International Factors in the Design of Multinational Supply Chains: The Case of Canadian Pulp and Paper Companies

Factors such as tariffs, exchange rates, income tax legislations, national factors of production (e.g. natural resources supply, labour and infrastructure), transfer prices, trade barriers and competition (e.g. world wide distribution of capacity and demand) may have an important impact on company performance. In this paper, we discuss the international factors that may have an important impact on the structure of the value creation networks of Canadian pulp and paper companies, and we show how they could be incorporated in a global supply chain optimization model. To do this, we use a simplified production-distribution network structure in order to emphasize the role of international factors without complicating the analysis. The global network considered is composed of four echelons: fiber and pulp suppliers, pulp and paper mills, distribution centers and demand zones. We provide some modeling elements for the construction of a global optimization model through the synthesis of the existing literature on international network design. We conclude with a discussion of modeling extensions required to obtain network optimization models adequate for decision support in the pulp and paper industry.

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