International Production and Operations Management (IPOM) – Meaning, Nature and Strategies

Introduction

International production and operations management deals with production of goods and services in international locations and markets. It involves management process which has to take into consideration local production market (labor and capital) and international customer requirements.

Nature of IPOM

The foundation for international production and operations is no different to domestic production and operations management. But there are certain aspects which make international exposure a challenge for an organization.

1. The very 1st difference is international business environment where not just economics but also international quality standards have to be maintained.

2. The 2nd aspect is the international stint makes the company more aware of its surroundings thus making it more competitive.

As IPOM is dynamic in nature, organization has to design it strategic objectives which cover following points:

• Meeting international quality standards
• Forecasting demand and production design
• Profitability
• Minimum production cost
• Adaptation to modern available technology

Domestic POM and IPOM

Organization has to clearly identify challenges it is likely to face in an international environment. Those challenges can be categorized as follows:

1. Culture: Domestic POM has to content with homogenous culture where as IPOM has to content with multi-culture multi-ethnicity scenario.

2. Business Environment: Domestic POM has to consider local economical and social factors where as IPOM has to deal with economical and social factors across geography and countries.

3. Quality Standards: Domestic POM has to look at single local market therefore not much variation in quality standards where as IPOM has to consider different international markets with different quality standard requirements.

4. Pricing: Pricing for Domestic POM may not be a challenge as competition would also operate in the same environment. IPOM has to consider the customer paying capacity which may vary from developed country to developing country.

5. Technology: In domestic environment innovation and usage of technology is much more comparable among competition. For IPOM owing to different quality and pricing requirements investment in technology becomes important.

6. Economies of Scale: Domestic POM has to deal with limited local market, hence limiting scope of economies of scale whereas IPOM has to access to larger market thus providing a change of achieving larger economies of scale.

7. Market Segmentation: Domestic POM is around local market where as IPOM has to developed and diversified market.

8. Usage of resources: Domestic POM has to deal with in-flexibility of moving around of resources within one location while IPOM has advantage of moving around of resources from high cost market to low cost market.

IPOM Strategies

Organization needs to consider the following point while developing IPOM strategies:

1. Production/Factory Location: The choice of location for the production facility depends on its proximity near to the market and cost of production (labor) in that particular environment.

2. Factory design, layout and quality standards: Organization need to standardize design and layout across their production location as to minimize production planning process, provide flexibility in sharing technical knowledge and manpower.

3. External vendor and procurement: Organization needs to finalize the vendors to provide raw material as well important components required to complete the final product. Also procurement schedule has to be finalized as not to hurt production.