Global Operations And Supply Chain Management

858 Words May 4th, 2016 4 Pages
Global Operations and Supply Chain Management
Competitive Alternatives Survey
A company involved in manufacturing medical devices decides to begin sourcing components internationally. As for now, it operates in the United States and Germany only. So, senior management should assess the relative manufacturing costs worldwide to choose where to source. This decision will be made based on manufacturing costs.
Cities with the Lowest and Highest Manufacturing Costs
The latest Competitive Alternatives survey was published by KPMG in 2016. It is the comparison of more than 100 cities in 10 countries all over the globe. The key finding of the report is that Mexico has the highest relative cost advantage if compared to the United States, and Japan has the lowest (KPMG, 2016). However, the area of interest of this investigation is to determine three cities with the highest and the lowest manufacturing costs for the company’s specific industry – medical devices manufacturing.
The 2016 report specifies that Monterrey and Mexico City in Mexico offer the lowest prices if taking into consideration facility cost (factory rent). The same is true about utility (electricity and natural gas), labor (salaries, statutory plans, etc.), and transportation (surface and air fright) costs. In general, Mexico is an attractive destination for sourcing because manufacturing costs are almost 22 percent lower than in the United States (Medical devices, 2016). The second cheapest country is Canada. In…
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