International sourcing and supply chain stability

Abstract. An international supply chain is conceptualized as a complex, dynamic system in which disruptions interact with long shipping and lead times to generate costs. Findings from a case study and simulation model indicate that demand-related disruptions cre-ated substantial and unexpected costs in terms of expedited shipping, high inventories, and lower demand fulfillment. Production-related disruptions declined over time, but demand-related disruptions did not. Implications for management are discussed. As national boundaries become more permeable to economic activities and capital becomes more mobile, industry value chains are becoming increasingly international in their scope [Dunning 1992; Julius 1990; Kotabe and Swan 1994; Levy and Dunning 1993; UNCTC 19911. This globalization of production entails substantial growth of international sourcing for both components and finished goods. A key issue facing managers is deciding which activities in the value chain ' can successfully be sourced internationally, and which need to be conducte