An empirical analysis of manufacturing re-shoring and supply chain risk

After an exodus of jobs in the last few years, the U.S. is committed to improving its manufacturing competiveness by investing in manufacturing innovation and increasing its labor force productivity. With rising labor costs in China and the current economic recession in Europe the timing could not be better for the U.S. to surge forward to gain back its competitive edge. These advantages along with the expected U.S. shale oil energy boom create an attractive opportunity for U.S. companies to re-shore their operations. This empirical manufacturing study analyzes the survey responses from a large number of companies with global manufacturing footprint and examines whether U.S. companies consider re-shoring their operations. The results show that a significant proportion, 33.6 percent of the U.S. companies are "considering" bringing manufacturing back to the U.S., while 15 percent of U.S companies are "definitely" planning to re-shore to the U.S. This is a very insightful finding and it shows that the re-shoring trend is picking up speed. We used the survey data to identify what drives this trend and whether this trend has made an impact. Competition in the manufacturing industry is instigating companies to reduce their supply chain costs. To retain their competiveness, companies are responding by implementing strategies such as lean manufacturing, outsourcing and offshoring. However, these strategies have significantly increased the company's exposure to supply chain risks. For example, lean manufacturing means lower inventory levels, and a high risk incident can cause a major disruption in operations. Similarly, as outsourcing and offshoring operations grow, supply chains become geographically dispersed and exposed to various types of risks. As a result, many companies are concerned about their supply chain resilience but only a few are effectively managing risk. Therefore, companies need to plan their supply chain strategy to effectively respond to various risks. This empirical study develops a framework to characterize the supply chain risk maturity level of each company. We then apply the maturity model to examine resiliency and operational effectiveness. The results offer a number of important insights: For example, companies with mature supply chain and risk management processes are more resilient than immature ones. The operational insights gained by this research can help companies manage today's challenges and prepare for tomorrow's opportunities.

Department dc:contributor.department

Massachusetts Institute of Technology. Engineering Systems Division.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2013

Author dc:creator

• Kyratzoglou, loannis M

Advisor dc:contributor.advisor

• David Simchi-Levi.

• Engineering Systems Division.
• System Design and Management Program.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/90688

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/90688