Abstract

Many researchers have revealed that US companies acknowledge the inevitability of supply chain disruptions in a global environment. These companies employ strategies that vary from proactive, reactive, resilient, to no supply chain risk management (SCRM) strategies to mitigate risks and ensure business continuity. When a company’s competitive advantage is speed to market, it is only logical that its front-end low-cost country sourcing (LCCS) decision model should include a Disruption Contingency Plan (DCP) as one of the factors for evaluation. In this research, we focus on the company’s financial performance with or without the up-front DCP in a closed loop outsourcing decision model, exploring and analyzing its relative effect on the firms’ Economic Value Added (EVA). In doing so, we reason, the decision to adopt low-cost outsourcing in foreign countries should not be reached without addressing the company’s speed-to-market capability. Using a US company that manufactures industrial printers as an example, various scenarios and options are explored for EVA comparisons in terms of a company’s ability to maintain normal sales, and capture competitors’ market share during supply chain disruptions. This example links the relevance among the outsourcing decision, the up-front DCP, and the company’s EVA during supply chain disruptions. Even when disruption strikes, there is still an opportunity for profitability.

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Additional Information

ISSN
2157-328X
Print ISSN
0041-1612
Pages
pp. 118-136
Launched on MUSE
2012-02-02
Open Access
No
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