Production Facilities At The United States

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Somerset had to shift their production facilities to China to remain competitive in the United States. Their intentions were to pay lower labor rates and improve the return position. This proved to be a success as they closed the production facilities they had in the U.S. which lowered their average labor costs from $9 to $20 that was paid in the U.S. to the China average labor cost of $2 per day. They were not the only company during that time deciding to outsource to China. This increased their lead times which created a domino effect to other problems which led to bad customer service for which they were known for in the past.
A high lead time is an understatement for this company. This is a pretty big problem that needs to be addressed for it to remain competitive or even open in the U.S. Somerset needs to focus on ways to reduce their lead times which is caused by the duration it takes for a product to be ordered, made and when it’s delivered. Below is a diagram representing the total timeline that it takes to deliver the final product to the customer after they made the order. It will show that worst case scenario it takes 259 days to deliver a product and it takes no less than 149 day to deliver the product. Both numbers are way too long for a customer to wait on their order. Another potential problem is high variability between what the customer wants and what is provided by the company. The high lead times are delaying orders by 40 percent. There are three

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