Supply chain design and site selection for the expansion of international manufacturing capacity

Abstract

The research conducted for this thesis was performed at "Company X", a U.S.-based engineered goods manufacturer. This project focused on Company X's overall manufacturing strategy, with an emphasis on how global expansion of manufacturing can allow the company to achieve greater international sales growth. Company X's current strategy for supplying non-U.S. markets has largely relied on U.S. manufacturing and assembly, followed by exporting of finished goods. Due to a desire to increase international sales and a need to address tariff and non-tariff barriers in certain key markets, Company X must now evaluate opportunities for in-country manufacturing and assembly in its target markets. This project seeks to evaluate the high-level financial and operational risks of expanding Company X's current manufacturing operations through the use of three types of analysis: 1) A single-site cost analysis of material and inventory flow to an international site; 2) A global manufacturing capacity plan to serve regional markets; and, 3) An evaluation of qualitative risk factors affecting potential site selection. The single-site model involves the development of a simplified cost model. This model demonstrates the cost-competitiveness of each supply chain design alternative for serving a single international site, including the sensitivity of the model to changes in key cost drivers. The global model builds on the results of the single-site model and evaluates the opportunities for international sites to serve both in-country and regional demand for the top markets Company X is targeting.

(cont.) The site selection model addresses the operational and socio-political risks associated with investing in operations in new markets. The results of this analysis provide Company X with additional insights into which markets represent the best and lowest-risk opportunities for operational growth in the near future. Recommendations provided in this thesis will be used by Company X to expand and develop their new global manufacturing strategy and to achieve its goal of rapid international sales growth.