Factory Location Analysis and Reduction of the Firm's Manufacturing Footprint

Abstract

Increasing costs to the supply chain induce firms to seek out alternatives to drive down these costs. The perceived source for competitive advantage lies in emerging markets. Although outsourcing appears appealing, there are some disadvantages that can potentially cause unforeseen risks. Partial outsourcing is a method to lower problems such as intellectual property leaks. Factories that are diversified globally allow the company to readily adapt to uncertainties with cost and demand. A manufacturing scheme that enables flexibility will be able to manage risks and subsequently costs.

As firms compete for scarce resources when a crisis point is reached, competition becomes whose firm’s and managerial capabilities are the sharpest. A roadmap is presented as a means to guide management professionals in confronting and possibly circumventing these risks. Configurational research in management literature describes, explains and predicts organizational behavior. The configurations of the Cambridge or Karlsruhe’s institute present foundations for researchers to contemplate. Top management will decide the best course of action for its strategy, structure and process.

The outline for firms to emulate includes configurations of the right strategy, manufacturing network, roadmaps, parameters and Net Present Value calculations that will lead to success. This model helps steer firms towards countries which fit priority requirements such as cheap labor in emerging markets.