Large Limited
Dispersion of control Many small shareholders Network of cross shareholding
Size stock market Large Small
Managerial prerogative High Low
Complementarity of institutional co-ordination
governance more strategic.
Institutional complementarity and economic growth
Hall and Gingerich 2009
,(Re)Location decisions
Industry rule of thumb: if overall costs is 5% lower at the new location, we move.
Allocation models
Continuous allocation models Discrete allocation models
Generate several suitable sites in a continuous Compare a finite potential set of sites
space
Both models suffer from incomplete data and uncertainties associated with location problems
(Stair, Hahha, Hale and Render, 2017)
Multi-Criteria Decision-Making Methods try to model uncertainty and vagueness using the fuzzy logic
approach (Karmakerand Saha, 2015) which resembles human reasoning, to assess weights for criteria
Basically two approaches can be used to assess weights:
Analytic Hierarchy Process (AHP) to weigh independent criteria and sub-criteria, and alternatives
Analytical Network Process (ANP) to weigh dependent criteria and sub-criteria, and alternatives
Why companies relocate production
Why companies backshore production
, Where is production moving to?
Risks changes over time
Risk in impact Economic still most important.
Managing networked production
Managing an international production network
Production Management
Change processes towards lean production: The role of the remuneration system (Karlsson and
Ahlstrom, 1995) keep people motivated
Strategic production environment
Effectiveness through strategic relationships with the strategic production environment
It starts with the environment, which affects your strategy.
Institutional environment: law and ownership, structure of an organization (shareholder-/
stakeholder aimed). Aspects in the institutional environment around your organisation that try to
influence your organization.
Market characteristics
Costumer need (order winner, order qualifier)
Product Lifecyle (introduction, growth, maturity, decline)
o When to launch new products?
o When to ramp up?
o When to disinvest?
Competitive position / competitor action
Be on top of market developments, you may not be able to sell your factories. (Philips that
underestimated the success of the flatscreen).
Technology
Investments in technology
Infrastructural facilities
o ICT
o Cluster of knowledge
o Energy
,Technology: Industry 4.0
Linking the physical world of machines to the digital world
Machines communicate without intervention of humans
Machines operate autonomously (not automatically, or preprogramed)
Institutions: Varieties of Capitalism (Labour Relations)
Liberal market Coordinated market
Level wage coordination Firm National
Degree wage coordination Employee and employer Unions and employer-
association
Labour turn over Hight: fluid labour market Low
Investments in personnel Low High
Working relationships
Wages stayed almost the same in 20 years in a US slaughterhouse in Texas
• It is estimated a quarter of the workers consists of illegal immigrants
• One year it was reported labor turnover was 100%
• Injured employees risk losing their job
Bargaining power, lots of illegal immigrants. Working life is not always fun for shop floor workers.
Institutions: Varieties of Capitalism (Corporate governance)
Liberal market Coordinated market
Shareholder power Large Limited
Dispersion of control Many small shareholders Network of cross shareholding
Size stock market Large Small
Managerial prerogative High Low
Complementarity of institutional co-ordination
governance more strategic.
Institutional complementarity and economic growth
Hall and Gingerich 2009
,(Re)Location decisions
Industry rule of thumb: if overall costs is 5% lower at the new location, we move.
Allocation models
Continuous allocation models Discrete allocation models
Generate several suitable sites in a continuous Compare a finite potential set of sites
space
Both models suffer from incomplete data and uncertainties associated with location problems
(Stair, Hahha, Hale and Render, 2017)
Multi-Criteria Decision-Making Methods try to model uncertainty and vagueness using the fuzzy logic
approach (Karmakerand Saha, 2015) which resembles human reasoning, to assess weights for criteria
Basically two approaches can be used to assess weights:
Analytic Hierarchy Process (AHP) to weigh independent criteria and sub-criteria, and alternatives
Analytical Network Process (ANP) to weigh dependent criteria and sub-criteria, and alternatives
Why companies relocate production
Why companies backshore production
, Where is production moving to?
Risks changes over time
Risk in impact Economic still most important.
Managing networked production
Managing an international production network
