Supply chain competitiveness: measuring the impact of location factors, uncertainty and manufacturing practices

Abstract

Supply chain performance is impacted by several factors beginning with the plant location decision. Existing literature has tended to predominantly emphasize quantitative factors such as transport costs, exchange rates, labour rates and taxes. While there are existing models that capture qualitative variables, there is limited research linking these variables with measures of the firm’s operational competitiveness. In this paper, we propose a framework that includes qualitative factors concerning plant location decisions, supply chain uncertainty, and manufacturing practices. We argue that a joint consideration of such factors helps explain supply chain competitiveness. Data from a large sample study is used to test the model. Our results largely support the assertion that there is a significant relationship between qualitative plant location factors such as labour, infrastructure, business environment, political stability, proximity to markets, proximity to suppliers, key competitors’ location, supply chain uncertainty and broad manufacturing practices and the operational competitiveness of supply chains as measured by quality, flexibility, inventory turnover and responsiveness.