ABSTRACT
Whether you are in the business of making a product yourself or contracting production out to a domestic contract manufacturer (CM) or outsourcing production to another country, the supply chain construction guidelines in this chapter are relevant. The factory for a supply chain network can be located almost anywhere. But the factory organization and geographical location selected to manufacture the product are critical to achieving your price/landed cost, product flexibility, and delivery reliability goals. On the one hand, a factory located close to the market may have a noncompetitive labor rate. On the other hand, a factory located in a distant land to be close to raw materials (RMs), cheap labor, or cheap energy may be noncompetitive in international logistics costs and flexibility. Information regarding the bill of materials (BOM), product configurations, forecasts, planning, supplier purchases, invoicing, and customer shipments must flow seamlessly among the trading partners. In this chapter, you learn how to select a factory to best fit your supply chain needs.
