Moderating the impact of global sourcing on inventories through supply chain management

In the last years companies have paid growing attention towards the management of their supply chain at a global level. Considering the upstream part of the supply chain, the need for better suppliers, the research of specific competences and the international competition have forced companies to improve their ability to cope with suppliers located in different countries around the world. Literature suggests that the geographical distance of suppliers should cause higher inventory levels primarily because of longer and more uncertain lead times. However, as this paper aims at demonstrating, companies can limit this effect by means of specific investments in the supply chain and in the relationships with suppliers. Results show that companies performing global sourcing have invested in supply chain management, thus keeping their inventories at an acceptable level, even if slightly higher than those performing local sourcing. Data from the last edition of the International Manufacturing Strategy Survey (IMSS) project are used.