https://www.scribd.

com/presentation/421302187/SCM-Group-2-CaseSolution

In summary, for the new order, Fuyao Glass America should manufacture the
product in its Ohio operations.
This decision is based on factors such as cost considerations, proximity to the
Canadian market, existing capabilities of the Ohio plant, and potential for future
business growth. By choosing Ohio operations, Fuyao can maximize efficiency
and cost-effectiveness, while also positioning
themselves strategically for potential future opportunities. The explanation for this
recommendation is as follows: Firstly, the bill of materials costs in Exhibit 16
indicate that the percentages for each category are different between the Tianjin
and Ohio factories due to
various factors. These factors include differences in labor costs, material
availability, production capabilities, and technological advancements. Ohio
operations benefit from lower labor costs compared to Tianjin, which helps to
reduce overall production costs. Secondly, in deciding
which plant should produce the order, factors such as proximity to
the Canadian market and existing capabilities are crucial. Ohio operations are
geographically closer to the Canadian market, resulting in lower shipping costs and
faster delivery times. Additionally, the Ohio plant has
already demonstrated its ability to produce high-quality products and meet
demanding customer requirements. Utilizing the existing capabilities of the Ohio
plant ensures efficient production and reduces the risk associated with establishing
a new production facility. Moreover,
it may make more sense to ship automotive glass long distances compared to float
glass sheets due to the characteristics and requirements of each product.
Automotive glass is more specialized and requires specific expertise, which the
Ohio plant has already developed.
On the other hand, float glass sheets are larger, more fragile, and less specialized,
making transportation over long distances more challenging and cost. Considering
the perspectives of both the Ohio and Tianjin factory managers, if Ohio wants to
become the source for the Canadian
factory, they should focus on showcasing their capabilities, cost-effectiveness, and
proximity advantages. They should emphasize their ability to meet customer
requirements promptly and establish strong relationships with Canadian customers.
Similarly, the Tianjin factory
manager should highlight their strengths, such as technological advancements,
quality control, and potential cost improvements to become the source for the
Canadian factory. Wen Li should recommend to the chairman that Fuyao
manufactures the new order in the Ohio
operations. This decision aligns with the company's strategic objectives, reduces
costs, leverages existing capabilities, and positions Fuyao for potential future
growth opportunities. By choosing the Ohio plant, Fuyao can maintain quality
standards, streamline operations, and establish a strong market presence in Canada.

Executive summary

The case study "Fuyao Glass America: Sourcing Decision" explores Fuyao Glass
America's decision to establish a manufacturing facility in the United States and
the sourcing choices they made for their production equipment. Their decision to
source locally while importing critical components from China was based on a
thorough evaluation of cost, quality, lead time, and flexibility. This strategic
approach allowed them to achieve a balance between cost savings and operational
efficiency.
The case study "Fuyao Glass America: Sourcing Decision" explores the decision-
making process of Fuyao Glass America, a subsidiary of a
Chinese automotive glass manufacturer, regarding the sourcing of their production
equipment. Here is an executive summary of the case study along with supporting
data:

1) Fuyao Glass America, faced with increasing competition and rising costs in
China, decided to establish a manufacturing facility in the United States to serve
the North American market.

2) The company had to make a critical decision regarding the sourcing of its
production equipment. They had to choose between importing the equipment from
China or sourcing it locally.

3) The main considerations in the sourcing decision were cost, quality, lead time,
and flexibility.
4) Importing the equipment from China offered cost advantages, as Chinese
suppliers could offer lower prices due to economies of scale and lower labor costs.
However, importing would result in longer lead times and potential logistical
challenges.

5) On the other hand, sourcing locally would offer shorter lead times and easier
access to technical support. However, local suppliers had higher costs compared to
their Chinese counterparts.

6) Fuyao Glass America decided to source the majority of its production

equipment locally, while importing some critical components from China. This
hybrid approach allowed them to balance cost savings and faster lead times.

7) The data supporting this decision includes cost comparisons between Chinese
and local suppliers, lead time analysis, and feedback from industry experts.

8) By sourcing locally, Fuyao Glass America aimed to establish a strong presence

in the U.S. market, reduce the risk of disruptions due to trade tensions, and
enhance their ability to serve their customers more effectively.

9) The case study highlights the importance of carefully evaluating various factors
when making sourcing decisions and the need for a strategic approach that
considers both cost and operational efficiency.