Ask These Questions Before Choosing a Manufacturing Location

One of the world’s largest automotive glass producers, Fuyao Glass, must decide where to fulfill its upcoming contracts. One option is their U.S.-based factory, where production rates are lower. The other is an older factory in China that produces below the cost target, but also incurs extensive shipping costs and requires a far greater amount of inventory holding. Drawing on his case study, “Fuyao Glass America: Sourcing Decision,” Harvard Business School professor Willy Shih explains how to account for product life cycles and the length of your inventory pipelines when you select a manufacturing location. He also discusses how to assess other possible risks that could cause delays or increase your production costs—like customs delays and labor strikes.