COLLEGE OF ENGINEERING & ARCHITECTURE
UCD SCHOOL OF MECHANICAL & MATERIALS ENGINEERING
Module Code MEEN40790
Module Title Supply Chain Design & Analysis
Module Coordinator Dr. Vincent Hargaden
Student Last Name
Student Firstname
Student Number
Date of Submission 13th October 2022
I declare that the material
contained in this project is
the end result of my own
work and that due
acknowledgment has been
given in the bibliography to
ALL sources, be they printed,
electronic or personal
1
, 1. Introduction
Fuyao Glass is an automotive glass company that has traditionally been based in China. During the last
decades it grew to become one of the leading companies in its sector, supplying glass to companies
like Ford, Honda, BMW, Volkswagen and many others. Traditionally, despite the majority of its clients
being located in America, the glass manufacturing was carried out in China, but lately, due to the
increase in the workers’ salary in the country, producing the glass in China and then sending it overseas
stopped being so profitable, so Fuyao glass also opened some factories in the USA and in other
locations like Russia.
These new factories have a lower production than the older ones. This happened because workers in
the new factories were not as familiar with the processes as the workers in the old factories. However,
it was predicted that the learning curve in the American factories could lead them to a productivity
equal or even higher than the one in the Chinese factories.
The case studied in this report consists on a dilemma that the company had when having to design a
supply chain for a new client located in Ontario, Canada. Fuyao Glass had narrowed the decision to
only two factories that could supply glass to the client.
The first option was the Moraine Factory. Float glass would arrive to this factory from a factory 293
miles away in Mt. Zion. In Moraine, glass would be cut and prepared for the individual client and sent
to the distribution center in Michigan. This site would be advantageous because it is close to the clients
and therefore delays in the supply are more difficult to occur. However, as mentioned, the
productivity is not as high as in Asian factories.
The second option was, in fact, an Asian factory: the Tianjin factory. Here, glass could be manufactured
and sent to the Tianjin port, only 70 km away from the factory. Then, the glass would have to be
transported to Michigan to be delivered to the client. Since there is more distance to cover, and more
countries to go through, delays are more likely from this site. Nonetheless, production costs are lower
(even after considering all the shipping costs) and production capacity is higher.
2. Analysis
The design of supply chains is a key element to determine the feasibility and cost of a project. A great
share of the final cost of most products comes from the added value that distributors provide.
Therefore, it is important to study all the possible choices that are available in the market to determine
which one is the best. This section does that for the case exposed above.
2.1 Sourcing Strategy and Production Location Factors
As it has been explained in section 1, there were two locations that were being considered for this
case, one of them in China and another one in the USA. Fuyao glass is not the first business that has
to decide between these two locations. It is important to say that there is not a country better than
the other. Instead, the best location depends on the context of each operation.
Essentially, the environment in which manufacturers have to survive is ruled by the sentence “faster,
better, cheaper”1. The ideal location will be chosen considering these three aspects.
Starting with the “faster” characteristic, the first thing that has to be determined is the transportation
of the good. The whole journey has to be determined, including hypothetical waiting times at different
ports, typical time travelling, time to cross any borders that have to be crossed and possible
uncertainties. Possible delays have to be evaluated as well as the possible economic consequences
(penalties) suffered by them.
When we talk about the “better” aspect, there are many different factors that will influence on this
one. Human capital and social capital are the firsts that can be mentioned. These two factors have an
influence on supply chain learning. China, having a more collectivist culture is more likely to share
information and knowledge more and in a faster way, which will optimize the productivity of a factory
2
1. Zhiqiang Wang , Tobias Schoenherr, Xiande Zhao, and Shanshan Zhang, (2019). “Intellectual Capital, Supply Chain Learning, and
Adaptability: A Comparative Investigation in China and the United States”
UCD SCHOOL OF MECHANICAL & MATERIALS ENGINEERING
Module Code MEEN40790
Module Title Supply Chain Design & Analysis
Module Coordinator Dr. Vincent Hargaden
Student Last Name
Student Firstname
Student Number
Date of Submission 13th October 2022
I declare that the material
contained in this project is
the end result of my own
work and that due
acknowledgment has been
given in the bibliography to
ALL sources, be they printed,
electronic or personal
1
, 1. Introduction
Fuyao Glass is an automotive glass company that has traditionally been based in China. During the last
decades it grew to become one of the leading companies in its sector, supplying glass to companies
like Ford, Honda, BMW, Volkswagen and many others. Traditionally, despite the majority of its clients
being located in America, the glass manufacturing was carried out in China, but lately, due to the
increase in the workers’ salary in the country, producing the glass in China and then sending it overseas
stopped being so profitable, so Fuyao glass also opened some factories in the USA and in other
locations like Russia.
These new factories have a lower production than the older ones. This happened because workers in
the new factories were not as familiar with the processes as the workers in the old factories. However,
it was predicted that the learning curve in the American factories could lead them to a productivity
equal or even higher than the one in the Chinese factories.
The case studied in this report consists on a dilemma that the company had when having to design a
supply chain for a new client located in Ontario, Canada. Fuyao Glass had narrowed the decision to
only two factories that could supply glass to the client.
The first option was the Moraine Factory. Float glass would arrive to this factory from a factory 293
miles away in Mt. Zion. In Moraine, glass would be cut and prepared for the individual client and sent
to the distribution center in Michigan. This site would be advantageous because it is close to the clients
and therefore delays in the supply are more difficult to occur. However, as mentioned, the
productivity is not as high as in Asian factories.
The second option was, in fact, an Asian factory: the Tianjin factory. Here, glass could be manufactured
and sent to the Tianjin port, only 70 km away from the factory. Then, the glass would have to be
transported to Michigan to be delivered to the client. Since there is more distance to cover, and more
countries to go through, delays are more likely from this site. Nonetheless, production costs are lower
(even after considering all the shipping costs) and production capacity is higher.
2. Analysis
The design of supply chains is a key element to determine the feasibility and cost of a project. A great
share of the final cost of most products comes from the added value that distributors provide.
Therefore, it is important to study all the possible choices that are available in the market to determine
which one is the best. This section does that for the case exposed above.
2.1 Sourcing Strategy and Production Location Factors
As it has been explained in section 1, there were two locations that were being considered for this
case, one of them in China and another one in the USA. Fuyao glass is not the first business that has
to decide between these two locations. It is important to say that there is not a country better than
the other. Instead, the best location depends on the context of each operation.
Essentially, the environment in which manufacturers have to survive is ruled by the sentence “faster,
better, cheaper”1. The ideal location will be chosen considering these three aspects.
Starting with the “faster” characteristic, the first thing that has to be determined is the transportation
of the good. The whole journey has to be determined, including hypothetical waiting times at different
ports, typical time travelling, time to cross any borders that have to be crossed and possible
uncertainties. Possible delays have to be evaluated as well as the possible economic consequences
(penalties) suffered by them.
When we talk about the “better” aspect, there are many different factors that will influence on this
one. Human capital and social capital are the firsts that can be mentioned. These two factors have an
influence on supply chain learning. China, having a more collectivist culture is more likely to share
information and knowledge more and in a faster way, which will optimize the productivity of a factory
2
1. Zhiqiang Wang , Tobias Schoenherr, Xiande Zhao, and Shanshan Zhang, (2019). “Intellectual Capital, Supply Chain Learning, and
Adaptability: A Comparative Investigation in China and the United States”
