Dealing with the Need for Flexibility and Economies of Scope in Global Production Network Design

摘要

The structure of production networks is determined by two key objectives. The first objective lies in the generation of economies of scale which propel the concentration of manufacturing in mass production sites in order to persist in the global market. The second objective is the individualization of products driven by decreasing lot sizes, an unpredictable market demand and growing expectations regarding proximity to the consumer which in turn lead to the need for more flexibility within the production network of companies. The dilemma increases when taking into account that product portfolios are often given due to market requirements, and product architecture is another battlefield of complexity. Today's specific challenge of global production network design therefore is the increasing number of relevant markets and planning objects, which need to be integrated into the planning scope. Within a midrange perspective, companies have just two main options to design or reshape their production network, either through the allocation of products or of investments to the different production sites. Depending on the business and the production process the one or the other option may have stronger effects.