Theoretical Framework for a Local, Agile Supply Chain to Create Innovative Product Closer to End-user: Onshore-Offshore Debate

Abstract

This paper presents a conceptual model of a viable onshore, agile supply chain approach for innovative product manufacturers in the manufacturing sector. As such, this paper provides insight into the drawbacks of offshore manufacturing and an empirical investigation into the importance of the manufacturing sector. This study aims to answer the research question: how can agile supply chain management add value to the manufacturing to create innovative products closer to the end-user? A theoretical framework was developed through a qualitative methodology to demonstrate effective onshore operation and supply chain. For the first time, the combination of Dynamic Capabilities (DC) and Total Cost of Ownership (TCO) theories has been used as a lens to examine the location decision of a close geographical supply chain networkglobal supply chain debate. Offshore manufacturing and global sourcing do not appear to fit the DC theory in a geographically and culturally distant situation, especially when supply chains involve operations in different continents. The 'theoretical perspective', including DC and TCO suggests that companies should frequently integrate, build and reconfigure internal and external competences to promptly react to the changing environment and they should also wisely calculate all the indirect, hidden, lifecycle and transaction costs of an operation when considering moving production offshore. Although studies in the agile supply chain area have examined competitiveness from several perspectives, there has been little to no research focusing on the advantages of agile, nearshore operation and supply chain solutions. This research notably widens the theoretical perspective of agility and adaptability for innovative product manufacturers in the manufacturing sector, and the viability of remaining close to the market and apply agile supply chain.

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