Abstract
We draw on the literature to categorise the supply chain disturbances (risks and uncertainties) that affect high-value manufacturing (HVM) firms when adopting the following two sourcing strategies: (a) insourcing/nearshore outsourcing, and (b) outsourcing/offshoring. We build a hierarchy structure of disturbances, which was tested in a case study of a European HVM operating in the aerospace industry. A novelty of this study is the quantitative prioritisation and comparison, using the analytic hierarchy process (AHP) method, of the disturbances reported by two groups of managers: three product managers (internally facing) and four supply chain managers (externally facing). Our findings show that managers’ perceptions of firm-related, network-related and location-related disturbances can be prejudiced by their functional boundaries. We show that both product and supply chain managers prefer the insource/nearshore outsource strategy, as they feel that the disturbances while outsourcing/offshoring are significantly greater and offset the benefits of low-cost production – a counterintuitive finding. Through in-depth interviews with both groups of managers, we found the mitigation strategies are reshoring, full consideration to the total cost of acquisition (including hidden costs of distant operations) and building clusters in emerging markets to support the firm’s regional hub by partnering with its existing suppliers from developed countries.
Highlights
Decisions on where to locate geographically have in the past primarily been based on quantitative cost measures, without due consideration being given to other important factors, such as disturbances internal and external to the supply chain (Tate et al 2009; Huq, Pawar, and Rogers 2016)
Our findings show that managers’ perceptions of firmrelated, network-related and location-related disturbances can be prejudiced by their functional boundaries. We show that both product and supply chain managers prefer the insource/nearshore outsource strategy, as they feel that the disturbances while outsourcing/offshoring are significantly greater and offset the benefits of low-cost production – a counterintuitive finding
By combining multiple data sources, triangulation of methods (AHP and interviews), formulation of an optimisation model to select the most preferable outsourcing strategy and detailed case study analysis of the mitigation of supply chain disturbance factors, we were able to achieve a degree of analytical generalisation and validity inference
Summary
Decisions on where to locate geographically have in the past primarily been based on quantitative cost measures, without due consideration being given to other important factors, such as disturbances internal and external to the supply chain (Tate et al 2009; Huq, Pawar, and Rogers 2016). In the West, political pressures have recently arisen to bring jobs back from overseas, termed ‘reshoring’ (Tate 2014). This is leading multi-national companies (MNCs) to focus on coordination of the supply network and re-evaluate their supply chain sourcing strategies. As Martinez et al (2008, 5) explain: ‘HVM firms do not compete primarily on cost Instead, they deliver value for one or more of their stakeholder groups by contracting for capability, delivering product/service innovation, establishing process excellence, achieving high brand recognition and/or contributing to a sustainable society.’. A report by EngineeringUK (2017) noted that the engineering sector in the United Kingdom (UK) contributes 26% of gross domestic product (GDP), viewed in terms of gross value added. This is greater than the collective contributions of the retail, wholesale, financial and insurance sectors
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
