The Geographical Footprint

Where to locate manufacturing units have always been among the most important decisions in a manufacturing strategy and is to a large extent independent of whether the company has outsourced some operations or are doing them in-house. Depending on level of decentralization of processes and responsibilities, the location is a physical manifestation and a footprint of the manufacturing strategy. These decisions require a minimum of facts to allow quantified cost benefit analysis. However, the increasingly important intangible aspects, for example related to innovation and improvement must be captured in the decision making process. There are different methods to assess, analyze and compare alternatives. An example is the Analytical Hierarchy Process (AHP) but there are also many other techniques for organizing and analyzing complex decisions. The geographical footprint is about what kind of activities the different units have in the production system, the role of the units and the relation between them. The roles of the units should not only be a prerequisite for decisions on whether to outsource or not. It also defines challenges and requirements to coordination activities for example related to innovation, improvements and knowledge transfer.