Global Versus Local Sourcing for Different Supply Chain Networks: An Analysis of Order Unfulfilment Rates

Abstract

Global sourcing is currently the most popular method for improving performance throughout the Supply Chain (SC). Because of this, we want to assess whether performance improvement because of global sourcing is true for all SC networks. In this paper, we assess the relationship of SC network types, global versus local sourcing, different levels of supply variation amplification and order unfulfilment rates. A multi-agent based simulation model is used for assessment. Results show that global sourcing alone cannot ensure SC performance improvement. Results also show that there is no best practice for all SCs. A simple trade-off analysis between costs and order fulfilment rates is also taken. This analysis helps diagnose the potential value of global sourcing and provides a framework for making sourcing strategy decisions.