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

In recent years, companies have paid growing attention to supply chain management at a global level. With regard to the upstream part of the supply chain, the need for better suppliers, the research into specific competences and concerns related to international competition have forced companies to improve their ability to cope with suppliers located in different countries around the world. The literature suggests that the geographical distance of suppliers should create higher inventory levels primarily because of longer and more uncertain lead times. However, as this paper aims to demonstrate, companies can limit this effect by means of specific investments in the supply chain and in their relationships with suppliers. The empirical analysis is based on data from the last edition of the International Manufacturing Strategy Survey (IMSS). The results show that companies performing global sourcing have invested in supply chain management (SCM) and that this has been helpful in keeping their inventories under control. © 2010 Elsevier B.V. All rights reserved.