Parameters that Determine the Critical Point of a Product

Abstract: The increasing global competition and increasing customer demands have caused many manufacturing companies operating in a high cost environment to consider locating to low cost countries. However, it is not always the best decision to locate the entire business. Some choose to locate the production to low cost countries located intercontinental while the others is content with having production sites closer. There are numerous factors that determine where a company decides to locate, a common factor is reducing cost. But the cost is directly affected by the production process and what product that it is produced into the production process. If the production process is fixed in to different locations it is important to understand what parameters affects the change of location. The purpose is to investigate the parameters that decide the critical point of when a semi-finished product should be transported from one production location to another. A case study was made at an industrial company to meet the purpose to investigate the parameters that decide the critical point when a semi-finished product should be transported from one production location to another. To meet the purpose the data collection consisted of interviewing and reviewing documents as research method to gather information in order to answer the 2 research questions. The results show that different parameters needs to be considered when deciding the critical point of the product. This includes new product development, production system with the management approach, product architecture and performance objectives. The results show that these are the most essential parameters to work with before deciding where the critical point in the production process is. In addition, analysis of the results concluded that solving the communication barriers, production measurements and project stages in the product development is the main focus before making the final decision. Keywords Production process, critical point, performance objectives, NPD, product architecture, and production localization.