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Article
Publication date: 19 February 2021

Hamid Moradlou, Hendrik Reefke, Heather Skipworth and Samuel Roscoe

This study investigates the impact of geopolitical disruptions on the manufacturing supply chain (SC) location decision of managers in UK multinational firms. The context of study…

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Abstract

Purpose

This study investigates the impact of geopolitical disruptions on the manufacturing supply chain (SC) location decision of managers in UK multinational firms. The context of study is the UK manufacturing sector and its response to the UK's decision to leave the European Union (EU), or Brexit.

Design/methodology/approach

The study adopts an abductive, theory elaboration approach and expands on Dunning's eclectic paradigm of international production. A Delphi study over four iterative rounds is conducted to gather and assess insights into manufacturing SC location issues related to Brexit. The panel consisted of 30 experts and managers from a range of key industries, consultancies, governmental organisations, and academia. The Delphi findings are triangulated using a focus group with 38 participants.

Findings

The findings indicate that the majority of companies planned or have relocated production facilities from the UK to the EU, and distribution centres (DCs) from the EU to the UK. This was because of market-seeking advantages (being close to major centres of demand, ease of access to local and international markets) and efficiency-seeking advantages (costs related to expected delays at ports, tariff and non-tariff barriers). Ownership and internalisation advantages, also suggested by the eclectic paradigm, did not play a role in the location decision.

Originality/value

The study elaborates on the OLI framework by showing that policy-related uncertainty is a primary influencing factor in the manufacturing location decision, outweighing the importance of uncertainty as an influencer of governance mode choices. The authors find that during geopolitical disruptions managers make location decisions in tight time-frames with incomplete and imperfect information, in situations of high perceived uncertainty. The study elaborates on the eclectic paradigm by explaining how managerial cognition and bounded rationality influence the manufacturing location decision-making process.

Details

International Journal of Operations & Production Management, vol. 41 no. 2
Type: Research Article
ISSN: 0144-3577

Keywords

Article
Publication date: 2 December 2020

Gregory Theyel and Kay H. Hofmann

This paper aims to investigate the strategic consequences of manufacturing location decisions, with a focus on understanding the link between collocating manufacturing with other…

Abstract

Purpose

This paper aims to investigate the strategic consequences of manufacturing location decisions, with a focus on understanding the link between collocating manufacturing with other value chain activities, via reshoring or retaining and organizational agility.

Design/methodology/approach

The paper uses qualitative data from 115 interviews with executives from UK high value manufacturing companies to explore the recent phenomenon of reshoring and the strategic effects of manufacturing location.

Findings

The location of manufacturing is operationally and strategically important for multinational companies. The spatial dispersion of manufacturing is determined by firm-specific and external factors, both of which are subject to constant change. The analysis shows that concentrating on manufacturing in their home countries enables firms to increase organizational agility and stimulate innovation. Better integration with and more extensive collaboration between related value chain activities, such as research and development, sales and marketing, leads to higher flexibility, speed and responsiveness to customer requirements. However, under certain conditions, firms also continue to benefit from the known advantages of offshoring.

Originality/value

This research sheds light on possible strategic downsides of global value chains, characterized by dispersed activities and intermitted processes. The results provide evidence that retaining manufacturing or bringing back manufacturing operations to a company’s home country can increase organizational flexibility, speed, adaptability, innovativeness and responsiveness to customer requirements. As these capabilities are critical for long-term survival, especially in dynamic environments, firms need to review their global factory configurations and determine whether the short-term advantages of foreign locations continue to justify offshoring practices.

Details

Multinational Business Review, vol. 29 no. 2
Type: Research Article
ISSN: 1525-383X

Keywords

Article
Publication date: 9 March 2012

Abraham Zhang and George Q. Huang

Rising production costs in coastal China have caused the popularity of the “China plus one” strategy, and the hike in oil prices favors near‐shore outsourcing to reduce…

5143

Abstract

Purpose

Rising production costs in coastal China have caused the popularity of the “China plus one” strategy, and the hike in oil prices favors near‐shore outsourcing to reduce transportation costs. Taking into consideration supply chain strategy, this paper aims to investigate the impacts of these major business environment changes on manufacturing outsourcing in China.

Design/methodology/approach

Considering costs and lead times, a bi‐objective integer programming model is developed to determine optimal supply chain configuration decisions under various business environment scenarios. A case study with a family of footwear products is used to illustrate model application and present detailed analyses.

Findings

Impacts of factors could be non‐intuitive. Partial relocation may be better than relocating all manufacturing steps to lower‐cost regions. Coastal China is still attractive for products with short order lead times, because of its formation of industrial clusters and efficient logistics services.

Research limitations/implications

Only tangible factors including costs and lead times are evaluated; however, they offer valuable insight for the strategic decision of selecting outsourcing locations.

Practical implications

The analyses suggest differentiated outsourcing strategies depending on product and demand characteristics. The trend of moving manufacturing away from China is exaggerated. Coastal China has established industrial clusters and efficient logistics support to enable supply chain responsiveness; while inland China maintains a low cost comparable with competing Asian countries.

Originality/value

Existing studies on the research phenomenon focused on cost factors alone. This paper analyzes lead times as well. The study also introduces the network perspective into the research of offshore manufacturing outsourcing.

Details

Supply Chain Management: An International Journal, vol. 17 no. 2
Type: Research Article
ISSN: 1359-8546

Keywords

Article
Publication date: 25 October 2011

Pichawadee Kittipanya‐ngam, Yongjiang Shi and Mike J. Gregory

The purpose of this paper is to explore the key influential factors and their implications on food supply chain (FSC) location decisions from a Thailand‐based manufacturer's view.

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Abstract

Purpose

The purpose of this paper is to explore the key influential factors and their implications on food supply chain (FSC) location decisions from a Thailand‐based manufacturer's view.

Design/methodology/approach

In total, 21 case studies were conducted with eight Thailand‐based food manufacturers. In each case, key influential factors were observed along with their implications on upstream and downstream FSC location decisions. Data were collected through semi‐structured interviews and documentations. Data reduction and data display in tables were used to help data analysis of the case studies.

Findings

This exploratory research found that, in the food industry, FSC geographical dispersion pattern could be determined by four factors: perishability, value density, economic‐political forces, and technological forces. Technological forces were found as an enabler for FSC geographical dispersion whereas the other three factors could be both barriers and enablers. The implications of these four influential factors drive FSC towards four key patterns of FSC geographical dispersion: local supply chain (SC), supply‐proximity SC, market‐proximity SC, and international SC. Additionally, the strategy of the firm was found to also be an influential factor in determining FSC geographical dispersion.

Research limitations/implications

Despite conducting 21 cases, the findings in this research are based on a relatively small sample, given the large size of the industry. More case evidence from a broader range of food product market and supply items, particularly ones that have significantly different patterns of FSC geographical dispersions would have been insightful. The consideration of additional influential factors such as labour movement between developing countries, currency fluctuations and labour costs, would also enrich the framework as well as improve the quality and validity of the research findings. The different strategies employed by the case companies and their implications on FSC location decisions should also be further investigated along with cases outside Thailand, to provide a more comprehensive view of FSC geographical location decisions.

Practical implications

This paper provides insights how FSC is geographically located in both supply‐side and demand‐side from a manufacturing firm's view. The findings can also provide SC managers and researchers a better understanding of their FSCs.

Originality/value

This research bridges the existing gap in the literature, explaining the geographical dispersion of SC particularly in the food industry where the characteristics are very specific, by exploring the internationalization ability of Thailand‐based FSC and generalizing the key influential factors – perishability (lead time), value density, economic‐political forces, market opportunities, and technological advancements. Four key patterns of FSC internationalization emerged from the case studies.

Details

Benchmarking: An International Journal, vol. 18 no. 6
Type: Research Article
ISSN: 1463-5771

Keywords

Article
Publication date: 1 March 2002

Cem Canel and Sidhartha R. Das

Rapid changes in today’s global markets are forcing businesses to re‐examine and improve the ways they compete. Integration of facility location decisions in global marketing and…

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Abstract

Rapid changes in today’s global markets are forcing businesses to re‐examine and improve the ways they compete. Integration of facility location decisions in global marketing and manufacturing strategies provides an important means for firms to compete in global markets. This paper proposes that manufacturing utility can be related to marketing utility through facility location decisions. Consequently, it presents a mathematical model for global facility location that integrates marketing and manufacturing decisions in a global context. It also presents a four‐stage evolutionary model that can guide managers in making global facility location decisions.

Details

Industrial Management & Data Systems, vol. 102 no. 2
Type: Research Article
ISSN: 0263-5577

Keywords

Open Access
Article
Publication date: 4 September 2020

Laura Macchion and Rosanna Fornasiero

Supply chain (SC) configuration has gained increased acceptance as an important issue when evaluating new customization possibilities and this evidence has contributed to the…

4500

Abstract

Purpose

Supply chain (SC) configuration has gained increased acceptance as an important issue when evaluating new customization possibilities and this evidence has contributed to the strengthening of the debate between global vs local production locations. This work contributes in enrichment of this topic by studying how local or global SC location decisions influence performances by considering a SC point of view, in terms of cost and time, in traditional and customized productions.

Design/methodology/approach

A discrete event simulation approach, based on experimentation through executable configurations, was used to evaluate different SC scenarios for customized as well as traditional products within the footwear industry.

Findings

The results indicated that to identify proper SC locations, existing trade-offs between the time and cost performances should be studied, avoiding the evaluation of a single performance independently and, instead, adopting a complete SC point of view while considering these performances.

Research limitations/implications

This evidence has contributed to the reinforcement of the discussion between far-shore destinations vs near-shore production locations. Further studies are encouraged to adopt the present model, in which addition of other variables such as specific manufacturing competences to differentiate suppliers, both local and global suppliers, or the possibility of realizing special types of product customization required by final consumers can be done.

Practical implications

The paper contributes to the academic and practitioners' debate by proposing a systemic approach to assess SCs’ performances in customized contexts and to compare them to traditional collections. Results indicate that cost and time performance must find a balance that does not necessarily correspond to an exclusively local or global production.

Originality/value

This work contributes to the SC configuration issue by considering the trade-off between efficiency and effectiveness (i.e. SC costs and SC times) for customized productions by reviving and enriching it with an SC perspective in customization contexts.

Details

Journal of Fashion Marketing and Management: An International Journal, vol. 25 no. 2
Type: Research Article
ISSN: 1361-2026

Keywords

Book part
Publication date: 4 August 2017

Bella Belerivana Nujen and Lise Lillebrygfjeld Halse

Global businesses base their sourcing operations and manufacturing decisions primarily on financial principles and metrics. What is often disregarded is the strategic value of…

Abstract

Global businesses base their sourcing operations and manufacturing decisions primarily on financial principles and metrics. What is often disregarded is the strategic value of domestic locations and contextual tacit knowledge. However, recent empirical work on knowledge flows shows that proximity is crucial. The risk of losing knowledge and important competencies developed through generations within companies and value chains needs to be considered when developing a global sourcing strategy. This chapter sheds light on how global shift-backs, through backshoring are seen to affect organizations that are located in a high-cost country. Based on interviews with managers and key personnel within a specific industry, we explore how companies preserve innovative capabilities when considering closing down (captive) offshore centers or when embarking on a backshoring strategy. The implications derived from the case offers valuable insights into how organizational capabilities could be restored when companies bring manufacturing back.

Details

Breaking up the Global Value Chain
Type: Book
ISBN: 978-1-78743-071-6

Keywords

Book part
Publication date: 4 August 2017

Marco Bettiol, Chiara Burlina, Maria Chiarvesio and Eleonora Di Maria

Defined as local manufacturing systems, industrial districts have been recognized as particularly important for the location of firms’ manufacturing activities intertwined with…

Abstract

Defined as local manufacturing systems, industrial districts have been recognized as particularly important for the location of firms’ manufacturing activities intertwined with innovation processes. The debate on the internationalization of production has stressed the low value related to manufacturing within value chain activities (smile framework), emphasizing the need to focus on high value-added activities (R&D or marketing). Following multinational enterprises’ internationalization strategies, also district firms have progressively offshored their production phases in the past years. However, recent studies focused on backshoring have revamped the attention on the domestic control of production for firms’ competitiveness. This chapter explores district firms’ location choices for manufacturing activities between local and global. Based on an empirical analysis of about 260 Italian district firms specialized in mechanics, furniture, and fashion and supported by a case study investigation, our results show that despite district internationalization processes, a non-negligible amount of firms still carry out – in-house or through outsourcing – production activities at district level. Larger firms couple district production and long-term upstream outsourced internationalization activities. The district system confirms its role of pooling specialized competences and product know-how, being decisive for firms’ innovation and responsiveness to national and international markets. Backshoring, instead, is a very limited phenomenon and linked to upgrading strategies.

Details

Breaking up the Global Value Chain
Type: Book
ISBN: 978-1-78743-071-6

Keywords

Article
Publication date: 2 October 2017

Xing Zhou and Holger Kohl

The purpose of this paper is to guide companies in conducting benchmarking studies of their manufacturing processes by viewing across industries, locations and products. In…

Abstract

Purpose

The purpose of this paper is to guide companies in conducting benchmarking studies of their manufacturing processes by viewing across industries, locations and products. In particular, the proposed framework can help corporate decision makers in terms of production footprint and site location studies. The level of benchmarking performance can be measured by evaluating defined benchmarking evaluation profiles.

Design/methodology/approach

This paper develops a tool to operationalize value-added manufacturing processes for benchmarking evaluations. In this context, an object-oriented database structure has been developed for the business areas such as product development, manufacturing and assembly. This paper focuses on manufacturing processes. Furthermore, a framework for applying high-performance benchmarking has been developed and applied in a case study.

Findings

This paper shows that object class-oriented modeling approach can be applied to manufacturing processes. The higher the degree of independence in terms of locations, industry sectors and products, the more powerful thus a higher performance of benchmarking is achieved. The performance level of benchmarking has been defined by proving and demonstrating higher and lower performance levels. The high-performance benchmarking tool has been successfully applied to a production footprint case study.

Originality/value

This paper takes up the superiority of process benchmarking that has been the focus of numerous research papers on benchmarking techniques in the past. The potential of process benchmarking has been enhanced and operationalized as a tool. A classification logic for benchmarking evaluation profiles has been developed and integrated in the overall tool set. The model helps decision makers to configure their benchmarking studies tailored to their strategic entrepreneurial questions and to guide them to achieve a higher benchmarking performance level.

Details

Benchmarking: An International Journal, vol. 24 no. 7
Type: Research Article
ISSN: 1463-5771

Keywords

Article
Publication date: 11 August 2022

Anne Friedrich, Anne Lange and Ralf Elbert

This study extends and refines the current knowledge on emerging supply chain designs (SCDs) for industrial additive manufacturing (AM) and manufacturing firms' rationales in…

Abstract

Purpose

This study extends and refines the current knowledge on emerging supply chain designs (SCDs) for industrial additive manufacturing (AM) and manufacturing firms' rationales in selecting them.

Design/methodology/approach

Following an exploratory research design, a multiple-case study is conducted in the context of industrial AM. It focuses on two key dimensions of SCD, the geographic dispersion and governance structure. Four cohesive AM SCD configurations are characterized and form the basis for exploring the rationales for the SCD decision of manufacturing firms.

Findings

The findings indicate that manufacturing firms' SCD for industrial AM depends on the trade-off between economies of scale in a centralized setting and the market potential from customer proximity realized by decentral AM. Furthermore, the control of suppliers and the reevaluation of manufacturing firms' core competencies guide the governance choice. Many of the identified rationales currently drive manufacturing firms toward in-house AM at a centralized location or distributed AM in a secure, firm-owned network.

Practical implications

The arguments for the AM SCD choices are illustrated. They provide guidance for managers of manufacturing firms when implementing industrial AM.

Originality/value

The study reveals and enhances the understanding of why the extant academic expectation of decentralized and outsourced AM is not sufficiently reflected in current industry practice. Thereby, the study provides a basis for elaborative decision-support research on AM SCDs.

Details

International Journal of Operations & Production Management, vol. 42 no. 11
Type: Research Article
ISSN: 0144-3577

Keywords

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