Global supply chain adaptations to improve financial performance

Abstract

Purpose The purpose of this paper is to understand and describe the conditions that compel and underscore global supply chain (SC) adaptations. Design/methodology/approach Insights from contingency theory, Porter's economic cluster theory and international factory mapping are used to analyze the SC adaptations that follow when an automotive firm moves from a domestic to a global SC. Findings An automotive global SC adaptation includes market entry considerations, the establishment of a three‐stage flexible time‐ and production‐based supplier network plan, and the integration of logistics partners. Research limitations/implications SC adaptations are an important consideration for any manufacturing expansion effort, especially international ones. Varying production levels impact supplier relationships and decisions and may result in varied supplier perspectives. Government regulations influence entry and routine decisions, while logistics issues and costs play an integral role in supplier perceptions and reactions. Practical implications With the rapid expansion of the Chinese auto market, entering manufacturing firms need more information about how to strategically locate, and develop and support supplier networks. A stepped supplier network establishment approach optimizes benefits for both manufacturing firm and suppliers. Evaluating and integrating logistics issues also sets the stage for future expansion efforts at optimal cost and supplier support. Originality/value The internationalization of the automotive SC involves adaptations that can only be successful through advance planning, strategic supplier networking, and systematic logistics integration.

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