Research Sheds Light on Global Supply Chain Sourcing for Manufacturing

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Shiliang Cui, assistant professor of operations and Ricardo Ernst, Baratta Chair in Global Business and director of the Global Business Initiative, recently published a research paper that explores the changes affecting global manufacturing sourcing across different industries.

“We wanted to obtain a deeper understanding of manufacturing firms’ sourcing decisions on a global basis,” said Cui. “In particular, with dynamic changes in global economic, political, and technological conditions, a significant wave of global supply chain restructuring is in progress across all industries.”

The paper was co-authored with colleagues from Kobe University, Stanford University, and the University of Pennsylvania, among many others.

“While the United States may be at the cusp of a manufacturing renaissance, such a change is not primarily driven by American corporations bringing back manufacturing to the United States, but rather by European and Asian firms looking to move their production to the United States because they see the country as a highly appealing market destination and source of knowledge,” said Cui. “Also, we found that labor costs no longer dominate manufacturing location decisions, but a magnitude of other factors such as across quality, market access, and risk.”

“The goal of the research was to inform both managerial policy decisions and the academic research agenda by developing insights on managerial practices that concern production sourcing and on the factors that drive such decisions,” said Ernst.

The research work was based on a global field study conducted in 2014 and 2015 among leading manufacturers from a wide range of industries, including automotive, capital goods, and information technology.

“Due to the global nature of manufacturing and the ongoing challenges globalization faces we believe it is critical to closely monitor the developments of global supply chains,” said Ernst. “Not only is it important for the affected companies given the increasing complexity of their operations, but also for operations academia, specifically how globalization keeps evolving and affecting the economic sectors that we study.”