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The impact of Brexit on designing a material-based global supply chain network for Asian manufacturers

The impact of Brexit on designing a material-based global supply chain network for Asian... The purpose of this paper is to investigate effects on global supply chain reconfigured in the customs duty rate of parts and specific material types brought about by Brexit and the Trans-Pacific Partnership (TPP).Design/methodology/approachThe supply chain network is modeled and formulated using mixed integer programming. Numerical experiments are conducted using bill of materials with information such as the procurement cost of each part, 3D-CAD and an industry census.FindingsThe experiments indicates that if the customs duty rate increases by Brexit, manufacturers would be necessary to restructure supply chain configuration and locate the domestic factory and market. Additionally, when the UK leaves the EU and joins the TPP, there is a case where the total cost decreases in the global supply chain network compared to the baseline without Brexit. Therefore, it is reasonable for the UK to join the TPP.Practical implicationsThe study shows how new trading rules from non-partnership countries can critically disrupt existing global supply chain equilibrium. Asian manufacturers should evaluate a move to more local sourcing, opening new facilities and setting up warehouses to stock finished goods or raw materials in different trading areas to overcome any barriers to the goods movement.Originality/valueThis study enables us to quantitatively evaluate what there are opportunities or cost increasing risks by the selection of supply chain configuration for Asian manufacturers by political and economic factors of each country, such as Brexit and participation in TPP. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Management of Environmental Quality: An International Journal Emerald Publishing

The impact of Brexit on designing a material-based global supply chain network for Asian manufacturers

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1477-7835
DOI
10.1108/meq-12-2018-0206
Publisher site
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Abstract

The purpose of this paper is to investigate effects on global supply chain reconfigured in the customs duty rate of parts and specific material types brought about by Brexit and the Trans-Pacific Partnership (TPP).Design/methodology/approachThe supply chain network is modeled and formulated using mixed integer programming. Numerical experiments are conducted using bill of materials with information such as the procurement cost of each part, 3D-CAD and an industry census.FindingsThe experiments indicates that if the customs duty rate increases by Brexit, manufacturers would be necessary to restructure supply chain configuration and locate the domestic factory and market. Additionally, when the UK leaves the EU and joins the TPP, there is a case where the total cost decreases in the global supply chain network compared to the baseline without Brexit. Therefore, it is reasonable for the UK to join the TPP.Practical implicationsThe study shows how new trading rules from non-partnership countries can critically disrupt existing global supply chain equilibrium. Asian manufacturers should evaluate a move to more local sourcing, opening new facilities and setting up warehouses to stock finished goods or raw materials in different trading areas to overcome any barriers to the goods movement.Originality/valueThis study enables us to quantitatively evaluate what there are opportunities or cost increasing risks by the selection of supply chain configuration for Asian manufacturers by political and economic factors of each country, such as Brexit and participation in TPP.

Journal

Management of Environmental Quality: An International Journal – Emerald Publishing

Published: Jul 9, 2019

Keywords: Free trade agreement; Sustainable supply chain; Economic partnership agreement; Material imported tax; Future production; Bill of materials

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