Question
We have a client who is looking at installing a factory in Mexico that will manufacture components for her smart phone business. In general, her
We have a client who is looking at installing a factory in Mexico that will manufacture components for her smart phone business. In general, her decision is based highly on two factors: cheap labour and the cost of the building. She has been quoted 3 million dollars less to build the factory in Mexico City than in Okazaki Japan where the device will be marketed and sold. In her mind the cost savings in the building will far outweigh the additional costs of shipping the product to Japan. She may or may not be right but she's using very baseline costs to make her decision and we as Global Sourcers know that's a dangerous mindset. So, let's put together a presentation that is two-fold......let's first talk about Total Cost of Ownership to help her consider other costs she may not be considering. And let's follow that up with an evaluation of each area using the EPIC tool to see if there are any other qualitative or quantitative reasons she may want to consider. As well maybe come up with some reasons why the Mexico City building is so cheap to build? It just can't be cheap labour, can it?
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