Definition of Globalization

Definition of Globalization

A definition that is given for the term “Globalization” is demand seeking the most cost efficient resource.

I believe that cost efficient does not necessarily mean the lowest $$ purchase price. In addition to the obvious other costs of shipping expense, importation expense, handling … are the difficult to measure; product quality consistency, delivery consistency, engineering support.

Product Quality Consistency: As an OEM integrator, you would like every component product that is provided to be of equal to or better than, the First Article samples provided for qualification. Anything less impacts your integration manufacturing process, decreasing yields, adding rework expenses. Incoming inspection is the traditional approach to reducing the impact. The better approach which controls WIP (Work In Process) levels and Quality Control costs is to select suppliers dedicated to providing high quality products. (Note that I do not use the concept Quality Assurance. I believe Quality Assurance is total project activity, from the beginning engineering design, to vendor audits, to integration manufacturing audits).

Delivery Consistency: Any OEM integrator that competes in a competitive market employs Just-In-Time materials management principles. WIP inventory represents cash investment, cash costs $$ money. Suppliers must be selected that;
1) Have the capability to be integrated into your materials requirements planning system and have their own systems in place to assure the timely reflection into their materials requirements planning system of all your requirements changes. Give up on the idea of a “Firm Production Schedule” that covers full leadtime. The existence of these schedules are a myth. The only reasonably firm schedule is booked customer orders.
2) Have the quality systems in place to assure consistent yields.

Engineering Support: The manufacturing engineering, industrial engineering, quality engineering resource must be available to handle and resolve the day to day process issues. Nothing continues to work forever without some attention!

In summary, cost efficient does not necessarily mean cheapest.

-- Timothy Chen