Global Supply Chain Configurations In The Manufacturing Industry

Global supply chain management refers to exchanging information and coordinating efforts with suppliers and customers, in order to support globalization strategies determined by companies. Globalization does not only refer to the act of selling all around the world, but also to sourcing and manufacturing on the global scale, and all of this needs to be coordinated flawlessly.

Within this context, a recent book and an  article we published (Golini, 2011; Caniato, Golini and Kalchschmidt, 2013) provides a conceptualization of the above-mentioned phenomena and ends up with the guidelines considered to be useful for companies in supporting their globalization strategies. First of all, four different global supply chain configurations are identified. Next, for each configuration, the best investments in the supply chain that aim to improve performance are defined. Finally, the effect of contextual variables is taken into account, and, in particular, it shows that the structure of the supply chain from one end to another (also called the value chain) holds a crucial role. The results are supported by empirical data from an international survey (International Manufacturing Strategy Survey).

The four global supply chain configurations identified

Four main configurations of global supply chain according to the percentage of sourcing, manufacturing and sales outside the continent are identified (See Figure). These configurations have been labeled and defined as follows:

• Locals: local sourcing, manufacturing and distribution;
• Barons: local sourcing and manufacturing, global distribution;
• Shoppers: global sourcing, local manufacturing and distribution;
• Globals: global sourcing, manufacturing and distribution.

Next, we considered the investments made to manage effectively the supply chain. This investments are classified in:

• Sourcing-related investments, that are coordination of the flows of goods and information with suppliers, suppliers development, specific supply strategies and risk management;
• Distribution-related investments, that are coordination of the flows of goods and information with customers and specific distribution strategies.

Locals, as a general tendency, invest less than the others; specifically, Locals invest less than Shoppers on supplier development and distribution strategy; Locals invest less than Barons in coordination with suppliers; Locals invest less than Globals in supplier development.

Finally, looking at the performance (cost, quality, delivery, lead time, flexibility), we found that every cluster can benefit from investment in the supply chain, usually in more than one performance indicator. However, looking at each cluster we found more detailed results. In particular,:

• Locals can further improve their delivery, lead time and quality performance if they review their distribution strategy and implement supplier development;
• Barons, on the contrary, should be careful about investment in coordination with suppliers and customers, as this appears to be detrimental for their quality performance;
• Shoppers benefit from every supply chain investments, without specific areas that are more or less beneficial;
• Globals receive very little help from investments in the supply chain, as their effect is limited to improve flexibility performance. Probably, this can depend on the many different sub-configurations that Globals can have and that make investment in the supply chain more or less beneficial.

This work offers a new perspective on global supply chain management useful for research and practice. Results provide evidence of the different configurations of globalization that can and are adopted by firms, providing some hints on the characteristics of each of them, which can help managers to define their globalization strategy. Moreover, this research shows which investments in the supply chain are more beneficial to improve the performance according to the different configurations.

References

Caniato, F., Golini, R., Matteo, K., 2013. The effect of global supply chain configuration on the relationship between supply chain improvement programs and performance. International Journal of Production Economics, Vol. 143, No. 2, pp. 285-293.

Golini, R., 2011. Global Supply Chain Management In The Manufacturing Industry: Configurations, improvement programs and performance. Sestante – Bergamo University Press, Bergamo.