Supply Chain Disturbances Assessment Model: Insights from High Value Engineering Supply Chain Sourcing Decisions

Even though total cost reduction is the primary reason for outsourcing, historically firms have not taken into account the possible uncertainty and risk related costs (supply chain disturbance factors) present in their global supply chains. This paper investigates through AHP how an European based high value engineering firm rates supply chain disturbances while using two alternate supply chain design strategies - insource/near-shore, and outsource/offshore. Interestingly, our findings show that quality defects are weighed higher when the former strategy is adopted. Results from our sensitivity analysis show that a decrease in firm related disturbances increase supply network related disturbances.