Уч.пос. Кузякин А.С., Попова Т.Г. Английский язык для управления цепями поставок

3. Can you think of an example of a company that has faced serious supply-chain disruption as a result of an unexpected disaster? Think about these questions:

•How well prepared was the company for this type of event?

•How did they discover the problem? / How quickly did they react?

•What action did they take to recover from the disruption?

(You may think of Fukushima nuclear accident, outbreak of Ebola in West African countries, the war in the East of Ukrain, etc)

Unit 7 Developments in global manufacturing and sourcing

Is global manufacturing losing its attraction?

by Arnoud De Meyer and Matthias Holweg

The argument for global sourcing and taking advantage of the lower cost of labour for manufacturing in Eastern Europe and the Bric countries – Brazil, Russia, India, China - was mainly based on the cost of transport, which decreased by a third between I960 and 2000.

However, in our research and in others’ research, we found that none of the companies that had gone global achieved all the cost efficiencies they had predicted. Some even found that ‘offshoring’ operations was more expensive than sourcing or manufacturing locally, and so have returned to their home country.

The cost of logistics may be a lot more important than originally estimated. Proctor & Gamble management, for example, reported that the company’s storage and transport costs were higher than the operating expenses of its factories abroad. Other companies found that the product cost was much lower, but the price for lower costs was often reduced quality.

Companies make two common mistakes when deciding to source components from abroad. First, they only tend to calculate the ‘static’ cost of a supply chain. That is basically the cost per unit ex-supplier factory and the transport cost together. With global sourcing, the lower labour cost reduces the unit cost of the product. This generally offsets the higher transport cost of bringing it into the home market from China. Often companies ignore or underestimate other costs. An example of this is the additional cost for buffer stocks, as a long supply chain is less able to respond quickly to changes in demand.

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Second, companies often assume that costs remain stable and do not consider what we call ‘dynamic’ costs. The belief is that countries in Eastern Europe, China and India have an unlimited supply of low-cost labour. Although this is certainly still true for China and India, the reality is that these workers are not always trained to the necessary level. Finding the right staff can be a challenge.

Car manufacturers relocating to Slovakia in Eastern Europe, for example, will find that the supply of trained workers has been almost exhausted and that wage inflation is rising fast as manufacturers compete for labour. In India, trained staff will change jobs several times per year if they see the chance of higher salaries elsewhere, and staff turnover of 20% has become normal. In China, a trained middle manager in the car sector, fluent in English and Mandarin, can earn more in Shanghai than in Wolfsburg or Birmingham.

Our research suggests that manufacturing will increasingly come back to where the markets are. ‘Backshoring’, as we call it, does not mean that all manufacturing will come back. The emerging countries are also very large markets, and local production will still serve local consumption there. In the future, companies will need to think about having networks of smaller flexible plants that can produce customised products for local markets.

Ex. 1 Translate the article above using the vocabulary and comments

Vocabulary						Comments
argument for – довод в пользу
global	sourcing		– осуществление			global adj. affecting or involving the whole
поставок со всего мира						world
						sourcing n. the activity of getting supplies of
						goods, especially ones that are used to make
						other goods
to	take	advantage		of	–
воспользоваться
cost of labour – стоимость трудовых
ресурсов
cost of transport – затраты на						transport n. a system for carrying passengers
транспорт						or goods from one place to another
to decrease by a third – уменьшиться
на треть
to go global – выйти на мировой
уровень
cost effectiveness			– эффективность
затрат, финансовая эффективность
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to predict – предсказывать
“offshoring” – осуществление всех				offshore v. If a company offshores jobs or an
или части операций компании за				activity, it moves them to a foreign country
пределами страны				where costs are lower
sourcing locally – поиск местных
поставщиков
to	estimate	originally	–
первоначально предполагать
storage and transport costs – расходы
на хранение и транспортировку
operating		expenses	–	operate v. If a business, system,	etc.
эксплуатационные (или текущие)				operates in or from a particular place, it is
расходы				based there or offers goods or services from
				there
product	cost	– себестоимость
продукции
price – цена
reduced quality – худшее качество
to tend to – иметь склонность к,
стремиться
to calculate – рассчитывать
static cost of a supply chain –				static adj. not moving, changing or
неизменная		стоимость	цепи	developing
поставок
cost per unit – стоимость за единицу
товара
cost ex-supplier factory – стоимость				ex-supplier factory adj. An ex-supplier
при отпуске с завода поставщика				factory price is one where the supplier makes
				goods available to the buyer at the supplier’s
				factory, and the buyer is responsible for
				paying for the transport of the goods to where
				they are needed
to offset – компенсировать				offset v. to balance the effect of something,
				with the result that there is no real change or
				difference
to ignore – не придавать значения
to underestimate – недооценивать
buffer stocks – резервные запасы				buffer stocks n. pl. an extra quantity of
				goods that is kept in order to protect against
				possible interruptions to supplies
to respond to changes in demand –
откликаться на изменения в спросе
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to assume – предполагать
dynamic costs – изменяющиеся,
растущие затраты
unlimited supply – неограниченный
запас
low-cost labour – дешевые трудовые								labour n. all the people who work for the
ресурсы								company or in a country
trained to the necessary level –
достаточно хорошо обученный
the right staff – персонал нужной
квалификации
challenge – трудно-разрешимая
задача
to		relocate	–			переносить		relocate v. If a company relocates or is
производство								relocated, it moves to a different place
trained			workers				–
квалифицированные работники
wage		inflation		–		инфляция,		wage inflation n. increase in people’s pay
вызванная ростом						заработной
платы
to	compete		for			labour	–	compete v. When one company or country
конкурировать			за			трудовые		competes with another, it tries to get people
ресурсы								to buy its goods or services rather than those
								available from another company or country
salary – оклад
staff turnover – текучесть рабочей								turnover n. rate at which workers leave an
силы								organization and are replaced by others
trained		middle			manager		–
квалифицированный						менеджер
среднего звена
fluent in Mandarin – бегло
говорящий			на		стандартном
китайском языке
increasingly – все больше и больше
manufacturing – производство
“backshoring”			–		возвращение
производства			в страну,			из которой
оно ушло по каким-либо причинам
emerging			countries				–
развивающиеся страны
local		consumption			–	местное		consumption n. the amount of goods,
потребление								services, energy or natural materials used in a
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		particular period of time
		local adj. connected with a particular area,
		especially the area where something is
		produces
network	- сеть
flexible plant – завод с гибким,		plant n. a factory or building where an
легко	переналаживаемым	industrial process takes place or a product is
производством		made
customized product – продукт,		customized adj. If something is customized
модифицированный по требованию		for a customer, it is designed, built, etc.
заказчика		especially for that customer, making it
		different to other things of the same kind

Ex. 2 Which of the following statements are true and which are false?

1.The advantage for global sourcing in the last quarter of the 20th century T/F was mainly based on the low cost of labour in Eastern Europe and Asia.

2.All countries that had gone global achieved at least some cost efficiency. T/F

3.Offshoring operations may be as expensive as sourcing and T/F manufacturing locally.

4.	Offshore operating expenses of Proctor & Gamble were higher than their		T/F
local logistics costs.
5.	Lower product cost in offshore companies often stood for lower quality.		T/F
6.	The static cost is cost per unit ex-supplier factory plus transport cost		T/F
minus cost for buffer stocks.
7.	Dynamic costs do not take into account the growing labour cost.		T/F
8.	Finding the trained staff in India and China is quite easy.		T/F
9.	In India working people tend to change jobs several times a year.		T/F
10.		Staff turnover has nothing to do with dynamic costs.	T/F

11.A well trained industrial middle manager in Shanghai expects to T/F earn more than his partner with equal status in Birmingham.

12.Offshore companies must become more flexible to be able to T/F satisfy the local consumers.

Ex. 3 Translate from Russian into English

1 Логистические расходы могут оказаться более значительными, чем первоначально предполагается.

2.Более высокие транспортные расходы компенсируются более низкой стоимостью рабочей силы

3.Компании часто не учитывают или недооценивают прочие расходы

4.Дешевые трудовые ресурсы часто не имеют достаточной квалификации, хотя их резерв в Китае и Индии пока еще не ограничен.

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5. Развивающиеся страны также являются рынками с большим потенциальным спросом на адаптированные товары.

Ex. 4 Match the words and phrases from the article (1-10) with their meanings

(a-j).
1	labour		a) countries with less-developed economies that		are
				expected to experience
			b) lots of growth
2	cost		c) the cost of an item at the supplier's factory,		not
	efficiencies			including delivery charges
3	offshoring		d) the rate at which people leave an organisation and
				are replaced by others
4	expenses		e)	all the people available to work in a country
5	ex-supplier		f)	a general rise in rates of pay, e.g. in a particular
	factory			country
6	unit cost		g) extra quantities of stock that are kept in case they
				are needed
7	buffer stocks		h) when a company moves part of its operations to
				another, often cheaper country
8	wage inflation		i)	ways of saving money or wasting less money
9	staff turnover		j)	price per item
10 emerging			k) money a company spends in order to operate
	countries
Ex. 5		Match the adjectives (1-6) with the nouns (a-f) to make word
partnerships from the article.
1	global			a) labour
2	operating			b) production/markets
3	low-cost			c) expenses
4	trained			d) products
5	local			e) sourcing
6	customised			f) staff/workers

What are at least three nouns in the article that can go before the noun cost, e.g. production.

Think of three more noun-noun word partnerships with cost.

Ex. 6 Use words and phrases from Exercises 4 and 5 to complete these sentences.

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1.Many companies are finding that g______ s_________ and manufacturing no longer make sense. One of the problems is high о_______ e_________. Another problem is increasing levels of w______ i________.

2.Even in e________ с________ with l________-c______ l______, like China and India, there are signs that there are shortages of t_______ w_________ with the right skills.

3.In the future, manufacturers may have smaller production units that will produce с_______ p______ to meet the needs of the l________ m__________.

4.In order to ensure that a business always has the correct amount of stock, most companies hold b_______ s_________.

5.Manufacturers are constantly looking for ways to make their operations more efficient and achieve с_____ e________ in their supply chains.

Ex. 7 Find words and phrases in the article which have a similar meaning.

1calculated approximately: e_____________

2usually do something: t_______

3balances: o__________

4do not to consider: i___________

5make an estimate that is too low: u_____________

6believe something is true: a_____________

7stay the same: r______ _________

8used up: e___________

Ex. 8 Find these two terms in the article. Then choose the best explanation for each one (a-d).

1	‘static costs	a) costs that are rising all the time
2	‘dynamic’	b) costs that are predictable and don't change a tot
	costs	c) costs that are fixed at a low price
		d) costs that vary and are continuously changing

Ex. 9 Complete the chart with derivatives.

noun:	activity/	verb	adjective
organisation
1 ________________		to	offshored	(production/
		__________ 2	manufacturing)
operating/__________		to operate	4 __________ (costs/strategy)
_ 3
5 __________		to _________	sourced
		6	(components/products/services)
			_________ 7 (decision/strategy)
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8__________	/	to__________		manufacturing
manufacture		__ 9		(plant/industry)
				10	_________
				(goods/products)
Ex. 10	Listen	to the dialogue	‘Hiring Business		Consultants’ and

commentaries coming after it. Give English definitions to the words and expressions in bold print. Learn the dialogue by heart and dramatize it with another student in class.

Erica: So your suggestion is to hire outside consultants to handle the extra work associated with the expansion.

Stefan: I think there are a lot of benefits: we get someone with the right expertise quickly, we can use him or her as needed, and we can save on employment taxes and benefits. What’s not to like?

Erica: I’m just not sure that’s the right move right now.

Stefan: To me, it’s a no-brainer. We call the shots. If we don’t like the consultant’s work, then we can terminate our relationship at any time.

Erica: Yes, but that also means that the consultant won’t feel any company loyalty and could quit working with us whenever he or she wanted to, leaving us in a lurch.

Stefan: That’s true, but that’s also true of any employee. Company loyalty is a thing of the past. I really think we should move ahead.

Erica: Well, I think we should take it one step at a time. Start with contracting consultants for smaller projects and see how they do before we have them work on this big one.

Stefan: Okay, I can live with that, as long as we don’t drag our feet in getting people started on the big project.

Erica: Don’t worry. If I drag my feet, I know you’ll tow me along.

(From ESL Podcast 588)

Ex.11. Questions for discussion

1. What are your predictions for the next five years for one of the following?

the offshoring of manufacturing to low-cost countries

the global sourcing of components, products and services

the organisation of manufacturing

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2.If the trend for ‘backshoring’ manufacturing nearer to home markets continues, what are the implications for developing countries? Which ones will do better? Which ones will do worse?

3.Based on the information in the article and your own experience, what is a checklist of points that companies need to consider when evaluating the business case for sourcing components from low-cost countries, far from the home market?

Unit 8 Outsourcing production to China

Foreign makers find advantages on home ground

by Peter Marsh

Nik Seidenader, Managing Director of a German maker of inspection machines for the pharmaceuticals industry, thought about joining the rush of manufacturers to China last year, but decided against it. In India, Vikas Goel, Chairman of Esys, a computer company, decided to locate his main plant in Singapore.

Behind the two men’s strategic choices lies an important change affecting global manufacturing. Despite China's status as factory to the world, foreign companies are starting to think harder about whether to set up operations there. An awareness is growing that longer-established industrialised regions still have plenty to offer manufacturers, in spite of their higher labour costs.

‘Although China will continue to be a strong competitor for many kinds of manufacturing investment, it is fair to say companies are re-evaluating their policies on investing there,’ says Hal Sirkin, a manufacturing expert from the Boston Consulting Group.

China still has a strong appeal for manufacturers. Not only does it offer an expanding market of 1bn-plus people, it is now also the world’s third biggest manufacturer after the US and Japan. But there is increasing concern about the pitfalls of setting up operating plants in China.

First, costs have generally risen, including labour costs and freight charges. Although labour in China may still remain cheap, that is not always the most important factor in a business's calculations. For Mr Goel, for instance, it was not important that Singapore’s hourly labour charges are two-and-a-half times higher than China's: costs for labour in computer assembly account for less than two per cent of production costs.

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Operating in China’s political system - with power shared among many provincial, state-owned organisations often competing with one another and with Beijing - can sometimes be a problem. Johnson Controls, the US car-parts company, had to set up five joint ventures with different state-owned companies - rather than the single operation the company would have liked - because it could not reach agreement with government officials in the different areas of the country.

Finally, the main industrialised countries are rediscovering their competitive edge. Jim Womack, President of the Lean Enterprise Institute, says increasing numbers of companies make products whose specifications change frequently to meet shifts in demand. If factories are too far away from customers, it can be hard to react quickly to such changes. Tim Powers, Chief Executive of Hubbell, a US electrical products manufacturer that sells mainly in North America, says: ‘Of our production, 40 per cent is customised. China is just too far away to make it useful for us as a manufacturing centre.’

The best approach for many companies will be a ‘hybridised’ strategy. This means splitting production according to factors such as technical sophistication and closeness to markets - and choosing the location that makes most sense in each case. In some cases, China will be suitable; in others, it will not.

Ex. 1 Translate the article above using the vocabulary and comments

Vocabulary					Comments
on home ground – на родной земле
Managing	director -	управляющий
директор
German	maker	–	немецкий
производитель
Inspection	machines	-	контрольные
аппараты
pharmaceuticals		industry		–
фармацевтическая
промышленность
rush of manufacturers to China –
наплыв производителей в Китай
to decide against smth – принять
решение не делать чего-либо
Chairman (of a board of directors) -
председатель (совета			директоров
предприятия)
to locate in –разместить(ся) в					locate v. to be based in a particular place
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