Kiwi Medical Devices Limited Essay

Total Length: 952 words ( 3 double-spaced pages)

Total Sources: 3

Page 1 of 3

Selecting the best country to locate off-shore manufacturing operations can be a difficult decision owing to the complexities involved in global supply chain operations. The various available options must be carefully evaluated if the desired outcomes are to be successfully achieved. With manufacturing costs in New Zealand on the rise, Kiwi must select a country that offers more competitive costs combined with an acceptable level of risk. Of the four most preferable countries (China, Indonesia, Mexico, and Slovakia), Mexico offers the best location. An important priority for the company as far as reducing its supply chain costs is concerned with locating its manufacturing operations in proximity to its major markets. While headquartered in New Zealand and with strong presence in Asia and Europe, Kiwi's major markets are in North America, which comprises 46% of its overall sales (Fawcett, 2014). Being in North America, Mexico is better compared to the other three countries in terms of not only proximity to the company's major markets, but also costs. Indeed, as explained in the case study, North America offers better costs than New Zealand; and it is much cheaper to transport goods from the North America to Europe than from New Zealand or Europe (Fawcett, 2014). Furthermore, though China and Indonesia offer large markets and more impressive economic indicators compared to Mexico and the relatively small Slovakia, they present market proximity difficulties, more significant cultural differences, greater political risk, and less advanced infrastructural development.

Question 2

It is important for Kiwi to make the right decision with regard to not only the most suitable country, but also the best city for the new manufacturing facility. The company can choose from either a port of entry or an interior city. Each option offers its own merits and demerits. A port of entry provides simpler setup and lesser logistics difficulties, while interior cities offer lower wage rates, a greater and more stable supply of labour, as well as better tax benefits (Fawcett, 2014). Though the advantages of an interior city appear more attractive, a port of entry would be better for the location of the new manufacturing facility given Kiwi's competitive challenge and its strategic goals. From a logistical point of view, it is more prudent to set up a manufacturing facility closer to suppliers (Kalantari, 2013). Though geographically dispersed, Kiwi's suppliers ship products into a port of entry. The company specifically desires to reduce its manufacturing and supply chain costs. Locating the new manufacturing facility at a port of entry is more likely to achieve this objective. Though an interior city may offer abundant labour supply at a lower cost, it would increase supply chain costs….....

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Branch, A. (2009). Global supply chain management and international logistics. New York: Routledge.

Fawcett, S. (2014). Kiwi Medical Devices, Ltd.: Is "right shoring" the right response? In. R. Frankel (Ed.), The definitive guide to supply chain best practices. Upper Saddle River, NJ: Pearson Education, pp. 109.121.

Kalantari, A. (2013). Facility location selection for global manufacturing. Theses and Dissertations. Paper 233.

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