Procedia Manufacturing | 2019
Effect of Supplier Selection Regulations on New Product Design
Abstract
Abstract At the early stages of new product design, companies integrate design, manufacturing strategies, and supplier selection decisions to decrease costs and stay competitive in the market. Global supply chain contributes to this integration by utilizing suppliers from low-wage countries. However, international trade regulations impact supplier selection. For instance, some countries limit the number of foreign suppliers of production companies to protect national manufacturers. Due to international trade challenges, there is an increasing trend towards reshoring especially in the U.S. and Europe. These regulations on supplier selection may have impacts on product design and production strategies. The purpose of this study is to investigate the effect of reshoring on new product design. We propose a mathematical model that simultaneously determines the optimal product design and supplier selection by minimizing the total transportation and production costs. An application of the mathematical model is performed by data from a bicycle manufacturer. We conduct a numerical case study to examine the impact of offshoring versus reshoring on optimal product design and financial performance.