In September 2010 Suresh Krishna, vice president of operations and integration at Polaris Industries Inc., a manufacturer of all-terrain vehicles, Side-by-Sides, and snowmobiles, needed to recommend a location for a new plant to manufacture the company's Side-by-Side vehicles.
The economic slowdown in the United States had put considerable pressure on Polaris's profits, so the company was considering whether it should follow the lead of other manufacturers and open a facility in a country with lower labor costs. China and Mexico were shortlisted as possible locations for the new factory, which would be the first Polaris manufacturing facility located outside the Midwestern United States. By the end of the year Krishna needed to recommend to the board whether Polaris should build a new plant abroad (near-shored in Mexico or off-shored in China) or continue to manufacture in its American facilities.
Evaluate tradeoffs between different geographic locations when establishing a manufacturing facility (off-shoring, near-shoring, and on-shoring)
Run a sensitivity analysis on total cost
Assess the impact of transportation costs, exchange rates, labor cost rates, lead times, and other assumptions on total costs
Identify qualitative factors to be considered when deciding between non-U.S. facility locations, transportation time variability, consumer perceptions, and cultural differences
