Manufacturing Footprint: A Value Chain Approach
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Manufacturing Footprint: A Value Chain Approach Manufacturing Footprint: A Value Chain Approach Document Transcript

  • Manufacturing Footprint: A Value Chain Approach Sami Farooq1, Chris O’Brien2and John Johansen1 Center for Industrial Production1 Aalborg University Fibigerstræde 16, 9220 Aalborg, Denmark Division of International Business2 The University of Nottingham Ningbo Campus 199 Taikang East Road, University Park, Ningbo 315100, China Email: sami@production.aau.dk , chris.obrien@nottingham.edu.cn , jj@production.aau.dk Abstract This paper presents a process based conceptual approach for the evaluation of manufacturing plant location decisions. The developed approach recognises the importance of global supply chains and their increasing role in achieving desired competitiveness. The decision making environment for manufacturing plant location is divided into manufacturing, supply chain and general environment. The manufacturing environment consists of intra-organisational factors, supply chain environment consists of inter-organisational factors and the general environment contains several other factors that play an important role in the plant location decision. It is suggested to determine risk associated with each manufacturing footprint alternative in terms of opportunities and threats in the three divided decision making environments. The use of analytical hierarchy process (AHP) and strategic assessment model (SAM) is proposed for the detailed risk evaluation before subsequent selection of a desired alternative. This preliminary approach is planned to be implemented in the industry using case studies to refine the proposed process and further investigate the research area. Keywords: Manufacturing Footprint, Value Chain, Opportunities, Threats Introduction In an increasingly competitive global environment and in the presence of ever demanding customers, most of the companies are competing with each other under an increased pressure to gain the global market share. In order to be competitive on the global stage the companies are constantly evolving their strategies to optimise their global operations. The two basic components in an organisations global operations strategy are its manufacturing and supply chain. The process of managing the global operations depends largely on the co-ordination of an organisations manufacturing and supply chain. The emergence of global supply chains is an established fact for a manufacturing organisation. Therefore the literature in the field of production and operations management has been stressing the need of developing the tools, techniques, methodologies and strategies to provide better coherence between an organisations supply chain and manufacturing and to provide the ultimate competitive advantage to an organisation by enhancing the manufacturing productivity at the least possible cost. The emphasis on reducing the manufacturing cost has taken the top priority in the list of practitioners and academics and therefore the manufacturing industry witnessed the arrival of various terminologies such as outsourcing, offshoring and more recently the term manufacturing footprint is coined to depict the production of right things in the right place. The strategies devised to promote cost effective manufacturing gave an initial impression that the simple solution for low
  • cost manufacturing is to shift manufacturing to low cost economies. However as the manufacturing companies started to move their production activities all over the globe to the low cost developing countries they began to realise that this manufacturing shift is not simple and contains many hidden strategic issues that needs to be properly addressed to achieve the goal of low cost manufacturing. One of the major concerns that need to be carefully investigated is the effect of production/manufacturing re-location on an organisations supply chain. The investigation of the capability of a supply chain to support this cost effective manufacturing initiative and the assessment of risk associated in terms of opportunities and threats for both manufacturing and supply chain are essential for the achievement of the desired objective. This paper presents a fundamental approach for selecting a manufacturing location considering the manufacturing as well as supply chain objectives. The inclusion of the supply chain objectives is to reiterate the fact that the success of global modern manufacturing depends largely on the co- ordination between manufacturing and the supply chain. Therefore for a holistic evaluation of a manufacturing location alternative the role of supply chain cannot be neglected. Literature Review Globalised Manufacturing Perspective The notion that we are living in an age of transnational manufacturing (Ferdows; 1997) is more evident to a common man than ever before. The basic commodities used in daily life are produced in different parts of the world. The companies are collaborating with each other over various geographical regions to produce products. The increasing collaboration between companies has given them the chance to use each others resources and expertise and thus focus more on their own core competencies (Prahalad and Hamel, 1990). The presence of such activities and partnerships among companies gave rise to the concept of international or global sourcing (Monczka and Trent, 1991; Bozarth et al., 1998; Nassimbeni, 2006). The increased co- ordination among various companies also announced the arrival of the term supply chain or global supply chain. A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. The earlier understanding of supply chain was on the effective performance of the day-to-day activities associated with logistics functions, such as the optimisation of inventory and the acceleration of the product flow throughout the supply network (Ross, 1998). Lambert et al. (1998) have extended the concept of supply chain to represent the integration of business processes across organisational boundaries. They stated that the integration of business processes deals with total business process excellence and represents a new way of managing the business and relationships with other members in the supply chain. The inclusion of different business processes under the umbrella of a single term called supply chain also highlighted international or global souring described more recently as strategic sourcing as an important supply chain business process. Several researchers have studied the concept of strategic sourcing (Quinn and Hilmer, 1994; Lonsdale and Cox 1998; Canez et.al, 2000; Quinn, 2000; Momme, 2002; Corbett, 2004; Trent and Monczka, 2005; Kocabasoglu and Suresh, 2006). The research in the field of strategic sourcing is studied from the perspective of understanding the sourcing decisions such as outsourcing, insourcing, make or buy and supplier selection. Another important element in strategic sourcing is to develop make or buy decision making models based on a company’s core competency analysis. The basic intention of all the strategic sourcing studies has been to reduce the operational cost (Howleg et al., 2008). The more and more acceptance of strategic sourcing as an important supply chain practice demands detailed investigation of strategic sourcing decision
  • making process and the role of strategic sourcing in optimising a supply chain needs a thorough elaboration (Zainal Abidin and O’Brien, 2008). The presence of globalised manufacturing has also provided the idea of having global production/manufacturing units. The determination of location decisions for production of products is a key aspect of strategic decision making for manufacturing organisations (MacCarthy and Atthirawong; 2003). The alignment of location decisions with the overall strategy of a manufacturing organisation is necessary to achieve the desired results (Wang et al., 2008). The literature on the international plant location decisions is relatively scant with the availability of few studies in the subject area (Badri et al., 1995; Canel and Khumawala, 1996). A very wide range of factors can influence a firm’s decision to locate their production facilities across globe. The access to low cost factors, resources and proximity to market are described as few of the important factors for plant location (Ferdows, 1997). The term plant location and design seems to be replaced by the broader concept of strategic sourcing in the literature. The researchers are describing various forms of strategic sourcing in the shape of outsourcing and insourcing (Zainal Abidin and O’Brien, 2008) and are further subdividing them into offshore outsourcing and offshore insourcing. Offshore outsourcing can be referred to as a process taking place when a company enters into a sourcing agreement with a provider outside the country/region concerning supply of capacity that has previously been provided in-house. The provider will normally take over the ownership and decision rights of the outsourced activity or product. Similarly offshore insourcing can be referred to as a process taking place when a company decides to supply the capacity in-house by setting up a new business unit with a provider outside the country/region. This strategy may happen when for example a Danish or UK manufacturer sets up a factory in China, taking advantage of the local labour, but the management of the factory remains with the focal company (Zainal Abidin and O’Brien, 2008). These examples of offshore outsourcing and offshore insourcing can be referred as the modern shape of classical plant location decision making process. Strategy Formulation Perspective The traditional perspective of strategy formulation is that every firm is concerned with formulating its own organisational strategies independent of the strategies formulated by other members of the network. This approach supports the view that competitive advantage is sought on an organisation specific basis rather than on the basis of the value chain to which the firm belongs. In this kind of approach the relevant unit of analysis is a firm. However recent research examining networks suggests that networks can be a source of competitive advantage (Dyer, 1996; Dyer and Singh, 1998; Poirier, 1999). This has shifted the focus of competitive advantage from the single organisation to inter-organisational resources. Therefore strategy formulation from an inter-organisational perspective positions the network as the unit of analysis. As the attention is shifted from a single organisation to the entire network so the term ‘supply chain’ evolved. Nowadays firms do not compete for the end customers. They compete with each other for position in desirable supply chains (Bradley et al., 1999; Harland et al., 1999; Cox, 1999). They then concentrate on developing the necessary capabilities that will make them valued members of the supply chain (Fine, 1999). Once developed these firm based capabilities become the resources the supply chain draws on in its competitive struggle with other supply chains for loyal end users (Skrabec, 1999). Hence in the network view the competitive success of a firm depends on the competitive success of the supply chain (Poirier, 1999). The nature of the global business environment has made it necessary for the successful manufacturer to carefully link its
  • internal processes to external suppliers and customers in unique supply chains (Frohlich and Westbrook, 2001). The importance of supply chain integration is an established fact however the knowledge regarding different forms of integrations and their effect on manufacturing performance is relatively weak. Four different types of strategic integrations as shown in figure 1 have been identified in the value chain (Swink et al., 2007). Figure 1: Types of Strategic Integration in Value Chain (Swink et al., 2007) Strategic customer integration is the process of acquiring customer requirements information and related knowledge. This provides a better understanding of the customer requirements and helps to develop a strong relationship with customer. Strategic supplier integration involves the process of acquiring and sharing operational and technical knowledge with the suppliers and vice versa. Product –process technology integration is the process of simultaneously developing product and processes and is pursued in manufacturing plants so that manufacturing processes may incorporate a better understanding of product requirements and similarly product designers may incorporate a better understanding of manufacturing process capabilities into product specification. Corporate strategy integration is about sharing objectives, plans and related knowledge pertaining to manufacturing and business strategies. Corporate strategy helps in aligning the business level and plant level decisions by setting the performance targets and deployment of resources. The decision regarding the extent of upstream and downstream integration by most of the manufacturers are implicit in nature. Some manufacturers have little integration with suppliers and customers and therefore have a relatively narrow arc of integration. On the other hand some manufacturers extensively integrate with their suppliers and customers thus having a broad arc of integration (Frohlich and Westbrook, 2001).
  • Figure 2: Arcs of Integration (Frohlich and Westbrook, 2001) Growing evidence suggests that the higher the level of integration with suppliers and customers in the supply chain the greater the potential benefits. High supply chain integration intensity directly influences the following competitive capabilities as summarised below (Rosenzweig et al., 2003): • Product Quality Capability • Product Delivery Reliability • Process Flexibility Capability • Cost Leadership Capability By considering the literature it can be summarised that the emergence of global supply chains have forced companies to review their operational strategies. The new strategies are devised considering the importance of supply chains and the decision making processes are developed in a way that they support collaborative decision making for the optimisation of the supply chain. An optimised supply chain can be termed as value chain and is the objective of organisations working in collaborative networks. The concept of value chain advocates the importance of value creation activities which are required to bring a product or service from conception, through the different phases of production to deliver to final consumers, and final disposal after use (Kaplinsky, 2004). The important issues in value chain analysis include firm’s supply chain structure, co-ordination between various activities within a firm and the role of core value creation activities in achieving a firm’s competitive strategy (Wang et al., 2008). Therefore it can be said that co-ordination between manufacturing and supply chain is a constituent component of a value chain. A Value Chain Approach for Determining Manufacturing Footprint Alternative The concept of value chain demands an optimised supply chain. In order to have an optimised supply chain it needs to be included in an organisations decision making process. The inclusion of inter and intra-organisational factors in organisational decision making process provides comprehensiveness to the evaluation process. Therefore considering the importance of supply chain considerations and their increasing role in achieving competitiveness on organisational as well as network level, this paper proposes a six step approach for the evaluation of manufacturing footprint alternatives as shown in figure 3.
  • Evaluation of Current Supply Chain Critical Supply Chain Factors for Market Competition Planning Range/Duration (Long term, medium term, short term) Input Output Information Deliverable Identification of Manufacturing Footprint Alternatives to fulfil Supply chain factors Detailed Assessment of Identified Manufacturing Footprint Alternatives Risk Assessment of Manufacturing Footprint Alternatives Figure 3: A Conceptual Approach for Assessment of Manufacturing Footprint Alternatives Evaluation of Current Supply Chain The first step is to evaluate the current supply chain performance of a product for which there are more than one manufacturing footprint alternatives are available. The main attribute of step 1 is the involvement of the relevant company managers in evaluating their own supply chain which gives them a first hand picture about their performance as compared to the market needs and demands and directs them towards their strong and weak links in order to sustain the increasing pressure from their competitors. This leads to the re-evaluation of their business strategy and provides them with an indication of into which areas they need to put in more effort and the areas where they are doing better than their competitors. The common supply chain performance measures like cost, quality, lead time, new product development and flexibility are advised to be included in the evaluation process. The importance- performance matrix (Slack, 1994) is used in this process to observe the performance of the supply chain compared to its competitors with reference to a particular performance metric like cost, quality, lead time, flexibility and new product development and the importance of that particular performance metric in the current supply chain. The results obtained are plotted on the importance performance scale depicting the true picture of the supply chain. An illustrative example of importance-performance matrix for performance evaluation of supply chain objectives is shown in figure 4. Similarly figure 5 shows the market evaluation of the supply chain performance measures from the customer perspective. This helps to relate the performance of a supply chain with the performance of the product in the market. From both the figures 4 and 5 it is evident that cost and lead time were the factors that caused concern in supply chain as well as the market performance of the company. This shows a relationship between the failure of the supply chain in achieving an appropriate level of
  • performance in cost and lead time resulting in poor performance of the company in the market on the basis of cost and lead time. Figure 4: An Illustrative Example for Supply Chain Evaluation Figure 5: An Illustrative Example for Market Evaluation
  • Critical Supply Chain Factors for Market Competition The second step is the clear identification of the critical factors on which a supply chain plans to compete. Once the strength and weaknesses of the supply chain are indicated the next step is to select a few factors from the indicated factors for re-defining the business strategy according to the market condition. The major outputs from this step are the identification of the core competencies, defined as a set of factors for market competition and re-defined business strategy. Time Horizon The third step is to define the planning range for the supply chain to compete on the factors defined in the second step. The supply chain members may wish to compete on a long, medium or short term basis. The major input is the re-defined business strategy that is the product of the second step described above. Another input is the nature of the market and business in which the supply chain is planning to compete. The major output of this step will be the future vision of the business and the supply chain. The other output will be the requirement of the means and definition of resource allocation to execute the proposed actions. Identification of Manufacturing Footprint Alternatives The next step is to identify the suitable manufacturing footprint alternatives to fulfil the critical supply chain objectives defined in the second step. This involves the input of a manufacturing plant location scanning process and requires carefully selected experts who understand the technical and strategic conformance expected from the selected manufacturing footprint alternative. Detailed Assessment of Manufacturing Footprint Alternatives The fifth step is the detailed assessment of the identified manufacturing footprint alternatives. A review of the literature shows the availability of various techniques for multi-criteria decision making such as ranking of alternatives, scoring models, utility models, fuzzy techniques, analytical hierarchy process and multi objective mathematical programming techniques such as goal programming. This approach proposes use of the analytical hierarchy process (AHP) developed by Saaty (1980) and the strategic assessment model (SAM) presented by Tavana and Banerjee (1995). In this step there is an effort to bridge the gap between the business objectives and the manufacturing capabilities of the supply chain. This has been done by dividing the decision making environment into manufacturing, supply chain and general environment and by determining the probability of occurrence of the opportunities and threats associated with each manufacturing footprint alternative in three different decision making environments. The division of the decision making environment into manufacturing and supply chain provided a mechanism to investigate the role and contribution of inter and intra-organisational factors in selecting a desired manufacturing footprint alternative. The output of the process is the identification of possible alternatives to achieve manufacturing and supply chain goals and the detailed characteristics of each available manufacturing footprint alternative. An example showing decision hierarchy for opportunities and threats for the assessment of suitable manufacturing alternative is illustrated in figure 6 and figure 7. Risk Assessment of Manufacturing Footprint Alternatives The final step is the risk assessment of the identified manufacturing footprint alternatives in which the risk associated with each manufacturing footprint alternative in terms of opportunity and threat is evaluated before selection. The output of this step is the overall risk adjusted
  • manufacturing footprint alternative strategic value which is the algebraic sum of risk adjusted manufacturing footprint alternative opportunity value and risk adjusted manufacturing footprint alternative threat value. Ranking Manufacturing Footprint Alternatives Manufacturing Supply Chain General Environment Environment Environment 1. Development Cost Reduction 1. Ability to Influence and Shape 1. Economic Factors 2. Development Time Reduction Demand 3. Unit Cost Reduction 2. Ability to Handle Demand 2. Social and Cultural Factors 4. Maintenance Cost Flexibility 5. Increased Productivity 3. Lead Time Reduction 3. Legal and Regulatory Factors 6. New Product Development 4. Lean Operations 7. Improved Performance 5. Sharing of Risk and Rewards 4. Government and Political 8. Intellectual Property Potential 6. Commitment to Network Factors Innovation 7. Proximity to Suppliers Figure 6: Manufacturing Footprint Alternatives AHP Decision Making Hierarchy (Opportunities) The process approach presented in this paper for the assessment of manufacturing footprint alternatives is in its preliminary stage. The process depicted in figure 3 needs to be further elaborated and tested using industrial case studies. The input information for various processes (figure 3) is required in detail and the output deliverables have to be more objective oriented. It is assumed that the industrial application of this approach will help to validate its functionality in practice and will provide an insight to refine the defined processes.
  • Ranking Manufacturing Footprint Alternatives Manufacturing Supply Chain General Environment Environment Environment 1. Capital Cost 1. Inadequate Collaboration 1. Management Issues 2. Staff Resistance to Change 2. Product and Service Delivery 3. Employee Layoff 2. Local Currency Exchange 4. Training Expenses 3. Different Organisational Rates 5. System Integration Cultures 6. Potential New Equipment 3. Business Climate Installation/ Re-Location 4. Separate Business Objectives 7. Quality Concerns 4. Attitude of workforce 5. Competing in different Geographical Locations 5. Labour Unions Figure 7: Manufacturing Footprint Alternatives AHP Decision Making Hierarchy (Threats) Case Study 1 The proposed approach for manufacturing footprint alternative is planned to be evaluated using a case study approach in a leading Danish manufacturer of valves and components for heating, ventilation and air conditioning (HVAC). The company is a global player in the field of HVAC accessories and is constantly striving to increase its global market share. It has recently acquired a local electronics company in China by recognising the need of gaining the market presence in the rapidly emerging consumer market. Such is the rate of demand in China and its potential for companies that the Danish manufacturer is aggressively embarking on their slogan of making China its second home. The Danish manufacturer is retaining the brand name of the recently acquired Chinese electronics company and is using its own sales network to satisfy the need of the Chinese market. The company acquired in China is in the process of establishing a new factory in 2009. The Danish HVAC accessories were traded in China since the early 1990s with a small market share at that time. It inaugurated its own manufacturing facility in 1997, though the company had to initially operate in a leased plant while moving to its own manufacturing facility in 2002. The simple reason for moving the production facilities to China was to reduce the cost of the products by exploiting the cheap availability of labour and land. The opportunity of entering into a developing and exponentially increasing consumer market was also a chief contributor behind moving the production facilities in China.
  • However the Chinese expedition 10 years ago did not turned out to be as simple as it was initially perceived by the company. The first major issue faced by the company was the non availability of the suitable suppliers in China. The process of identification of the desirable suppliers required some time and even after the suppliers were identified the language barrier played its part and the company faced an uphill task in explaining the technical specifications to the suppliers. This lead to confusion and in most cases parts had to be acquired from suppliers in Europe rather than from local Chinese suppliers thus increasing the cost of operations. The management style of the company was new to the Chinese workers and it took them a while to understand the culture of collaborative sharing at the work place. Another issue faced by the Danish manufacturing company in China was the production of its counterfeit products. The local manufactures were producing the same products by copying the design of the Danish manufacturer and were not reprimanded severely enough by the law enforcing authorities. This was bringing considerable loss to the Danish manufacturer and they were told by the local authorities that it was nearly impossible to eradicate this practice and they must observe all necessary precautions in their production and operations. The story for the Danish manufacturer changed with the opening of its own manufacturing facility in 2002. The five year experience of operating in China helped the company to understand the market and the rules of the game more strategically. Therefore the company finally started to break even and with the expansion in business it increased its product range. The acquisition of the electronics company in the recent past is an effort to diversify its product range and to constantly retain a sizeable market share. The decision of establishing a new factory in China provides an opportunity to test the manufacturing footprint alternative approach presented in this paper. It is proposed to mitigate the decisions taken by the Danish manufacturer few years ago while locating its manufacturing plant in China by using the developed approach. This process will provide an opportunity to test and further refine and elaborate the proposed approach. This will act as a pilot study and after the refinement of the process the refined approach will be aimed to facilitate the decision making process for new manufacturing establishment in China. The biggest challenge faced in establishing a new factory in China is to integrate the new manufacturing setup with the global supply chain of the Danish manufacturer and to strategically align the objectives of the new establishment with the parent company in Denmark. Considering the importance of supply chains in the modern business environment the approach presented in this paper provides a provision to include supply chain opportunities and threats associated with each manufacturing footprint alternative to determine a comprehensive solution for evaluating a new manufacturing footprint. Therefore the proposed approach aims to act as a co-ordination mechanism between manufacturing and supply chain to achieve the desired results. Case Study 2 This case deals with a Danish pump manufacturer which is a leading player in the industry. The basic aim of the company is to provide different types of environmental friendly pumps and also the pump accessories to the global pump market. The highly technical nature of the product means high price and specialised manufacturing process. The company has a major presence in Europe with developing growth rates in North America, China and India. Therefore to meet the increasing customer demand the major investment by the company has been in developing production facilities, research and development (R&D) and to diversify the product range. The company has followed the industrial trend for locating production facilities in the cost efficient China and has been operating in the country for nearly a decade. The company has constantly
  • reviewed its overseas production experience and by successfully using these experiences has located its production facilities in recent past to different parts of the globe like India, Russia and Hungary. However the company has acquired a strategic position in Suzhou (China) industrial district and has attained a dominant position among the pump cluster (a network of pump companies and suppliers in Suzhou industrial district). The company considers the Chinese market to provide it a significant proportion of business over the next few years. The availability of huge market potential, suppliers, low cost inputs and educated labour is forcing the company to further strengthen its presence in China by increasing its production capacity and to look for future production plants to satisfy the market demand. Like many other European companies the Danish pump manufacturer faced a number of difficulties in locating its manufacturing facilities in China. The first issue was to make the relationship with the local suppliers. Since the business culture in China is completely different from the European business culture it took some time initially by the company to develop close relationship with the suppliers. This was complicated by the advance presence of an industry competitor in China who had already attracted the attention of the suitable suppliers and had made strategic collaboration with them. The pump manufacturing is a complex technical work and requires skilled educated workforce. The availability of educated engineers in China was an advantage but to attract that workforce to a newly arrived foreign manufacturing company required some persuasion. The pump manufacturing thrives on the quality of the product and the cost associated in achieving the desired quality is usually accepted by the pump manufacturers. Therefore the quality level of the finished products in the Chinese manufacturing plants was the top priority of the production managers. The quality of the product was dependent on the quality of the raw material from the suppliers and the quality control techniques implemented during the production process. This required taking the suppliers and the factory workers onboard regarding the quality expectations. The effective communication with the suppliers and the workers was necessary to attain the desired quality levels. The factory management style needed to be adapted according to the local working environment. It was necessary to abide the local political and cultural customs to guarantee the smooth production operations. Finally counterfeiting that has nearly affected every foreign company which has moved its production facility to China was addressed after gaining more information and experience about the local industry traits and by collaborating with the law enforcing agencies. The Danish pump manufacturer is having China at the top of it strategic growth agenda. The company has recently increased the capacity of one of its production plants and is always exploring different locations within China for its future location of production facilities. The process approach presented in this paper will be aimed to crystallise the plant location decision making approach for the Danish manufacturer in China. The first step would be to understand the original decision to locate the production facilities in China in the last decade. The important aspect would be to understand the advantages that have been gained by these production locations and the unexpected problems or difficulties that have been caused by such decisions. The lessons from this exercise will be incorporated in locating the current manufacturing footprint alternative. The involvement of inter-organisational factors in manufacturing footprint assessment approach will determine the risk associated with it in terms of opportunities and threats whereas the presence of intra-organisational factors will safeguard the manufacturing objectives.
  • Conclusion The global manufacturing industry is highly competitive. The manufacturing companies are facing the pressure of reducing the product cost and are actively striving to minimise their lead time. The struggle to reduce the product cost has resulted in looking for better more efficient suppliers by the manufacturing companies all over the globe. The availability of modern communication facilities, improved logistical solutions and the race of the survival by satisfying the global customer demands have contributed actively in developing and shaping the concept of extended supply chains. The presence of the global supply chain have provided manufacturing companies access to suppliers located in various geographical regions and more importantly have provided the manufacturing companies to establish stronghold in the newly discovered thriving global markets. However with all these advantages comes a big challenge of managing these global chains. It is the objective of every company and the network to which that company belongs to have a supply chain which adds value to their system. Thus having only a global supply chain is not the key to success but it is mandatory to have a value chain for successful global operations. The first basic step in enhancing the value of a supply chain is to include its benefits and concerns in organisational decision making processes. Therefore by keeping in mind the importance of having coherent manufacturing and supply chain this paper presented an approach for the assessment of manufacturing footprint alternative by combining manufacturing and supply chain opportunities and threats associated with a manufacturing footprint alternative. It is envisaged that the case studies will help in elaborating the proposed process approach and will produce a refined and more detailed solution to the problems of locating overseas manufacturing plants. The case studies aim to develop a knowledge base for locating overseas manufacturing operations especially for Danish manufacturers by drawing on their existing experiences and processes. It will provide a platform to trace the manufacturing footprint of the Danish manufacturers in China by linking their past decisions with their current objectives and their future ambitions. It is hoped that the manufacturing location selected using this approach will add value to the systems by satisfying the manufacturing and supply chain requirements thus making it an important constituent of an organisational or network value chain. References Badri, M., Davis, D. and Davis, D. (1995). Decision support models for the location of firms in industrial sites, International Journal of Operations & Production Management, 15/1, 50-62. Bozarth, C., Handfield, R. and Das, A. (1998). Stages of Global Sourcing Strategy Evolution: An Exploratory Study, Journal of Operations Management, 16/ 2-3, 241-255. Bradley, P., Thomas, J., Gooley, T. and Cooke, J.A. (1999). Future Competition: Supply Chain vs. Supply Chain, Logistics Management and Distribution Report, 38, 20-21. Canel, C. and Khumawala, B. (1996). A Mixed-Integer Programming Approach for the International Facilities Location Problem, International Journal of Operations & Production Management, 16/4, 49-68. Canez, L.E., Platts, K.W. and Probert, D.R. (2000). Developing a Framework for Make-or-Buy Decisions, International Journal of Operations and Production Management, 20/11, 1313-1330. Corbett, M.E. (2004). The Outsourcing Revolution: Why It Makes Sense and How to Do It Right. Dearborn Trade Publishing, USA. Cox, A. (1999). Power Value and Supply Chain Management, Supply Chain Management: An International Journal, 4/4, 167-175. Dyer, J.H. (1996). Specialised Supplier Networks as a Source of Competitive Advantage: Evidence from the Auto Industry, Strategic Management Journal, 17, 649-666.
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