Disturbances to the supply chains of high-value manufacturing firms: comparison of the perceptions of product managers and supply chain managers

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.

Automated summary

This study categorizes the supply chain disturbances affecting high-value manufacturing firms when adopting insourcing/nearshore outsourcing and outsourcing/offshoring strategies. Results show that both product and supply chain managers prefer the insource/nearshore outsource strategy due to the belief that outsourcing/offshoring brings greater disturbances that outweigh the benefits of low-cost production. Mitigation strategies include reshoring, comprehensive consideration of total acquisition costs, and building clusters in emerging markets.