2 management - School of International Business and ...

Hans H. Steinbeck
product variance compensates the benefits of economy of scale very fast. In flexible manufacturing
the logistic and the shop floor control system is flexible enough to handle every allowable customer
configuration, still giving the benefit of higher volumes.
A typical flexible manufacturing can best be seen by visiting a German car factory today. The
typical German car buyer wants to buy ‘his’ car, which is configured to order and unique, while
the typical American buyer takes what is available at the dealers showroom. So German cars are
build to order, while US cars are build to plan, as well as cars from Asia. So for a German car
factory, producing premium cars, the shop floor control system can handle any possible variety,
even down to right hand or left hand steering simultaneously. The factory managers even proudly
announce, that they never build the same car. Since a big part of the production is done by robots,
the requirements on the supporting logistic system are very high, and all suppliers have to be
linked and integrated real time.
6 SUPPLY CHAIN MANAGEMENT
Supply chain management (SCM) is the management of a network of interconnected businesses
involved in the ultimate provision of product and service packages required by end customers
(Harland, 1996). Supply Chain Management spans all movement and storage of raw materials,
work-in-process inventory, and finished goods from point-of-origin to point-of-consumption (supply
chain) [Wikipedia 2008]. Todays advanced capabilities in SCM, will link all suppliers and the fac-
tories around the world, with the customers, wherever they are located, as it is shown in Figure 8.
Figure 8 | Supply Chain Management is linking all participants, from the supplier to the customer.
The capabilities of SCM are huge and the need for a globally integrated supply chain is key to suc-
cess, however the implementation should not be underestimated. Information Technology (IT) has
the capabilities, but time and financial effort will be very large. Linking different companies, using
different IT architecture and applications, around the world, is a challenge, but there are many very
good examples available of companies, which have done it successfully. As a first step, only suppliers
will be accepted who can communicate directly by EDI, without any manual interaction. So comput-
420