Integrating Spatial Analytics in Global Sourcing Decisions

The ability or inability to develop an effective, reliable supplier network can often play a major role in determining an organization’s competitive position. Especially in today’s era of a complex global economy, disruptions to an organization’s supply chain can drastically undermine its ability to compete. We analyze the interaction between density risk, or risk related to the proximal relationships between suppliers, and environmental risk, or risk arising from conditions affecting a supplier’s local business environment. We provide a powerful supply base risk mitigation strategy incorporating spatial analytics to enhance our analyses. We develop a multi-objective program to manage these factors and recommend minimal risk supply bases. We detail the interaction between objectives in an example and discuss the ramifications for managers. This work will assist managers in their efforts to build a supply base that meets the cost and efficiency demands of their organization.