The optimal quantity of quick response manufacturing for an onshore and offshore sourcing model

Consumer demand for innovative and fashion products is highly unpredictable, but could be fulfilled through quick response manufacturing (QRM). However, the extra cost is usually considered to be a barrier to such an approach. The newsvendor algorithm is applied to demonstrate that a strategic combination of onshore and offshore manufacturing can be more profitable than a 100% offshore approach, highlighting the growing importance of a cost versus response trade-off. The optimal split between onshore and offshore manufacturing is calculated. We discuss the successful application of the QRM model in two practical cases: quick response manufacturing for athletic wear; and onshore garment dyeing versus offshore yarn dyeing. In the right context, QRM is a viable and profitable option. Issues in the practical application of the model are discussed.

[1]  Jayashankar M. Swaminathan,et al.  Managing broader product lines through delayed differentiation using vanilla boxes , 1998 .

[2]  Taiichi Ohno,et al.  Toyota Production System : Beyond Large-Scale Production , 1988 .

[3]  Rakesh Nagi,et al.  A review of agile manufacturing systems , 2001 .

[4]  R. Warburton,et al.  The strategic integration of agile and lean supply , 2003 .

[5]  Marshall L. Fisher,et al.  Reducing the Cost of Demand Uncertainty Through Accurate Response to Early Sales , 1996, Oper. Res..

[6]  N. D. Burns,et al.  Implications of postponement for the supply chain , 2003 .

[7]  M. Christopher,et al.  Measuring agile capabilities in the supply chain , 2001 .

[8]  Remko I. van Hoek,et al.  RECONFIGURING THE SUPPLY CHAIN TO IMPLEMENT POSTPONED MANUFACTURING , 1998 .

[9]  R. Lowson,et al.  Analysing the Effectiveness of European Retail Sourcing Strategies , 2001 .

[10]  G. D. Silveira,et al.  Exploring the trade‐off concept , 2001 .

[11]  John T. Mentzer,et al.  Sales Forecasting Management , 2005 .

[12]  Chris J. Backhouse,et al.  Management of uncertainty through postponement , 2004 .

[13]  M. Fisher.  What is the Right Supply Chain for Your Product , 1997 .

[14]  Russell King,et al.  Quick Response: Managing the Supply Chain to Meet Consumer Demand , 1999 .

[15]  Terry Hill,et al.  Manufacturing Strategy: Text and Cases , 1993 .

[16]  大野 耐一,et al.  Toyota production system : beyond large-scale production , 1988 .

[17]  R Stratton,et al.  Questioning the relentless shift to offshore manufacturing , 2002 .

[18]  Diwakar Gupta,et al.  Make-to-order, make-to-stock, or delay product differentiation? A common framework for modeling and analysis , 2004 .

[19]  Alan Tonelson.  The Race To The Bottom: Why A Worldwide Worker Surplus And Uncontrolled Free Trade Are Sinking American Living Standards , 2000 .

[20]  Christopher S. Tang,et al.  Modelling the Costs and Benefits of Delayed Product Differentiation , 1997 .

[21]  Awi Federgruen,et al.  Capacitated Multi-Item Inventory Systems with Random and Seasonally Fluctuating Demands: Implications for Postponement Strategies , 2001, Manag. Sci..

[22]  McGraw-Hill, New York. , 2022 .

[23]  J. Fuller,et al.  Tailored logistics: the next advantage. , 1993, Harvard business review.