Home > Research in practice > Moderating the impact of global sourcing on inventories through supply chain management

Moderating the impact of global sourcing on inventories through supply chain management

In recent years, companies have paid growing attention to supply chain management at a global level. With regard to the upstream part of the supply chain, the need for better suppliers, the research into specific competences and concerns related to international competition have forced companies to improve their ability to cope with suppliers located in different countries around the world.

One of the main issues related to the geographical distance of suppliers is higher inventory levels primarily because of longer and more uncertain lead times.

However, a work published by Golini and Kalchschmidt in 2011 on the International Journal of Production Economics demonstrates that companies can significantly limit this effect by means of specific investments in the supply chain and in their relationships with suppliers. The empirical analysis is based on data from the last edition of the International Manufacturing Strategy Survey (IMSS), a database of more 700 companies in the assembly manufacturing industry from more than 20 countries.

We conclude that global sourcing companies tend to invest in restructuring supply strategy and supplier portfolios and in vendor rating and supplier development since and they can gain a beneficial effect on inventory levels. However, an effort to increase integration and coordination with suppliers, even if more difficult in a global sourcing context, can bring about further improvements.

From:

Golini, R., Kalchschmidt, M., 2011. Moderating the impact of global sourcing on inventories through supply chain management. International Journal of Production Economics 133, 86-94.

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Categories: Research in practice
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