Comparisons of Financial Performance Measures of Global Sourcing and "Made-in-USA" Domestic Production Strategies
Globally sourcing basic goods generally increases the firm's profits, while that for fashion/seasonal products tends to result in lost sales due to stockouts or high rates of markdowns on unsold inventories. Domestic production under the supply chain management system could be effective in response to customers' demands more promptly and frequently. This study examined differences in financial productivity of global versus domestic sourcing scenarios for fashion/seasonal products, considering merchandise plan errors due to market uncertainty. Sourcing Simulator, merchandise planning simulation software, is used to create a series of merchandise planning simulations for global and domestic sourcing scenarios. A total of 530 simulations with merchandising performance measures were analyzed. The findings from this study provide an insight about financial performance measures regarding global and domestic sourcing scenarios under demand uncertainty.