Tag Archives: Holweg Matthias

Visualizing the risk of global sourcing

1 Reply
Revised on: 2015-09-23

The benefits of global sourcing as part of a firm’s purchasing strategy have been widely discussed in the academic literature, yet so there are few models that provide a comprehensive risk and cost assessment to guide managerial decision-making. A picture says more than a thousand words, and here is one paper that has it all and that literally illustrates the differences between different sourcing strategies: On risk and cost in global sourcing by Matthias Holweg, Andreas Reichhart and Eui Hong. The paper defines three basic cost elements in global sourcing: static, dynamic and hidden cost, and uses this framework to assess the costs and risks inherent in global sourcing scenarios from three different points of view: conceptually, analytically and empirically. It is  paper shows how brings the message across of where to source and where not to source.

Continue reading →

Supply Chain Turbulence

Leave a reply
Revised on: 2015-09-12

We are living in turbulent times. So are our supply chains. Nonetheless, the standard tenets of supply chain management prescribe that supply chains are most efficient when fully controlled from end to end, without any volatility or uncertainty. The basic idea is that variability is detrimental to performance as it causes cost in the form of stock-outs, poor capacity utilisation, and costly buffers. Really? Martin Christopher and Matthias Holweg disagree,  and that is why they wrote “Supply Chain 2.0”: managing supply chains in the era of turbulence.  This paper questions the established approach and argues that in the light of increasing turbulence a different approach to supply chain management is needed. What is needed is an approach that builds structural flexibility into the supply chain decision making. Only thus can we create the level of adaptability that is needed to remain competitive in the face of turbulence.

Continue reading →