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Exploring Operations of Manufacturing Plant Types in International Context

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International Operations Networks

Abstract

Internationalized operations are widespread for plants from all over the world. Plants can build their own competitive advantages, but can also rely on location based comparative advantages, such as markets, low cost production opportunities or access to skills and knowledge. International business and strategic management literature offers several studies that focus on the internationalization of manufacturing plants and networks, but they rarely explore operations performed by these plants, may they be single plants of a company or plants within an international manufacturing network (IMN). Operations management literature, on the other hand, has recently started to discover this field. This paper follows this stream by using an international database to analyze plant operations in an international context. Based on the internationalization level of operations (sourcing, manufacturing, sales) we first identify plant types. We provide a deeper insight into the role of these plants by exploring the comparative (country level) and competitive (business unit level) advantages they realize. Lastly, variables of internal (manufacturing) and external (supply chain) operations are also included in our analysis to discover the characteristics of plant operations and to identify differences between various plant types.

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Author information

Authors and Affiliations

  1. Department of Logistics and Supply Chain Management, Corvinus University of Budapest, Budapest, Hungary

    Krisztina Demeter

  2. Faculty of Economics and Business Administration, Babes-Bolyai University, Cluj-Napoca, Romania

    Levente Szász

Authors
  1. Krisztina Demeter
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  2. Levente Szász
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Corresponding author

Correspondence to Krisztina Demeter .

Editor information

Editors and Affiliations

  1. Aalborg University, Aalborg, Denmark

    John Johansen

  2. Aalborg University, Aalborg, Denmark

    Sami Farooq

  3. Aalborg University, Aalborg, Denmark

    Yang Cheng

Appendices

Appendix 1

 

Production site (PS)

Real globals (RG)

Domestic player (DP)

Importers (IM)

Exporters (EX)

Country competitiveness factor (7-point scale)

HealthPrEd

6.24 (DP)

6.35 (DP)

6.12 (PS, RG, EX)

6.19

6.26 (DP)

HiEd

5.14 (DP)

5.30 (DP)

4.90 (PS, RG, EX, IM)

5.16 (DP)

5.11 (DP)

Techn

4.81 (DP)

5.05 (DP)

4.46 (PS, RG, EX, IM)

4.92 (DP)

4.77 (DP)

MktSize

4.79 (RG, DP, IM, EX)

5.19 (PS, DP)

5.81 (PS, RG, EX, IM)

5.19 (PS, DP)

5.18 (PS, DP)

BusSoph

4.68 (RG)

5.14 (PS, DP)

4.75 (RG)

4.92

4.84

Innov

4.20 (RG)

4.64 (PS)

4.34

4.42

4.42

Perceived location advantage (5-point scale)

Proximity to suppliers

2.21 (DS, EX)

2.72

2.80 (PS)

2.65

2.94 (PS)

Labor costs

2.72

2.75

2.84

2.59

2.52

Material costs

2.29

2.78

2.70

2.51

2.48

Skills & know-how

3.40 (RG)

3.97 (PS, DP, EX)

3.28 (RG)

3.46

3.43 (RG)

Transport & logistics

3.14

3.46

3.37

3.18

3.21

Proximity to customer

2.51 (DP, IM)

2.88

3.12 (PS, EX)

3.41 (PS, EX)

2.33 (DP, IM)

Competitive priorities (5-point scale)

Price

3.78

3.70

3.84

4.16 (EX)

3.64 (IM)

Product quality

4.06

4.32

4.23

4.27

4.28

Conformance

4.10

4.09

4.31

4.05

4.16

Reliable delivery

3.88

4.10

4.18

4.06

3.95

Fast delivery

3.51 (DP, EX)

3.67

4.04 (PS)

3.81

3.95 (PS)

Customer service

3.53 (DP, EX)

3.97

3.94 (PS)

3.81

3.96 (PS)

Wide product range

3.20

3.28

3.37

3.15

3.34

New product introd.

2.79

3.15

3.17

3.14

3.07

Innovativeness

3.22

3.72

3.51

3.62

3.45

Order size flexibility

3.16

3.00

3.47

3.41

3.28

Environment

2.98

3.17

3.28

3.11

3.16

CSR

2.64 (DP)

3.15

3.20 (PS)

2.86

2.97

Operations: production process type (one of a kind, batch, mass—% of total)

One of a kind

28.78

24.12

29.36

17.04

32.10

Batch production

51.12

45.30

45.44

55.26

52.61

Mass production

20.10

30.58

25.21

27.70

15.30

Operations: order policy (Engineered-to-order, manufactured-to-order, assembled-to-order, make-to-stock—% of total)

ETO

13.27

9.79

17.55

11.19

21.47

MTO

46.29

35.86

49.67

43.67

41.87

ATO

25.45

29.54

16.60

18.25

20.43

MTS

15.00

24.81

16.18

26.92

16.23

Supply chain: purchasing (raw materials, parts/components, subassemblies/systems—% of total)

Raw materials

51.37

40.02 (DP)

55.25 (RG)

51.61

53.86

Parts/components

38.27

39.53

31.50

35.90

34.29

Subassemblies/systems

10.36 (RG)

20.45 (PS, DP, EX)

13.25 (RG)

12.49

11.86 (RG)

Supply chain: selling (to subassembly producers, finished product manufacturers, distributors, end users—% of total)

Subassembly producer

14.14

17.42

16.91

14.81

13.62

Finished products m.

38.32

30.83

30.16

32.00

28.17

Distributors

25.83

27.14

20.96

31.26

32.97

End users

21.71

24.61

31.97

21.93

25.24

Supply chain: improvement programs (implementation effort in the last 3 years, 5-point scale)

Supply strategy

2.91

3.25

2.99

2.94

2.97

Supplier development

2.95

3.46 (EX)

3.10

3.06

2.88 (RG)

Coord. with suppliers

2.65 (RG)

3.34 (PS, EX)

2.90

2.85

2.76 (RG)

Distribution strategy

2.22

2.66

2.58

2.66

2.29

Coord. with customers

2.51

2.85

2.84

2.94

2.62

Environmental impact

2.27

2.69

2.67

2.56

2.37

Risk management

2.58 (RG)

3.15 (PS, EX)

2.83

2.89

2.57 (RG)

  1. Bold—highest value in row, Italic—lowest value in row, (PS, RG, DP, IM, EX) —significant difference (p < 0.05) between the category in the column, and the ones in parentheses (ANOVA, Scheffe post hoc test)

Appendix 2: Questionnaire Items

2.1 Domestic Sourcing, Manufacturing and Selling Ratios

G1. Where do you source the raw materials, parts/components, subassemblies/systems and manufacture and sell the finished products/services resulting from your plant’s dominant activity (answers should add up to 100 %):

 

Sourcing

Manufacturing1

Sales

This country

_______ %

_______ %

_______ %

Within your continent

_______ %

_______ %

_______ %

Outside your continent

_______ %

_______ %

_______ %

Total

100 %

100 %

100 %

  1. 1In case there are other plants in your company involved in your plant’s dominant activity

2.2 Location Advantages

B7. What is the importance of the following advantages provided by the location of the plant?

 

None

 

High

Proximity to suppliers

1

2

3

4

5

Availability of low cost labor

1

2

3

4

5

Availability of low cost material and/or energy sources

1

2

3

4

5

Availability of skills and know-how

1

2

3

4

5

Access to transportation & logistic facilities

1

2

3

4

5

Proximity to customers

1

2

3

4

5

2.3 Competitive Priorities

A4. Consider the importance of the following attributes to win orders from your major customers

 

Importance in the last 3 years

 

Not important

Very important

Lower selling prices

1

2

3

4

5

Superior product design and quality

1

2

3

4

5

Superior conformance to customer specifications

1

2

3

4

5

More dependable deliveries

1

2

3

4

5

Faster deliveries

1

2

3

4

5

Superior customer service (after-sales and/or technical support)

1

2

3

4

5

Wider product range

1

2

3

4

5

Offer new products more frequently

1

2

3

4

5

Offer products that are more innovative

1

2

3

4

5

Greater order size flexibility

1

2

3

4

5

Environmentally sound products and processes

1

2

3

4

5

Committed social responsibility

1

2

3

4

5

2.4 Operations—Production Process Type and Order Policy

B8. To what extent do you use the following process types (% of volume)? (percentages should add up to 100 %):

One of a kind production

Batch production

Mass production

Total

__________ %

__________ %

__________ %

100 %

B9. What proportion of your customer orders are (percentages should add up to 100 %):

Designed/engineered to order

Manufactured to order

Assembled to order

Produced to stock

Total

__________ %

__________ %

__________ %

__________ %

100 %

2.5 Supply Chain—Purchasing and Selling

SC1. What is the percentage of spending on the following categories of goods purchased (your answers should add up to 100 %)?

Raw materials

Parts/components

Subassemblies/systems

Total

_________ %

_________ %

_________ %

100 %

SC4. Indicate the percentage of sales in the following categories of customers (your answers should add up to 100 %):

Manufacturers of subassemblies

Manufacturers of finished products

Wholesalers/distributors

End users

Total

_________ %

_________ %

_________ %

_________ %

100 %

2.6 Supply Chain—Improvement Programs

SC9. Indicate the effort put into implementing the following action programs in the last 3 years

 

Effort in the last 3 years

None

High

Rethinking and restructuring supply strategy and the organization and management of supplier portfolio through e.g. tiered networks, bundled outsourcing, and supply base reduction

1

2

3

4

5

Implementing supplier development and vendor rating programs

1

2

3

4

5

Increasing the level of coordination of planning decisions and flow of goods with suppliers including dedicated investments (e.g. information systems, dedicated capacity/tools/equipment, dedicated workforce)

1

2

3

4

5

Rethinking and restructuring distribution strategy in order to change the level of intermediation (e.g. using direct selling, demand aggregators, multi-echelon chains)

1

2

3

4

5

Increasing the level of coordination of planning decisions and flow of goods with customers including dedicated investments (e.g. information systems, dedicated capacity/tools/equipment, dedicated workforce)

1

2

3

4

5

Improving the environmental impact generated by transportation of materials/products and outsourcing of process steps

1

2

3

4

5

Implementing supply chain risk management practices including early warning system, effective contingency programs for possible supply chain disruptions

1

2

3

4

5

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Demeter, K., Szász, L. (2014). Exploring Operations of Manufacturing Plant Types in International Context. In: Johansen, J., Farooq, S., Cheng, Y. (eds) International Operations Networks. Springer, London. https://doi.org/10.1007/978-1-4471-5646-8_3

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  • DOI: https://doi.org/10.1007/978-1-4471-5646-8_3

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